This Week In The US Economy

[robertk]

Remember....Their proving it today. Nobody knows anything.........times 2.

[Richard Tracy]

I smile when I hear all this 'conservative' commentary,.. as their leaders have had decades to prove their rhetoric all the way from two terms of trickle down Reagan through three sets of Burning Bush terms adding up to 20 years of stacking the top until it toppled over.

Now that others sensibly want to build from the base up, and have the power to do it,.. out come all the economic 'experts'...with their Nostradamus like prophecies which are thinly disguised desires that the 'other side' fails.

Something different needs to be done, and done it will be, and though the results are not guaranteed, anyone in their 'right' minds, who really take the time to think past all the brainwashing they have all been swallowing about people, places the world, and their places in it, can understand why this plan has come to be.

Equalization always comes eventually !

[dred30]

I think this is a good conversation to have but it is an easy one when your on the out side looking in not having to make the decision. The US has been spending more than they take in since the early 80s (thanks Ronald) and we the people have followed along by spending more than we make and helping to create a economy that is based on frivolous spending. http://zfacts.com/p/318.html

This is a direct effect of the securities markets being deregulated which brought out the greed in the banking system that enabled people to by things that they couldn't afford (i.e... housing bubble).

I to don't like the stimulus but if there is a 70/30 chance that it will help that means there would be a 70/30 chance of failure if nothing is done, failure in this case would mean another 1930s 10 year depression with up to 24.9% unemployment. That is not an option!!!!!!

Edited February 11, 2009 by dred30

[fakemaster]

Ypu know I tried watching that mock press conference the other night but had to turn it off after he pulled down 38 uhs in a 60 second period. Well that and the fact he contradicted everything he said in his campaign. In any case this guy has to be the worst public speaker I have ever heard. Thiese clips pretty much say it all.

[nikki6]

Yeah cause Bush was a F'in genius speaker!! Don't you realise the rest of the world is hurting because 'Monkeyboy Bush' smelled oil somewhere he didn't own!!

People die every second of every day, I hope that wee scumbag realises he accounts for a good couple of minutes worth of people a day! He is and always will be pondlife!

Brought from the paddlingpool end of the gene pool to run one of the most powerful countries on earth!! Ahh the American dream, you can just smell the dead and dying from here, mixed of course, with the smell of good ole moms applepie!

Fakey go put your head back from where it just popped out of, I'm sure your colon is feeling lonely!

[robertk]

Ypu know I tried watching that mock press conference the other night but had to turn it off after he pulled down 38 uhs in a 60 second period. Well that and the fact he contradicted everything he said in his campaign. In any case this guy has to be the worst public speaker I have ever heard. Thiese clips pretty much say it all.

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[nikki6]

I thank you Robert! See you were telling fibs, you DO know a bit!!

[Shundi]

I thank you Robert! See you were telling fibs, you DO know a bit!!

I agree about GWB but I chuckle to myself as all the "Change" rhetoric slowly becomes more of the same. Politicians will be politicians- there is always an agenda and there are always alterior motives. Always.

[fakemaster]

You're right. This is the guy you picked as an improvement. I love political discussions.

[Shundi]

You're right. This is the guy you picked as an improvement. I love political discussions.

I take it you mean "you" as the voting population of the USA?

[Demsey]

Oh! Dear!

Trans-Atlantic derogatory remark, general nation bashing and three decades of pent up partisan frustration!? This thread is about to be 'binned', sorry 'Chief' !!

But before it's locked, you know what we must do? Yes! It's time! Cue the Scots on double necked Standard Gibsons played with a half-crown! It's on!

[fakemaster]

[jonthebhoy]

Oh! Dear!

Trans-Atlantic derogatory remark, general nation bashing and three decades of pent up partisan frustration!? This thread is about to be 'binned', sorry 'Chief' !!

But before it's locked, you know what we must do? Yes! It's time! Cue the Scots on double necked Standard Gibsons played with a half-crown! It's on!

Lovin it. I'm in the "four more years" camp.......for this thread of course!

[offshore]

Yep, Dems' (as usual), is on the money.

This thread has been allowed to continue, as a discussion on the economy.

However it is now descending into a political bun fight.

May I suggest you all have a wee glance at rule 6!

The next political post, (as aside from a discussion of the economy) will see the clampers applied.

Should you wish to continue to discuss the pros & cons of parties/leaders, and /or their contribution, or lack thereof... I am sure you all can find much more worthwhile fora, in which to have your "discussion"

Thanks.

Offshore

[jonthebhoy]

At the risk of incurring Alan's wrath...................I give you Richard Armour...

"Politics, it seems to me, for years, or all too long, has been concerned with right or left instead of right or wrong."

I will now find a dark alley to hide from the mad Aussie!

[RobbieG]

There is a tidal wave coming. And I feel like we are putting on our Sunday best, digging our feet in the sand, and just peeing in front of it. You may look heroic, presidential up until the point you get crushed. Time is better spent thinking about the aftermath and beyond.

No one wants to recognize that something so dark can be so beautiful at the same time. But thats exactly what I think of bankruptcy system in this country. Ramp it up. It has greatly contributed to the success of this country and makes recoveries more efficient.

And those in our business tend to see the truth in that - maybe because traders are so close to the discoveries that can only come from getting your head handed to you. LOL. You can take the concept down to the microcosm of even one trading day. Why? Consensus of value. Before price can move on it has to reach consensus. While it is moving it reaches tons of little consensus levels all the way up or down. Everyone who inserts his intellect into the equation in the soup and picks door #1 or door #2 in this just gets crushed. I say all this because I have to laugh when I see people struggling like fish because they don't know what is going to happen next. Welcome to the real world. We never did. It just seemed like it because we have been in the same long trade since 1926. LOL...

How this relates to the current issue is this if you don't understand: Let's say a market doesn't know its true value because of turmoil, but before it can finish slogging around - or selling off, a big trader comes in and goes, "Watch this - I'm gonna flood the market with buy orders and make it trend up. I'll show that market..." So the guy comes in with billions and billions in equity and just floods that market with long trades. You know what happens? Yeah he succeeds at a short term runup for a few minutes or even half a day. But what happens next? The market goes right back down to where it was because it still either doesn't know what value is or it does and it wants to be lower. No amount of money can stop this phenomenon. You think a billion is a lot if money? In my example, that buys you 100,000 contracts worth of S&P 500 futures trades maybe in my example - assuming 100 contracts per million equity. How about a hundred billion? That market trades 2-5 million contracts a day. Get the picture? The point being fat.tail's words of peeing in the sand are 100% correct. You can use any market or issue to analyze it. All issues are their own little markets too. The consensus of value in the world now (so to speak) is either no consensus or down. Throwing a bunch of long trades at it (so to speak) could never stop something so vast.

So yes, the wave is coming. And nothing can stop it. The whole discussion as it is being played out is mute. The real recovery that is lusted after can only happen after total destruction. And then there will be a true consensus. People just have to stop kidding themselves that some of those consensus prices are going to be zero. Zero happens everyday all around you, so don't think for one second it isn't plausible. But the rebirth is going to be amazing so lets think about the aftermath as he says. A much better use of time and energy - and we will need a plan to survive that.

[Demsey]

I agree Robbie.

History has shown through recessions and the Depression, that the first indicator of the economic recovery is the recovering free market. Long before what the public perceives as a recovery; "I have my job back, and I have money back in my pocket". Shown first as a reflection in the proportionally rising stock market. That (merely the rise in stock valuation, an abstract at best) may not be intrinsic to the mechanics and function of a recovering economy, but is like fishermen showing up on the lake just at sunrise; there were fish to be caught an hour before sunrise, and there are fish to be caught an hour after, but the mere phenom of the sunrise triggers the catching. When the fishermen come out.

So, the 'concensus' is an irrational thing. Is what I drew from your post? Driven more by emotion than a 'science of an economy'? Agreed. Catering to the free market is what leads to booming economies that 'presidents', their cabinets and their parties like to take credit for by citing unrelated social policies. Reagan did it with upper tier tax cuts and the 401K program, Clinton with the laissez-faire approach, letting the market run it's own course and resulting 'booming bubbles' and what Bush did with mid tier tax cuts, lowering capital gains, and what he tried to do, but failed, in privatizing Social Security. Is it lost on people who and where Tim Geithner came from? Why the market rallied the hour his appointment was announced? Why President Obama appointed him in the first place? Why he survived the 'Turbo Tax' mini-scandal when Daschle didn't? He's a banker, he is Wall Street. He's KEY to Obama's economic recovery, just as a recovered stock market is. Yesterday Barney

Frank took a position that was entirely out of character; he started to defend the CEOS of the major banks, he has started a putsch to 'un-demonize' Wall Street in the eyes of Main Street. Stating unequivocally that it may appear that they (the banks) are being rewarded for mismanagement with TARP funds, but without the gesture all is lost. Like gunning for the doctor who removed your lung to save your life. If you want to begrudge his salary and his Porsche while his diagnosis and prognosis took you off the golf course, fine, but that's well and aside how he performs his role in your health care. If the public wants blood, wants butts, to punish Wall Street on some sort of misplaced economic Jihad, they're just cutting their own throats.

Strong economy is driven through public 'confidence', it's what gets the cash off the side lines and changing hands, and is nurtured with positive rhetoric and action from leadership, not the DAVOS Summit or charts on marginal utility and certainly not with campaign speeches dsiguised as press conferences designed to impress; "You need me because things are dark and scary". Ronald Reagan was the king of the process. He wouldn't lie about poor economic numbers, he would just ignore them in addresses and focus on the facets and facts that could lead to prosperity. Something this administration has either yet to learn or is deliberately sabotaging for reasons which I am at a loss.

Edited February 12, 2009 by Demsey

[nikki6]

Apologies Offshore and all, I did get a bit over the top there! a) Fakey does my thruppnies in and b ) I know way too many people come back to Scotland in a bag!

I'll step out of this now, and again sorry to forum and those that have to take the flak for this, re Mods and Admin (except JTB cause he is just as bad as me!! )

[jonthebhoy]

(except JTB cause he is just as bad as me!! )

Hey I resemble that remark!

But as e-debates go...this is a good un.

[Demsey]

Apologies Offshore and all, I did get a bit over the top there! a) Fakey does my thruppnies in and b ) I know way too many people come back to Scotland in a bag!

I'll step out of this now, and again sorry to forum and those that have to take the flak for this, re Mods and Admin (except JTB cause he is just as bad as me!! )

DRAT! THE HIGH ROAD? LADDIE!

I was hoping you'd get one more dig in before Offshore got back from the pub. I was going to bring out the BIG GUNS! I know I promised Ken I would not fan political flames when I registered, but desperate times require desperate riffs!

Without further ado, the BIG SCOTTISH GUNS! DUCK!!

[offshore]

(Back from the pub- Hic!)

You know Dems, I am really enjoying the discussions on economics, and the vagaries of same.

Far be it for me to stem our attempts to alter the economic history of the planet.

'Tis only when the political name calling moves to one line barbs, and economics is suddenly renamed politics, that the red mist descends.

So, ' to it lads...I'll just retain a very light pressure on the big button, and/or until the next round of bitch slapping commences.

Offshore

[RobbieG]

So, the 'concensus' is an irrational thing. Is what I drew from your post? Driven more by emotion than a 'science of an economy'?

Maybe. Maybe not. I guess from my perspective it doesn't really matter what it is or where it comes from. I was only trying to say I know from my experience that you can't fight ranging, rising, or falling markets by juicing the other side. It just never works. I make my living out of essentially following various self-fullfilling prophecy as they manifest themselves with no regrard for prediction or having any real opinion of it at all. I don't short because I think the market is going to go down. I short if it is going down. If it is ranging I don't hope for a trend or try to create one. I also don't know how far the market is going to move once I'm in a trade so I'm prepared for whatever by devoting some of the exits to short term ideas and some of the capital exiting with longer term perspective. In other words, in order to keep things smooth I can only be half right when operating at 100% efficiency if that makes any sense.

Why? Because the one thing I have learned in 15 years of studying the markets I trade (and I still study them extensively every day of my life) is that there is absolutely no reliable way to know either what is going to happen next or to what magnitude. Wall Street loves to lie to retail and do everything in their power to tell you they can - and why shouldn't they? How else will they get you to give them commish? I wouldn't know - I don't trade for commish or fees, nor do I trade retail clients money. But I'll tell you that I know the only reason I have been able to stay in the game for all these years, never go broke, and deliver remarkable smooth results from year to year - and I might add never have a serious drawdown is because I have managed to not interject my intellect into my decision making in making immediate trading decisions. But managing risk is another thing which is very intellectual and the key to the whole game. The US and its business has done a dreadful job at that and that is the real reason we are in this spot of non-consensus and fear and will remain so until the bill is paid.

I'm not off topic here in talking trading. Nor am I trying to connect the equities markets I trade to the current crisis. They are of course but that isn't the point. It is all the same force moving everything. I'm only illustrating it with trading lingo to say that intellect and piecing stuff together or trying to figure out who is responsible for what will not fix the broad issue. Nor will throwing money at the problem that is not enough and not real. What people don't understand is that what has happened is fundamentally no different than a day trader using extreme leverage to make big bets intraday, being wrong about them and getting a margin call. For those who don't know what margin is, in laymans terms you have to post security cash for each contract of a security you trade in a minimum amount in order to trade with leverage. If you lose alot of trades the amount of money in your account can drop below what you need in margin to cover the contracts traded. Before you can place more new trades you have to deposit new money or your account will be closed if your losses have eaten into the minimum margin (security deposit) required. You should never get a margin call IMO and if you do you are trading with too much risk plain and simple.

So basically what has happened here is take that day trader example and multiply it out over years - the US has traded with too much leverage and has been losing a lot of bets. Now the US getting a margin call but we don't have the cash (not really, which is why all this is such a bear). So the world is going to close our account like it was our day trader's brokerage if we don't figure out how to do it. We can't trade because our credit isn't good so we need to post up to restore faith. The situation is exactly the same in evey way which is why I say the particulars are unimportant.

But it is important for people to undertsand that this is life. Somebody has to pay in every thing or else the system breaks down. When people don't pay big bills bad things happen. Empires crumble. Things change and become different then they have been. The value of a country can go to zero just like a day trading account. You bet. You lose. You pay. And if you don't and somebody else has to pay you get cut off until you post up.

It is ugly to swallow that that is what is going on here with our banks / housing industry, etc. but that is where we are at. People want to think it can't be that simple. We are the United States man. How could this happen to the greatest power in the free world? Like fish dying on a dock they flop and squirm. It makes no sense to work it out intellectually which is what you see the talking heads doing every day. Trying to find a way around it. It is almost amusing if not so sad and dire. But you make bad bets and lose you pay or you get eliminated. But what we are willing and able to pay is not only not enough, it also isn't real money either and everyone knows that too. In my example that is like funding your margin call with a high interest credit card that got closed for late payments a year ago...

[Demsey]

(Back from the pub- Hic!)

You know Dems, I am really enjoying the discussions on economics, and the vagaries of same.

Far be it for me to stem our attempts to alter the economic history of the planet.

'Tis only when the political name calling moves to one line barbs, and economics is suddenly renamed politics, that the red mist descends.

So, ' to it lads...I'll just retain a very light pressure on the big button, and/or until the next round of [censored] slapping commences.

Offshore

Oh absolutely A. No one knows that game and it's ramifications more than I. Especially if you consider the 'lost' years of the old RWG. As I'm sure you are aware yourself, as you did throttle by from time to time, how it can escalate in the laissez-faire?

The beauty of that scenerio, well camouflaged in the vulgarity of a moment and yet reassuring to the human condition, was; that eventually the tempers would burn themselves out and 'nikki' 's recant here would have come from his own volition and good judgement not at the prompt of the Admin. Fascinating and ultimately....................a waste of spirit. Tho'.

You know how it goes; tell a free man "No" and he will certainly test the parameters, give a man free reign and he will more than likely not rise to the occaision. It was to the point on the old board that the F-bomb, back biting, and derogatory remark ultimately carried no weight whatsoever. To really get the goad of a troll, in the void of 'zero moderation' we invented counter trolling. A well crafted bag of tricks that included but not limited to tacts ; endless paragraphs that strayed so far away from the point only to drift back on course and adopt the troll's original point of view. I used to debate myself for laughs. Not even in an alter ego, just casually. It confounded rational thinking and frustrated the determined troll to fits. Hilarious!

One of my favorite ruses was to visit a hot thread well underway and lay in wait for a detractor of my POV to log on as well. You know, down at the bottom of the thread, the line of visible members 'viewing'. Then I would click the 'Reply' link and put my name in italics on the footer, the signal I was 'composing' a reply. Break for lunch or leave my desk for 30-45 minutes. All that while the troll would stick around to deliver his scathing brilliant retort. I would return, the troll would still be there, would have posted in the interim; "OH! This should be good! Come on 'Demsey' ! We're all waiting! Make it a full pound of your cr*p!" And I would simply 'log off'.

There is simply no language you can muster, in any tongue, that will show a fellow human being your total disgust and dismissal than to simply 'ignore' him and leave him standing there out in the cold. "Do not feed the troll" said Clive. It is immaculate in design, so very hard to ride.

Anyhoo, all in good fun with regard to social science experiments and wayward watch sites, but in the end, I have found, there is nothing wrong with any good thing in and with 'moderation'. Civilizations are civilizations because of 'rules' adopted certainly as the man who promised the 'wheel' acknowledged;

"You know, this would be a lot easier if you other Neanderthals would stop slinging your sh*t at me." Is what I found.

Onward!

<edit>

@ Robbie

I'm with you Robbie, in theory, and in the markets. I work, always have, will as long as I can, but have passive income, from generations past behind me. It affords some 'things', some tangeable, and some as intangeables too; a sound(er) future for the next generations and opportunities, but I do not 'rely' on it. I foster that in and from myself.

I follow the market, try to understand it from an investor's POV, but have found trying to develop or even imagine an 'edge' outside the great sway of the thing, what you allude "This is America", is chasing waterfalls. I have faith in the fiduciary responsibility of two of the nation's largest financial entities and take my cues from them. Do they care about me? Probably not. But if they care about their balance sheets, assets and ownselves? I'm along for the ride. I don't trade or manage my own portfolios. I think for the average person it is foolish, like the old saying; An attorney who represents himself in court has a fool for a client.

If America can get this far in 233 years, we can get past this. See what happens.

Edited February 13, 2009 by Demsey

[HauteHippie]

History has shown through recessions and the Depression, that the first indicator of the economic recovery is the recovering free market.

Let's take it a step further. The free market is the solution to recession and depression. The solution is never brought by politicians seeking votes, but rather by entrepreneurs seeking profits (wealth creation enriches everyone). And it is, in fact, scary how utterly clueless our latest crop of central planners appear to be. It's bad enough that they're going to take the Bush fiasco and multiply it by orders of magnitude with Geithner's $2T bank rescue plan on top of the $800B "stimulus" set to pass imminently, on top of the already spent $700B from round 1, on top of God only knows what else. But what this one-trick fraud Geithner wants to do now is once again prop up the market for asset-backed securities. Unbelievable!! News flash: the securitization of mortgages, and credit card debt, and all that other garbage paper is exactly what caused this problem! And so how anyone can go along with this plan to recreate the exact same bubble in the exact same manner is absolutely beyond me. And, besides, why would the hedge funds and foreign investors buy back in?! Especially after they hear Geithner on CNBC actually state that we need the government to supply the demand that is missing in the economy... Cue John McEnroe. Putting the repetition of epic failure and catastrophe aside... for the love of all that is sacred and holy.... did this guy even take Econ 101? I mean, to come full circle here, it is the productivity of the free market (not the government) that supplies goods which creates demand. Supply creates demand. But when you've got the government propping up companies that were too unproductive to survive on their own and should have gone bankrupt, then what you're doing is preventing economic recovery by diverting resources to companies that should have gone under, and away from new companies that could have been viable, thereby preventing business expansion. And therefore we should not be thinking of this as a rescue plan. But rather, quite the opposite.

There was a real opportunity here to slam on America's brakes as we head straight towards a cliff and steer us back on course, but without any question at all, what they're doing instead is nothing short of stepping on the gas pedal. Scary, scary stuff brewing. No two ways about it.

[Shundi]

There was a real opportunity here to slam on America's brakes as we head straight towards a cliff and steer us back on course, but without any question at all, what they're doing instead is nothing short of stepping on the gas pedal. Scary, scary stuff brewing. No two ways about it.

Chief...as usual, you are spot on!