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the S&P 500 closed at an all-time high

That's spectacular. Top 10 reasons why this peak is nothing but spit and wishes?

1. Job gains weren't enough to keep up with workforce growth, even if you believed the BS government numbers (if not, then there was a 200,000 job loss).

2. More than 100,000 real-estate agents and mortgage brokers are losing their jobs, per month, but aren't counted under any "official" metric since they can't claim unemployment since they are purely commission compensated.

3. GDP is still low and will be for Q2.

4. Debt amounts hit another high in April, packing on another few billion, approaching what many economists call the "tipping point".

5. Housing continues to slide.

6. DR Horton, Lennar, Centex, and a few others are close to breaching triggers on their warehouse lines, meaning their liquidity is about to dry up, meaning they are about to run out of money.

7. Oil is raising. Gas prices are going up. Mortgage rates are going up. Inflation is going up. Ethanol is screwing up anything related to corn, and the Fed is trapped since they can't raise or lower rates without screwing something up horribly.

8. Sub-prime is about to take another whack. Hedge funds are shorting sub-prime credit-default swap indexes in record numbers.

9. Short-interest in all major stock indexes are at all-time highs.

And the number 10 reason why this whole peak is bullcrap?


10. The whole thing is fueled by pre-downturn buy-out activity.
 
Originally posted by: LegendKiller
That's spectacular. Top 10 reasons why this peak is nothing but spit and wishes?

1. Job gains weren't enough to keep up with workforce growth, even if you believed the BS government numbers (if not, then there was a 200,000 job loss).

2. More than 100,000 real-estate agents and mortgage brokers are losing their jobs, per month, but aren't counted under any "official" metric since they can't claim unemployment since they are purely commission compensated.

3. GDP is still low and will be for Q2.

4. Debt amounts hit another high in April, packing on another few billion, approaching what many economists call the "tipping point".

5. Housing continues to slide.

6. DR Horton, Lennar, Centex, and a few others are close to breaching triggers on their warehouse lines, meaning their liquidity is about to dry up, meaning they are about to run out of money.

7. Oil is raising. Gas prices are going up. Mortgage rates are going up. Inflation is going up. Ethanol is screwing up anything related to corn, and the Fed is trapped since they can't raise or lower rates without screwing something up horribly.

8. Sub-prime is about to take another whack. Hedge funds are shorting sub-prime credit-default swap indexes in record numbers.

9. Short-interest in all major stock indexes are at all-time highs.

And the number 10 reason why this whole peak is bullcrap?


10. The whole thing is fueled by pre-downturn buy-out activity.
Click to expand...
It's a lot more legitimate than the bubble of 2000.

 
Originally posted by: Random Variable
Click to expand...
It's a lot more legitimate than the bubble of 2000.



Is it? You have 6 years of massive asset appreciation, much of it well outside the mean growth rates for 100 years prior. The massive consumption of the resulting equity-cash out is nothing more than debt filled self-destruction. The euphoria of the engorgement of the consumers and the profits reaped by the corporations are nothing more than credit card spending, which demands a repayment at some point.

Right?

So when will it be repaid? All debt is is moving wealth from the future to the present, so won't future wealth be impacted by present consumption?

It's like this. If I take my wealth over the next 10 years, and say I will make $2 annually, then I make $20 in 10 years.

However, if I "borrow" against that future wealth and spend $4 over the next 3 years, then over the next 7 I only have $1.14 to spend each year, cutting my "growth" by 71.5%.

You have, in effect, accomplished nothing. In fact, you have hurt yourself more, since that now growth has to be financed. Meaning you have to pay interest. That means that in order to consume 2x as much as you should have, you also have to pay 5-20% more (depending on your financing)..ANNUALLY.

I find it so damn amusing that people think that wealth is created out of thin air and economies can be driven by debt in a never-ending game. You are robbing the piggy bank to consume today, but peopel think you'll never have to pay back.

We have robbed the bank for all it's worth, if you can't see that then good luck with your equities, because I cashed out last month. Sure, I missed out on some gains, but when the downturn comes, I won't be stuck.
 
My question is...

The people in charge of large corporations, the central banks, the Fed, all have to be someone competent and knowledgeable about economics. Yeah there are a lot of idiots, and while i don't know any of these people I have to assume that the majority of them have some kind of brains when it comes to the money. Why don't they try to change things, why doesn't anyone do something?
 
Originally posted by: RadioHead84
My question is...

The people in charge of large corporations, the central banks, the Fed, all have to be someone competent and knowledgeable about economics. Yeah there are a lot of idiots, and while i don't know any of these people I have to assume that the majority of them have some kind of brains when it comes to the money. Why don't they try to change things, why doesn't anyone do something?
Click to expand...

Because it's very profitable for a lucky few individuals to borrow and spend.

We're going to have to pay all this back though SOMEDAY though.

http://www.usatoday.com/printedition/news/20070529/1a_lede29.art.htm

 
Originally posted by: RadioHead84
My question is...

The people in charge of large corporations, the central banks, the Fed, all have to be someone competent and knowledgeable about economics. Yeah there are a lot of idiots, and while i don't know any of these people I have to assume that the majority of them have some kind of brains when it comes to the money. Why don't they try to change things, why doesn't anyone do something?
Click to expand...


How can they change people? Irrationality is built into the psychology of every human being. Some people try to temper it, some may go a bit too far (me sometimes) to be moderated. But in the end, they just can't change the mentality of people.

Then you get the idea that you don't want to quash their hopes and dreams. Imagine if Bush did the right thing 3 years ago and said "Hey look people, massive mortgages you can't pay for are bad".

1. He wouldn't have been re-elected since he's a "downer".

2. People would have over-reacted and the economy would tank.

3. Growth wouldn't be so good and his legacy would have been hurt. After all, he's only concerned about his watch, not the next guys.

I think everybody in High School should read two books.

1. Irrational Exuberance.

2. Beyond Greed and Fear.

Then I think they should have to re-read them in college. Perhaps then you start to change the psychology of investors.
 
Err why can't people understand that we can't have everything? Can't a president say "We have this much money we can budget for, we can't promise everything and pay with it with nothing"

 
Originally posted by: LegendKiller
Originally posted by: Random Variable
Click to expand...
It's a lot more legitimate than the bubble of 2000.



Is it? You have 6 years of massive asset appreciation, much of it well outside the mean growth rates for 100 years prior. The massive consumption of the resulting equity-cash out is nothing more than debt filled self-destruction. The euphoria of the engorgement of the consumers and the profits reaped by the corporations are nothing more than credit card spending, which demands a repayment at some point.

Right?

So when will it be repaid? All debt is is moving wealth from the future to the present, so won't future wealth be impacted by present consumption?

It's like this. If I take my wealth over the next 10 years, and say I will make $2 annually, then I make $20 in 10 years.

However, if I "borrow" against that future wealth and spend $4 over the next 3 years, then over the next 7 I only have $1.14 to spend each year, cutting my "growth" by 71.5%.

You have, in effect, accomplished nothing. In fact, you have hurt yourself more, since that now growth has to be financed. Meaning you have to pay interest. That means that in order to consume 2x as much as you should have, you also have to pay 5-20% more (depending on your financing)..ANNUALLY.

I find it so damn amusing that people think that wealth is created out of thin air and economies can be driven by debt in a never-ending game. You are robbing the piggy bank to consume today, but peopel think you'll never have to pay back.

We have robbed the bank for all it's worth, if you can't see that then good luck with your equities, because I cashed out last month. Sure, I missed out on some gains, but when the downturn comes, I won't be stuck.
Click to expand...

There is a theory that we can outearn our debt through economic growth. So the government (the current one especially) wants to print money and cut taxes. While at the same time, the consumer buys into the theory and maxes out their cards, thinking the wages will keep increasing and the 401K will take care of retirement. So they don't save anything. The average CC debt is 8k and people have no emergency fund. When they retire, where is the health care coverage going to come from? There is going to be a high level of poverty in older generation and no government money to make up for it.
 
Originally posted by: RadioHead84
Err why can't people understand that we can't have everything? Can't a president say "We have this much money we can budget for, we can't promise everything and pay with it with nothing"
Click to expand...

Because presidents want to get re-elected and leave a legacy? I think legendkiller explained it well. When Bush cuts taxes but raises spending, of course it's going to make the economy run great for the short term, but eventually, we're going to have to pay all this back and whoever the poor schmuck is that's president is going to be stuck explaining to the voters why the economy is so bad and why we'll have to tighten the belt and pay all the loans back.
 
Originally posted by: LegendKiller
Originally posted by: Random Variable
Click to expand...
It's a lot more legitimate than the bubble of 2000.



Is it? You have 6 years of massive asset appreciation, much of it well outside the mean growth rates for 100 years prior. The massive consumption of the resulting equity-cash out is nothing more than debt filled self-destruction. The euphoria of the engorgement of the consumers and the profits reaped by the corporations are nothing more than credit card spending, which demands a repayment at some point.

Right?

So when will it be repaid? All debt is is moving wealth from the future to the present, so won't future wealth be impacted by present consumption?

It's like this. If I take my wealth over the next 10 years, and say I will make $2 annually, then I make $20 in 10 years.

However, if I "borrow" against that future wealth and spend $4 over the next 3 years, then over the next 7 I only have $1.14 to spend each year, cutting my "growth" by 71.5%.

You have, in effect, accomplished nothing. In fact, you have hurt yourself more, since that now growth has to be financed. Meaning you have to pay interest. That means that in order to consume 2x as much as you should have, you also have to pay 5-20% more (depending on your financing)..ANNUALLY.

I find it so damn amusing that people think that wealth is created out of thin air and economies can be driven by debt in a never-ending game. You are robbing the piggy bank to consume today, but peopel think you'll never have to pay back.

We have robbed the bank for all it's worth, if you can't see that then good luck with your equities, because I cashed out last month. Sure, I missed out on some gains, but when the downturn comes, I won't be stuck.
Click to expand...

Very interested, as for many, it's hard to cash out of your 401k and IRAs but these are long term investments and if the market does goes down, it will eventually bounce back.

 
Originally posted by: Cal166
Originally posted by: LegendKiller
Originally posted by: Random Variable
Click to expand...
It's a lot more legitimate than the bubble of 2000.



Is it? You have 6 years of massive asset appreciation, much of it well outside the mean growth rates for 100 years prior. The massive consumption of the resulting equity-cash out is nothing more than debt filled self-destruction. The euphoria of the engorgement of the consumers and the profits reaped by the corporations are nothing more than credit card spending, which demands a repayment at some point.

Right?

So when will it be repaid? All debt is is moving wealth from the future to the present, so won't future wealth be impacted by present consumption?

It's like this. If I take my wealth over the next 10 years, and say I will make $2 annually, then I make $20 in 10 years.

However, if I "borrow" against that future wealth and spend $4 over the next 3 years, then over the next 7 I only have $1.14 to spend each year, cutting my "growth" by 71.5%.

You have, in effect, accomplished nothing. In fact, you have hurt yourself more, since that now growth has to be financed. Meaning you have to pay interest. That means that in order to consume 2x as much as you should have, you also have to pay 5-20% more (depending on your financing)..ANNUALLY.

I find it so damn amusing that people think that wealth is created out of thin air and economies can be driven by debt in a never-ending game. You are robbing the piggy bank to consume today, but peopel think you'll never have to pay back.

We have robbed the bank for all it's worth, if you can't see that then good luck with your equities, because I cashed out last month. Sure, I missed out on some gains, but when the downturn comes, I won't be stuck.
Click to expand...

Very interested, as for many, it's hard to cash out of your 401k and IRAs but these are long term investments and if the market does goes down, it will eventually bounce back.
Click to expand...


Some programs allow the flexibility, others don't. It'll certainly bounce back.


 
Originally posted by: txrandom
It's Bush's fault!
Click to expand...

I've said the same about Clinton pre-i-net bust. While the president is largely a figurehead, in relation to the economy, moderating language never hurts. However, most politicians don't want to be seen as somebody who rains on the parade. They're too afraid of ruining it (and their legacy), so they keep up the "Rah rahs" to keep the economy chugging along.

Just look at the Fed. They are f'd when it comes to statements. Say one thing wrong and it leads to a market crash.
 
Originally posted by: LegendKiller

We have robbed the bank for all it's worth, if you can't see that then good luck with your equities, because I cashed out last month. Sure, I missed out on some gains, but when the downturn comes, I won't be stuck.
Click to expand...

So....where are you gonna put it? in bonds? money market?
 
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