The strongest economy in the world

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Originally Posted by sabang

I think it is the international community that would squeal a lot more than the electorate Panda. Jobs are the big thing now. Anyway, tariffs are something to be resorted too- the 'threat' of tariffs is probably more meaningful short term. Plus there are 'procedural' rather than formal tariff measures that should not be underestimated- the Frogs are the past masters of that.

Truth be told, the 'Champion of free trade' USA is, selectively, a whole lot more protectionist than it makes out to be. The worlds largest per capita consumer of sugar pays double the world price for it, because of Protectionism. No overseas ownership of media or airlines, highly nationalistic Defence procurement policies etc, etc...

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I personally dont see tariffs as a solution. Tariffs would work only to a degree. Tit for tat restrictions result in competing countries, with the end result that uncompetitive industries end up being subsidized by the consumer for domestic political reasons.

What really needs to be done to get world trade back on a level playing field and to restore USAs economy is to replace the $US as the worlds default trading currency with something more soundly based.

Lots of ideas are being kicked around at the moment. A return to the gold standard has been ruled out as there just isn't enough of the stuff to go around these days and an increase to 20 or $30 thousand and ounce (or perhaps a lot more), would be inequitable to many countries who sold off their gold reserves in exchange for $US reserves. The Euro has been proposed as a contender for the crown. But same old problems with using paper money fiat currency as occurred with USA. Then there's the concept of using a basket of major currencies. Again, open to manipulation if one country wishes to hold its currency value down in order to gain a competitive edge.

I believe we should get back to the basics of what wealth actually is rather than playing with funny money fiat currencies. True wealth is not paper money but actual production of goods and services that people can use to enhance their lives. We already have very good ways of measuring that, --- its called GDP. But how to value GDP if governments are going to squander the countries profitable labour on things such as wars or irresponsible social policies. Well, we already have a good way of measuring that too. Its called the government deficit or surplus. But what if a country has a good growth rate of GDP but a negative trade balance due to domestic demand? Well, that can quite easily figured into the equation too. It aint rocket science. If we can put a man on the moon back in '68, we can surely work out a formula to accurately gauge the value of a countries productive capacity in 2010.

Such a system wouldn't be perfect as countries would try to cheat the system for their own benefit as they always have done and always will do. But it would be impossible for any one nation to rort the system to the same extent as has happened under the $US hegemony. China and USA, though at opposite ends of the scale, being prime examples of how the current experiment of the past 39 years can be exploited.

Its something that has got to happen in some shape or form and surely will happen, -- probably within the next decade. Its going to involve a lot of redistribution of wealth among the worlds countries. And a devaluation of the $US would be the best thing that could happen to the people of USA.

US the strongest economy, eh? Heh...been watching Bloomberg a lot lately (that Susan Li kinda gives me wood) and they reported Singapore is now the fastest growing economy in the world. Too bad Obama & his Democrat cronies have fucked-up America this bad:

https://teakdoor.com/images/smilies1/You_Rock_Emoticon.gif

GRAPH: Democrats' Job Agenda Revealed - Blog - GOP.gov

We all know how smart B. Hussien Obama is so the question is, why is he flying in the face of reality? 70% of Economists want to keep the Bush Tax Cuts. Only explaination is he really does want to bring America to its knees...

70% of Economists Favor Extension of Bush Tax Cuts to Those Making >250k/Year

Wall Street Journal, Economists Want Policy Makers to Back Off Now: Economists are getting more pessimistic about the strength of the U.S. recovery, but they don't think policy makers should do anything more to support it, according to the latest Wall Street Journal forecasting survey.

TaxProf Blog: 70% of Economists Favor Extension of Bush Tax Cuts to Those Making >250k/Year

A mere cut n paste, but I can't say it any better than Robert Reich, the former US Secretary of Labor:-

What to do? First, don't listen to Wall Street and the Right.
Forget the Neo-Hoover deficit hawks who say we have to cut government spending and trim upcoming deficits. We didn't get into this mess and aren't remaining in it because of budget deficits. In fact, the only way to reduce long-term deficits is to restore jobs and growth so government revenues rise and expenses like unemployment insurance drop.
Ignore the government haters who say we have to void or delay upcoming regulations of Wall Street and big business. We got here because Wall Street went bonkers, the housing bubble burst, and the middle class couldn't continue to spend because their health-care bills were soaring and their pay was stagnating. New regulations of Wall Street and big business are necessary to avoid a repeat.
And don't believe the supply-siders who say we have to extend the Bush tax cuts for the wealthy. Because the wealthy save rather than spend most of their incomes, extending their tax cut won't do squat. And restoring their marginal tax rate to what it was under Bill Clinton won't harm the economy. The Clinton years had the best sustained economy in American history.
The central problem is lack of demand -- and that's what has to be tackled.
Three of the four sources of demand have stopped working. (1) Consumers can't and won't buy because they're still under a huge debt load, can't get more credit, are afraid of losing their jobs (or already have), depend on two wage earners, at least one of whom is working part-time and pulling in less, or have to save. (2) Businesses won't invest and spend on creating more jobs if they don't see consumers willing to buy more. (3) Exports are stalled because the dollar is so high they cost too much, much of the rest of the world is still struggling with recession, and American firms can make things for sale abroad more cheaply abroad.
That leaves only one remaining source of demand -- government. We need a giant jobs program to hire people and put money in their pockets that they'll spend and thereby create more jobs.
Robert Reich: Forget a Double-Dip, We're Still in One Long Big Dipper


The absolute worst thing the Obama admin could do is listen to the discredited voodoo economics being pushed by the GOP.

Extend tax cuts for the rich booner? Nonsense- the Bush tax cuts had absolutely no Multiplier/ stimulus effect on the US economy at all, and helped land the US government in the budgetary hole it faces now. It would be incredibly irresponsible to extend them- some 'Deficit hawk' you are. :mid:

In the unlikely event this does happen, my advice would be to move every ounce of your currency out of USD.

Keeping the tax cuts will do nothing to stimulate the economy. People will either save the money or pay down debt. The consumer has got a huge hangover from the debt they amassed through phoney financing schemes during the Bush years. Get used to high unemployment and slow growth.

Here is a piece from Poul Jorion, I don't know if he is known as a doomsday prophet but his outlook on the US and by default then the World economy is quite bleak.

Interesting interview in a danish newspaper with the man who foresaw the latest crisis:
Google translation so not perfect :

"The crisis is getting worse and worse
In 2004, predicted he cracked on the U.S. housing market, which has drawn deep into the global economy. And now predicts Paul Jorion, french investment expert and anthropologist, to the financial crisis is far from being driven over. He believes we should adopt an international financial constitution. As long as you let banks and investment firms regulate themselves, the scams of the day working in the financial sector.

Tip of the iceberg Central Bank directors and financial advisors in the Western world are currently busy reassuring the public. They preach at regular intervals to the bottom now reached crisis by turning and that we will soon go better days to come.

"The figures confirm not the prevailing pessimism," it sounded so recently the Director of the European Central Bank, Jean-Claude Trichet.

But in reality, there is silence before the storm - or rather before the hurricane. How it sounds extremely bleak prognosis from Paul Jorion, anthropologist and sociologist specializing in economics, who for years has worked as an investment bank man in the U.S..

"There is no recovery time being. It might be, it looks as if the banks and stock markets are feeling better. But it will not last, "he said.

And when Paul Jorion speaking, there is reason to listen.

For he is one of the few financial analysts who predicted the so-called subprime crisis on the U.S. housing market. Already in 2004 described Paul Jorion in the book 'La crises you capital Semitism américain' so step by step how the U.S. and then the global economy would be shaken to its foundations when risky hypotekboliglån - so-called subprime loans - began to cave in. And that happened in 2007 when housing prices in the U.S. fell, while interest rates rose. This led to a dramatic growth in the number of foreclosures and big losses for investors.


Massacre in wait

According to Paul Jorion is delayed two bombs, which most overlook when they looks ahead:

Firstly States own debt, which they must borrow endless money to cover the action. This year alone the United States from 1700 to borrow billions of dollars, but also France, Spain and Japan and Britain to borrow huge sums.

"There is not enough money in the loan market because of the crisis and therefore it would be the weakest states must pay the highest interest rate, which would weaken them further and make the world economy even more fragile," says Paul Jorions assessment.

Secondly, it seems - on top of the international credit problems - the bleak outlook for the commercial part of the U.S. housing market: offices and hotels. Everything is built on credit loan and a great many of these loans to be renewed in 2012.

'But who will borrow to finance these buildings whose value has collapsed because of the crisis? It will be a pure massacre, "said Paul Jorion.

A massacre whose repercussions will spread like ripples across the globe - not least a massacre, according to Jorion will not be back for subprime krise0n.

"Our economies are based on credit, and as the credit system develops, they become more and more fragile. Why? Because a owe money to b, who owe money to c, which in turn owes to d. Completely banal. The more complex debt network becomes, the more interdependent it becomes. And if one suddenly plunges into the abyss, it can pull all the others were in decline because they are suddenly not able to repay their debts and bonds, "explains Paul Jorion."

"But banks have not learned anything of crisis? No, says Paul Jorion.

"And why should they basically too? Banks are commercial enterprises, and their only rational goal is to make money. The problem is that basically lets them operate within the same frame as before. There has since beginning of the crisis been a single firm directive and there is no hard steps taken to curb excesses in the leading U.S. Financial District Wall Street. Yet one wonders that the banks are back to business as usual 'and back pay huge bonuses, while people go bankrupt and struggling to stay afloat. It is a huge delusion to think that you can just tell people that they must change their behavior and that they do it. "


Systematically Scams
According to Paul Jorion is the biggest problem that the whole system in its current form based on what he calls "everyday småsvindel '

"We saw in the Enron scandal in 2001 when one of America's biggest companies, energy company Enron, over just a few weeks went bankrupt because of massive fraud and accounting fraud. The same happened on Wall Street's fourth largest financial group Lehman Brothers, and who dare now say that it was not also what happened to investment bank Bear Stearns, "says Paul Jorion.

Every time reveals investigators overly creative accounting, and every time defending the guilty with the argument that others would only step in if not they themselves did, and it would therefore make them an unfair competitive situation to the wider financial market if they should have followed the rules.

"It is so firmly ingrained an argument in the financial world that even the big audit firms assist banks and firms in the fraud," said Paul Jorion.

Energy company Enron's accounting was so favorable endorsement of the global consulting firm Arthur Andersen. In 2005 the audit giant KPMG a prosecution for selling packaged solutions to companies that could evade taxes by transferring financial loss to companies that were created solely for the purpose of collecting others' losses. And in the case of Greece, which in late 2009 appeared to be on the brink of national bankruptcy, it was investment banks Goldman Sachs and JP Morgan, who helped the Greek state to makeup its records, so you could not see the gaping holes.

"Banks continue to think the same way. Since the U.S. financial authorities, for example, tightened auditing rules in 2000, reduced Lehman Brothers only an expert team that would find the best loopholes and identify how best and most effective way to circumvent the rules. We can hardly call to respect spirit of the law, "Sugar Paul Jorion.

It is all of this basic economic logic to be changed, says Paul Jorion. Otherwise, it will always be taxpayers, who ultimately will pay.

The solution is not more complicated rules, directives and bulky Coll. The more complex the rules are, the easier it will be - surprisingly - to the international financial firms to find helpful loopholes:

"Take for example the comprehensive Financial Overhaul Plan (to be tighter regulation of the entire banking and credit sector, ed.), Which President Obama people knitting together. A bulky document of 767 pages that contains as many loopholes and opportunities for lawyers centers and alternative interpretations as there are sides. "

The text will never be able to rein in the runaway capitalism or contain the major financial firms constant excesses, says Paul Jorion."

"Close all loopholes

Instead there is a need for simplicity. Texts strengths lie in their clear and unambiguous. And since the beginning of the crisis has Paul Jorion thus advocated for the adoption of an international economic and financial constitution.

"There is a need for texts that you can not run from. Not unlike the 10 bids. It should be quite a few very simple principles. For example, 'It is forbidden to issue stock options'. A sentence of six words. Simple and impossible to misunderstand or deliberately misinterpreted. No loopholes. Law spirit and form are one and the same case, "he explains.

Another principle could be a prohibition against speculating in price fluctuations.

"It was a tool that was originally created to ensure people who made real and lasting investments in industrial production, import or export. But today it is a speculative way that creates volatility in the markets, which are pumped up artificially. Like locking means that could be used much better elsewhere for investment in production equipment, "believes Paul Jorion.

If we forbade the offering to investors who only speculate short-term price fluctuations in and with a quick profit, would, according Jorions calculations reduce the financial markets mere volume of the order of 80 percent.

"Price Speculation is simply the surest recipe for how to create systemic instability. This is about to speculate on others' losses, "he explains.

The question that remains is whether anybody could agree to make such an international document of international law applicable.

"The economic and financial fields have so far the only area of human coexistence, which escapes all external, international control. But why should we not be able to create such a constitution? We were created because after all, a universal declaration of human rights in his time. And we have an international criminal court. So why not an international economic court on the model, "author Paul Jorion.

He estimates that the time is ripe soon.

"We find ourselves today in the year 1788," he says enigmatically.

'In 1788 we did not know that the revolution of 1789 would come. Similarly, there is currently a feeling that things are going badly. But very few can put into words what is wrong. And nobody knows what happens tomorrow. It is rare that there is such a serious crisis in human history. This is not just a crisis but a definite turning point. "

9th August 2010 / No 25

Please don't put to much weight on the website, i saw the piece in the Danish news and just googled for a translation and this place is where i found one.

New economic crisis ahead. Turning point, page 1

Jeffrey Sachs was also interviewed by Fareed Zakaria last night and the podcast should be available. He makes a lot of sense to me.


Time to plan for post-Keynesian era

http://www.ft.com/cms/s/0/e7909286-726b-11df-9f82-00144feabdc0.html

By Jeffrey Sachs
Published: June 7 2010 22:22 | Last updated: June 7 2010 22:22

Mainstream Keynesian economics is facing its last hurrah. The global fiscal stimulus championed last year by the Obama administration is coming undone, repudiated by the same Group of 20 that endorsed it last year. Now, against a backdrop of a widening sovereign debt crisis, we need to abandon short-term thinking in favour of the long-term investments needed for sustained recovery.
Keynesian stimulus was premised on four dubious propositions: that it was needed to prevent a global depression; that a short-run fiscal boost would jump-start the economy; that “shovel-ready projects” could combine short-term cyclical and long-term structural agendas; and, last, that the rapid rise of public debt occasioned by stimulus need not be a concern. That these ideas were so widely accepted was a testament to the perennial political attractiveness of tax cuts and spending increases.

In fact, the ubiquitous references last year to the Great Depression were glib; the policymakers had panicked. Adroit central banking could and would prevent depression. The hastily assembled stimulus packages were a throwback to naive Keynesianism. The relevant fact was that the US, UK, Ireland, Spain, Greece and others had over-borrowed for a decade, so a decline in consumption after 2007 was not an anomaly to be fought but an adjustment to be accepted.
Certain counter-cyclical spending is vital on social grounds. But stimulus measures such as temporary tax cuts for households or car scrappage schemes were dispiriting wastes of scarce time and money. They reflected a hope that a temporary fiscal bridge would carry us back to consumption and housing-led growth – a dubious proposition since the old “normal” had been financially unsustainable.
The talk of a green recovery, in which the fall in consumer spending would be offset by investments in sustainable energy, made sense and still does. Yet it was quickly undermined by the politicians’ insistence on “shovel-ready” projects. The shift to sustainable energy systems is a vital but long-term task. It could never be a short-term jobs programme. Maybe in China there are shovel-ready projects of sufficient scale, but not in the US.
Taking office in January 2009, President Barack Obama inherited the largest peacetime budget deficit in US history. By increasing it further, he made it his rather than his predecessor’s. He and his advisers ignored one of the key insights of modern macroeconomics: that the result of fiscal policy depends not only on current taxes and spending but also on their expected trajectories in the future.
The US was not in a credible position to raise an already enormous deficit “temporarily” because the prospect for future deficit cutting was and remains extremely clouded. America has absolutely no consensus on how to restore budget balance, as it is trapped between a federal government that provides too few public investments and services and a public that is almost maniacal in its opposition to tax rises. One cannot build a credible long-term fiscal policy by starting off in the wrong direction, with larger rather than smaller deficits.
Now we face a world economy with weak aggregate demand in the US and Europe, bulging budget deficits, sovereign debt downgrading and consumers unwilling to borrow. Governments are fighting for market credibility via draconian cuts in spending. This too is the wrong approach. We should avoid a simplistic austerity to follow the simplistic stimulus of last year. Here are some suggested guidelines.
First, governments should work within a medium-term budget framework of five years, and within a decade-long strategy on economic transformation. Deficit cutting should start now, not later, to achieve manageable debt-to-GDP ratios before 2015.
Second, governments should explain, and the public should learn, that there is little that economic policy can do to create high-quality jobs in the short term. Good jobs result from good education, cutting-edge technology, reliable infrastructure and adequate outlays of private capital, and thus are the outcome of years of sustained public and private investments. Governments need actively to promote post-secondary education.
Third, governments must of course also ensure social safety nets: income support for the poor, universal access to basic healthcare and education, a scaling up of job training programmes and promotion of higher education.
Fourth, governments should steer their economies towards needed long-term structural transformation. External-deficit countries such as the US and UK will need to promote exports over the next few years, while all countries must promote clean energy and new transport infrastructure.
Fifth, governments and the public should insist that the rich pay more in income and wealth taxes – indeed, a lot more. The upward re-distribution of the past 25 years has made our economies into extravagant playgrounds for the super-wealthy. Politicians of both the mainstream left and right in the US and UK have fawned over those who pay their campaign bills in return for low taxation. Even playgrounds should collect tolls – when it is billionaires in the sandpit.
We need, in sum, to reset our macroeconomic timetables. There are no short-term miracles, only the threat of more bubbles if we pursue economic illusions. To rebuild our economies, the watchword must be investment rather than stimulus.
The writer is director of The Earth Institute at Columbia University

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Originally Posted by sabang

A mere cut n paste, but I can't say it any better than Robert Reich, the former US Secretary of Labor:-

What to do? First, don't listen to Wall Street and the Right.
Forget the Neo-Hoover deficit hawks who say we have to cut government spending and trim upcoming deficits. We didn't get into this mess and aren't remaining in it because of budget deficits. In fact, the only way to reduce long-term deficits is to restore jobs and growth so government revenues rise and expenses like unemployment insurance drop.
Ignore the government haters who say we have to void or delay upcoming regulations of Wall Street and big business. We got here because Wall Street went bonkers, the housing bubble burst, and the middle class couldn't continue to spend because their health-care bills were soaring and their pay was stagnating. New regulations of Wall Street and big business are necessary to avoid a repeat.
And don't believe the supply-siders who say we have to extend the Bush tax cuts for the wealthy. Because the wealthy save rather than spend most of their incomes, extending their tax cut won't do squat. And restoring their marginal tax rate to what it was under Bill Clinton won't harm the economy. The Clinton years had the best sustained economy in American history.
The central problem is lack of demand -- and that's what has to be tackled.
Three of the four sources of demand have stopped working. (1) Consumers can't and won't buy because they're still under a huge debt load, can't get more credit, are afraid of losing their jobs (or already have), depend on two wage earners, at least one of whom is working part-time and pulling in less, or have to save. (2) Businesses won't invest and spend on creating more jobs if they don't see consumers willing to buy more. (3) Exports are stalled because the dollar is so high they cost too much, much of the rest of the world is still struggling with recession, and American firms can make things for sale abroad more cheaply abroad.
That leaves only one remaining source of demand -- government. We need a giant jobs program to hire people and put money in their pockets that they'll spend and thereby create more jobs.
Robert Reich: Forget a Double-Dip, We're Still in One Long Big Dipper


The absolute worst thing the Obama admin could do is listen to the discredited voodoo economics being pushed by the GOP.

Extend tax cuts for the rich booner? Nonsense- the Bush tax cuts had absolutely no Multiplier/ stimulus effect on the US economy at all, and helped land the US government in the budgetary hole it faces now. It would be incredibly irresponsible to extend them- some 'Deficit hawk' you are. :mid:

In the unlikely event this does happen, my advice would be to move every ounce of your currency out of USD.

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Its the chicken and the egg argument again. Which comes first? -- Hand money to the banks so they can lend to business and create jobs, which will in turn give consumers more money (and thirst for credit) to support business, and therefore more jobs etc, etc...? Or, create government funded jobs building bridges and railroads so that the workers will have more money to spend? Or maybe give a tax break to the wealthy so they have more to invest in business?

The bottom line is that most every day consumer goods made in America, like TVs and shoes, are just too expensive for consumers anywhere in the world when quality products from other countries are cheaper. And the reason for that is not excessively high wages for Americans or Unions demanding excessive benefits, -- its simply that the $US is way overvalued when it comes to trading their goods and services with other countries. The high price of the $US is killing US production. Its pushed the US into a negative trade deficit thats sapping its wealth and shipping jobs overseas. Prior to 1971 when Nixon completely abandoned the gold standard link to the value of the $US, USA was, for many decades, a nett exporter and the worlds powerhouse of production.

The value of the $US has been gradually slipping on the world stage for years, but not nearly fast enough to bring the $US back into a state where stuff produced at home with American labour would be competitive either on the world market AND the domestic US market.

And just why is this so? Well, simply because the $US is the worlds supreme currency. The worlds default trading currency. The $US is the worlds store of wealth just as gold used to be. Its called the $US hegemony. And its the only the reason why the US government has been able to go into ever increasing debt without the same market price adjustment on their currency that would occur for any other country. The temptation to exploit this privileged economic position has just been too much for US government to resist, and the people applauded it as it seemed to provide them with cheaper imported goods and increase their spending power.

Now the game is all but up. Just 39 years of this experiment in fiat money hegemony and USA is not only broke and in debt up to its ears, but it has destroyed the productive capacity of US domestic business and created massive unemployment.

The true wealth of a nation can not be created at the printing press in paper money. (Not for long anyway. Less than 40 years in USAs case). True wealth is created by producing things that people need and want to buy at a competitive price.

What a lot of kebab here. The US govt has to stop its obama spending spree, lower taxes for everyone, kill obamacare, which will raise costs and reduce service, reduce regulations and finally get the govt out of the marketplace. The resultant uncertainty obama and the libbie House has created is keeping private biz from investing or hiring, and they have almost $2 trillion in reserves & assets just sitting on their books. Fin regs -- what a laugh. Many local banks are folding every month (lending short, borrowing long never works) and the big banks just raised user fees to compensate for possible losses. Who loses? The consumer.
obama is killing biz, just like he's done to further damage the Gulf's state economies with his stupid moratorium on drilling. He has no clue, his ivory tower advisors who have never had a biz or made payroll don't have a clue, and all his libbie party wants to do is borrow more and print more money to give people more benefits.
Fire them.

^ But over the forty or so years since Reagan, it is the Republican administrations that have successively landed the US in this mess. One surely has to learn from their discredited, and ultimately disastrous, economic assumptions.

Keynesianism/ stimulating demand is not a long term economic management formula at all, but in several cases- such as the great Depression, and Thaksin's policies here in Thailand, and more recently in China, it has been very sucessful to get a stagnant economy moving again. Then the government withdraws, because even a 'pure' Keynesian does not want too much government participation in the economy- he just realises that as the single largest economic player, and the ultimate controller of monetary and fiscal policy, it can have a major short term effect on employment, investment and business confidence.

Like it or not, we're all Keynesians now anyway- it was only government action that stopped the world financial system from collapse. Not saying 'thankyou' won't change that fact. And Germany is now showing signs of powering out of it's slump while the US stagnates- they were not afraid of a bit more government action, and it has brought tangible results. Ditto China (although they have much more money).

Strict Monetarist policies will ensure the US will remain in a Japanese style slump for the remainder of this decade, at best. Politically, it will lead to the GOP quite likely winning the next election too, which if their rhetoric is to be believed would be an utmost disaster for the US, in fact the nail in the coffin of it's world economic primacy imo. Either way, I have no USD and certainly have no intention of buying them- I might well even punt on a short if they seriously look like extending the tax cuts and ballooning the Deficit to no effect.

So what do you think Sab. of employing the measures under here that P. Jorion proposes. is this type of financial speculation beneficial to society as a whole or a liability as Jorion seems to think ?

"There is a need for texts that you can not run from. Not unlike the 10 bids. It should be quite a few very simple principles. For example, 'It is forbidden to issue stock options'. A sentence of six words. Simple and impossible to misunderstand or deliberately misinterpreted. No loopholes. Law spirit and form are one and the same case, "he explains.

Another principle could be a prohibition against speculating in price fluctuations.

"It was a tool that was originally created to ensure people who made real and lasting investments in industrial production, import or export. But today it is a speculative way that creates volatility in the markets, which are pumped up artificially. Like locking means that could be used much better elsewhere for investment in production equipment, "believes Paul Jorion.

If we forbade the offering to investors who only speculate short-term price fluctuations in and with a quick profit, would, according Jorions calculations reduce the financial markets mere volume of the order of 80 percent.

"Price Speculation is simply the surest recipe for how to create systemic instability. This is about to speculate on others' losses, "he explains.

SB, the prob is that obama's "policies" are long-term sucking machines. How about the early 1920s? Post war? Reagan's policies were excellent until Clinton tagged on his coat-tails and feked it up. Sure, things were fine in Clinton's terms coz the economy was still humming along from Reagan. What about the tech crash in 2000-01? Who can we blame that on? Reagan and Bush? The libbies know nothing about biz and their biggest prob is they don't get big biz folks on their advisor teams. They just want to spend that taxpayer cash, dole out benefits so all the lazy welfare folks vote for them, pretend they are altruistic and caring, when in fact, they are the opposite. Hey, almost 500,000 NEW folks made unemployment claims last week. FO. People want jobs. Keynesian? Sure, obama has already forked over almost $2 Tril in Chinese-funded money to "stimulate" the economy. Well, what's happening? Nada. It's all obama and libbie BS. obama has spent more in 18 months than Bush did in eight years.
America has always been a go-getter economy. Small govt. You fek up, you lose and start over. That's what makes the country great. NOT WELFARE.

Aren't all investors speculators? I mean they wouldn't be investing if they didnt think they could turn a profit.

I guess it only becomes a problem when such large investors in a particular commodity have the ability to create a shortage of supply and thus force the price up artificially. Oil went from $140 to $40 only a couple of years ago. Surely as many speculators got burnt as those who made a killing? Now its back to $75 as the speculators are pretty much standing back and waiting to see which way supply and demand will go.

Now, hoarding of supply to cut supply and increase prices is a different matter.
Saudi Arabia turns up or turns down supply to keep supply and price of oil stable (and to stop an invasion by USA :-). All developed countries have strategic oil reserves to overcome shortages, even though it may be stored in tanks rather than in the ground.

The thing that forced up the oil price back in what was it? 2007? was not so much hoarding physical oil but "futures trading". That is investors were bidding on oil that had not yet been produced and selling this non existent oil as the price went up.

Maybe the regulators need to look at this futures trading in all sorts of stuff from food to fuel if they want to stop speculation?

^ Pffft. The govt invested in a bunch of mortgage-backed junk and knew nothing about it. Lost and feked the market. The govt always screws up -- how's Fannie and Freddie doing? Lost money again and had to get bailed out AGAIN.

Jet and Booners fail to see that USA has no other option than to go deeper into debt until the $US crashes and they pay back debt at greatly reduced exchange rates. Its the only way they can get out of the hole and would be happening under a Republican government also. USA is the worlds sub-prime borrower/consumer. Why be frugal when you can pay back the debt in virtually worthless $USs later on?

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Originally Posted by Jet Gorgon

^ Pffft. The govt invested in a bunch of mortgage-backed junk and knew nothing about it. Lost and feked the market. The govt always screws up -- how's Fannie and Freddie doing? Lost money again and had to get bailed out AGAIN.

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You are missing the big picture there Jet. Its only money, and USA can print as much of that stuff as they need,-- so long as the rest of the world continues to exchange their paper stuff for real goods and services.

There will come a time when the $US is worth what is in real production rather than debt, but that time hasnt come yet. So, in the meantime its print, borrow and spend. In the end someone else will have to pay for USAs debt.

Quote:

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Originally Posted by Jet Gorgon

SB, the prob is that obama's "policies" are long-term sucking machines.

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Welfare is a long term hoover unless the economy starts creating job growth- thats the key. At least their welfare basically goes 100% to consumption, unlike tax cuts for the rich. HC reform is a budgetary excercise- I know you were against it, but if it is funded it is no fiscal disaster. If it brings down the cost of health care LT as it should, it will assist the longer term finances of the US gov't actually.

They gotta use government measures to stimulate job growth though, thats really the thing. I don't mind rich business owners getting tax breaks on hiring folk- let them make up for the Bush tax cuts they will soon lose that way.

The investment markets do have a real value in providing capital to new and existing businesses larv, capital that would not be provided if there was no secondary market, ie the ability to sell. Can't see a way around that. The rampant financial speculation that the banks were involved in has to be curtailed though, we'll see how effective the recent financial legislation overhaul is in this regard. The only problem I have with stock options is with companies that issue too many, but if the guy means exchange traded options that is different again- the saving grace with them is that you only risk the capital you invest, unlike futures which can carry a hugely greater liability. The real problem arose because of 'exotic' financial products that, as it turned out, nobody really knew the risks of.

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Sure, things were fine in Clinton's terms coz the economy was still humming along from Reagan.

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In 1987 there was that market crash and the real estate market suffer for some time after that. It wasn't the best time for jobs graduating from university then. I can't find a timeline for what was going on from 1987 - around 1993 but things were a bit slow. I worked in an investment company for a few years in the early 90s at that time and it wasn't an exciting time as far as I can remember. My father worked in real estate and that 1987 stuff had some serious effects at that time. Anyways, I don't think Reagan's boom went into Clinton's presidency at least not with the shine that it had during his time.

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Originally Posted by Panda

Jet and Booners fail to see that USA has no other option than to go deeper into debt until the $US crashes and they pay back debt at greatly reduced exchange rates. Its the only way they can get out of the hole and would be happening under a Republican government also. USA is the worlds sub-prime borrower/consumer. Why be frugal when you can pay back the debt in virtually worthless $USs later on?

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Originally Posted by Panda

You are missing the big picture there Jet. Its only money, and USA can print as much of that stuff as they need,-- so long as the rest of the world continues to exchange their paper stuff for real goods and services.

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Pandy, I love ya, but your views would garner an F on an economics 101 paper. Sorry.

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Originally Posted by sabang

They gotta use government measures to stimulate job growth though, thats really the thing. I don't mind rich business owners getting tax breaks on hiring folk- let them make up for the Bush tax cuts they will soon lose that way.

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Erm, obama and his libbies already used $780 bil to do that last year to keep unemployment below 8%. Oops, unemployment is almost 10% now innit? And another $26 bil last week to save teachers jobs (read that as several bil to teachers unions to support libbie campaigns this fall).
The rich...$250k a year is rich? Even the $1 mil bracket is filled with small biz owners. You tax them more, they don't invest, don't hire and stuff savings offshore. Aww, is that fair? No. It's life. Everyone wants a better life. The biz folks want to do it by being entrepreneurs, not welfare recipients.

I've noticed this 'Hindenburg Omen' popping up on occasion while I am browsing through yahoo or other websites. I first saw it under yahoo Buzz a couple weeks ago which I guess means enough people were looking it up for yahoo to notice. Does anyone have any opinions about this? Is it just another silly flag for end-of-the-economic-world people to wave.


Are we just in a new world where all these old US based theories and calculation mechanisms just don't work anymore?


Hindenburg Omen Reached Again: Is a Stock Market Crash Imminent? - TheStreet

"NEW YORK (TheStreet) -- It may just be the summer doldrums, or the ominous occurrence of a Friday the 13 in mid-August, but the Hindenburg Omen -- a technical indicator of an impending stock market crash -- has reared its head for a second time within a month. "



https://teakdoor.com/images/imported/2010/08/705.jpg




Hindenburg Omen - Wikipedia, the free encyclopedia


I guess it has something to do with some sort of balance of market forces on the up and down sides meaning the market has no real direction. I may be wrong about this What do the financial gurus on this forum know about this 'omen'?

Charts are great for looking at things after the event, mainly.
Besides momentum indicators, I think they're baloney for making predictions.

Well, check this out. The only thing surprising in this report from The Hill is that two states actually have had positive job growth since early 2009

"House Ways and Means ranking member Dave Camp (R-Mich.) on Friday released data complied by his office that shows 48 out of 50 states have lost jobs since the February 2009 enactment of the economic stimulus bill.

“While Democrats promised their 2009 stimulus would create 3.7 million jobs, the reality is far different,” stated a release from Camp’s office. “To date, 2.6 million jobs, including 2.5 million private sector jobs, have been lost.”

According to the report, only Alaska and North Dakota have experienced positive job growth since early 2009. The District of Columbia also saw an increase in hiring during that period."

Hope & Change!

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Originally Posted by Boon Mee

Well, check this out. The only thing surprising in this report from The Hill is that two states actually have had positive job growth since early 2009

"House Ways and Means ranking member Dave Camp (R-Mich.) on Friday released data complied by his office that shows 48 out of 50 states have lost jobs since the February 2009 enactment of the economic stimulus bill.

“While Democrats promised their 2009 stimulus would create 3.7 million jobs, the reality is far different,” stated a release from Camp’s office. “To date, 2.6 million jobs, including 2.5 million private sector jobs, have been lost.”

According to the report, only Alaska and North Dakota have experienced positive job growth since early 2009. The District of Columbia also saw an increase in hiring during that period."

Hope & Change!

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Can anyone name a country that went for tax cuts for the rich rather than a stimulus package to cope with the WFC?

There is no doubt at all the Republicans wouldn't have done exactly the same thing with exactly the same result.

The Dow is below 10,000. There's lots of worry out there still. It's got to be the time to buy into stocks since so many are down to lows they haven't seen for some time. Or this is just the beginning of something worse. Are we are going into a black hole, the second great depression?

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Originally Posted by PaulBunyon

Are we are going into a black hole, the second great depression?

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Unless the Obama administration shows some balls, and introduces some effective job creation schemes and, more importantly, incentives for the private sector to hire, I think the US is looking at a Japanese style decade of low growth and drifting markets.

Whether they will or not is a real question- the GOP, and even some Democrats on the right, actually want to extend, or make permanent, the US tax cuts for the rich. The amount this would add to the deficit will severely curtail the US governments ability to act in other, more productive areas. If the political will does not exist, or the Congressional system proves too paralysed, the already overvalued USD becomes quite a dangerous currency in my view- who wants to continue lending to a country that is politically unable and unwilling to address it's Deficit woes?