Obamaconomy!!!

[Mr. Shaman]

Hobo, folks like Mr. Shaman believe that the loss of money to the economy is mostly if not completely due to the thieving of the 1%-ers and that The Democrats are coming to the rescue of The Victims. On that basis, they don't believe anything that you say if you're on or seem to be siding with The Dark Side.

I just wish people could learn how to think...

.....Which would include Learning from the past.....​

"Not only was the entire national deficit eliminated after raising taxes on the wealthy in 1993, but the economy grew so fast for the remainder of the decade that many conservative economists thought that the Fed should raise the prime interest rate in order to slow it down."

 

[Mr. Shaman]

"Initial construction of U.S. homes unexpectedly surged in February, after falling for seven months, according to a government report released Tuesday.

Housing starts rose to a seasonally adjusted annual rate of 583,000 last month, up 22% from a revised 477,000 in January, according to the Commerce Department. It was the first time housing starts increased since June, when they rose 11%."

The SURGE against Bizarro Bushworld appears to be paying-off!

​

 

[Dr.Who]

This idea of what is money and what is wealth is a hard one to get your hands around.

Ask yourself... "How much money do I have?" Well, I have about $35 in my wallet, but that is about it. In reality, all of my money is held in an account somewhere. Virtually all of your money is being held on an accounting sheet somewhere. "I have money in my checking account"... no you don't, the bank has already lent 90% of that money to say Super-Duper Computer Store. That is the way wealth is created. Both you and Super-Duper Computer think they have that money. Indeed Super-Duper Computer has hard assets in the form of computers sitting on the shelf in their store.

You don't have money in the bank, you have an IOU from the bank. It isn't 'real' money. In fact, you didn't put 'real' money in the bank in the first place. You put your paycheck in the bank - which was an IOU being transferred from your employer's bank to yours. So you didn't get paid in 'real' money either.

In the United States we all operate on the principle that our institutions can be trusted to hold our wealth and the number printed on the page is indeed our money. But it is all an illusion. The only difference between money that you have in the bank and money you have in the stock market is that the FDIC guarantees the money you have in the bank. But even that is a matter of risk. Your money in the bank is guaranteed by the full faith and credit of the government. If the US banking system and the Federal Reserve were to go bankrupt like has happened in many other countries, then we would all be losers.

In the final analysis, it is all a matter "of how much risk do you want to take?" Money is at risk even if you put it under your mattress - over time it will dramatically loose value simply by inflation.

I always like the quote from the film Gone with the Wind:

"Why, land is the only thing in the world worth workin' for, worth fightin' for, worth dyin' for, because it's the only thing that lasts." ​

But in the recession, we have seen that even the price of land is not free from risk. All of life is a risk, and wealth is never "safe" no matter where you keep it. The secret is knowing how much risk to take - and at what time.

Very true. Which is why I have some money in the bank but also have an emergency fund in a hollow book, and a pantry with, say, six months worth of food in it.

 

[Pidgey]

The SURGE against Bizarro Bushworld appears to be paying-off!

​

Sorry, Bubba, but this says you can forget it:



(Click on the picture and use the links to see it in full size)

 

[Pidgey]

Well, that was... great. They just announced what amounts to printing more dollars so stocks and gold shot up. That essentially means it takes more dollars to get the same value, especially for imports. Yes, folks, you could watch the damage happen immediately in realtime on the Forex. You might have a difficult time seeing it, but everyone just got an immediate pay cut.

 

[Pidgey]

"Forex? What's that?"

You'll figure it out.

Some of you will, anyhow. There are certain folks that I don't hold out any hope for anymore...

 

[Dr.Who]

Well, that was... great. They just announced what amounts to printing more dollars so stocks and gold shot up. That essentially means it takes more dollars to get the same value, especially for imports. Yes, folks, you could watch the damage happen immediately in realtime on the Forex. You might have a difficult time seeing it, but everyone just got an immediate pay cut.

The economy is a "system". Any time a change is made to one part of it effects will be felt in another part. Increase regulation - there will be an effect. Shift taxes to favor one group but penalize another - there will be effects. congressmen makes laws to help his re-election fund contributors - there will be effects.

So the obamaconomy is rolling along - but there will be large effects that will be felt for a long time. The only difference is that most people will only see the hand that gives and not the one that takes away.

 

[Pidgey]

Technically, they intend to do this over the next six months. Therefore, exchange rates shouldn't bounce at the mere announcement but sometimes portents of things to come create the reality. We'll watch the Forex over the next few days to see what it does. If they're going to make a habit of it (printing more money, so to speak) then foreign investors would likely start fleeing the dollar in earnest and not rolling over their treasuries. China's already making the move towards shorter term bonds away from longer term ones. Another bad omen.

 

[Hobo1]

Technically, they intend to do this over the next six months. Therefore, exchange rates shouldn't bounce at the mere announcement but sometimes portents of things to come create the reality. We'll watch the Forex over the next few days to see what it does. If they're going to make a habit of it (printing more money, so to speak) then foreign investors would likely start fleeing the dollar in earnest and not rolling over their treasuries. China's already making the move towards shorter term bonds away from longer term ones. Another bad omen.

"Bernanke Caps Treasury Yields to Cut Consumer Borrowing Rates" the headline reads. I think this is an act of desperation! All the government money poured into the system to date has had no ‘stimulating’ results that we can see any of the indicators.

What makes Benanke think that consumers or business are going to borrow money because the interest rate is low? Is THAT the right medicine? Right now I don’t think so. Most people and businesses are struggling to keep their head above water, or hang on to their job. The last thing anybody wants to do right now is to borrow money to buy a new car or a new house.

In my opinion, all of the decision makers at the Fed and at Treasury have come from wealthy backgrounds and don't have a gut level feel of how either businesses or people think in an economy like this one. What is the grand economic theory/ strategy that we are following right now? Does anyone really know what to do to actually improve this economy right now? That has become a rhetorical question.

Rather than a grand strategy, we are now struggling with a grand economic question… do we choose capitalism or do we choose socialism? After watching talking heads on CNBC (the business channel), they switched to a commercial advertising the “Suze Orman Show” where she says, “It’s better to do nothing with your money than something you don’t understand.”

I think anybody over 30 years old remembers that our economy goes through cycles. Our political leaders need to explain that the best thing the government can do right now is to provide a fiscally strong economic foundation and a competitive, level playing field for business. That’s the best thing the government can do at ANY time!

All of this borrowing and printing of money is going to have a lot of unintended consequences down the road. We are on a roller coaster ride, but this roller coaster ride has tracks that are constantly turning and twisting so nobody knows if we will ever get back to the loading platform again.

 

[Pidgey]

This is an example of a headline that I was referring to:

Fed in Bond-Buying Binge to Spur Growth

Have you ever looked at a treasury auction? Go here:

http://www.treasurydirect.gov/tdhome.htm

They're a little different than most would imagine. If the Treasury is offering a $1,000,000 bond, that's the value at maturity. Potential buyers generally bid under that number, rather than it being a specific price with a specific interest rate. That establishes the "yield". It's not quite like going to your bank for a CD, where the interest rate isn't negotiable. The difference is that it's literally an auction and the Treasury is begging for buyers. They have a certain target of sales to make for a specific auction and so they accept the highest bids that add up to the total required for the auction. 'Zat clear as mud?

Anyhow, by The Fed committing to buy $300 bn worth of long-term treasuries, they do a lot of things at the same time including driving down the yields that others would have stood to have gained. It's one really complex mess... Many analysts around the world see it as aggressively attempting to sustain the unsustainable.

 

[Pidgey]

For more on the dangers:

http://market-ticker.org/archives/879-Bernanke-Inserts-Gun-In-Mouth.html

 

[Pidgey]

Somebody wanna' comment on this:

http://www.reuters.com/article/usDollarRpt/idUSLJ93633020090319

"Mr." Shaman? Care to mull over the consequences to us if they actually implement it?

 

[Mr. Shaman]

Somebody wanna' comment on this:

http://www.reuters.com/article/usDollarRpt/idUSLJ93633020090319

"Mr." Shaman? Care to mull over the consequences to us if they actually implement it?

Hell....let 'em try what they want!

It's of ZERO-consequence.

​

"What's been a breath of fresh air has been the return of U.S. global leadership on the financial crisis," says Rudd. He notes that America's embrace of the G-20 "was noticed by people around the world."

The London summit will test whether the global consensus Rudd describes is more than skin-deep. There's still a wide gap between American views (more stimulus!) and European (more regulation!), and many of China's policies remain a mystery. But as Rudd says, it's at least modestly reassuring that the G-20 will be the forum, China will be a player and America will be back in a leadership role.http://www.washingtonpost.com/wp-dy...AR2009032002772.html?hpid=opinionsbox1&sub=AR"

​

 

[Hobo1]

Somebody wanna' comment on this:

http://www.reuters.com/article/usDollarRpt/idUSLJ93633020090319

"Mr." Shaman? Care to mull over the consequences to us if they actually implement it?

The idea of a universal currency has been talked about for decades. Remember when Petrodollars was a great idea? I'd hate to have my money in that currency. Then the Euro was supposed to overtake the dollar because it was so strong. Hmm, doesn't seem like such a good idea right now.

A new currency would be supported by the full faith and credit of .... what?? All the G-20 nations? Good luck getting all 20 nations to work together on anything. A more logical leading agency would be the IMF, but that suffers from the same problem - it doesn't have any real underlying value.

No matter how bad the US government manipulates and mangles the poor US dollar, most people in the world still want their money in dollars when times get really tough. If other nations want to keep their reserves in safer places, the let them put their money in a basket of currencies. They would be singing a sad song right now as the rest of the world's currencies (except Japan) have fallen below the dollar.

 

[Mr. Shaman]

The idea of a universal currency has been talked about for decades. Remember when Petrodollars was a great idea? I'd hate to have my money in that currency. Then the Euro was supposed to overtake the dollar because it was so strong. Hmm, doesn't seem like such a good idea right now.

....Much like those folks who insisted they could get a better-return on their retirement-bucks....if they could dodge S.S.-payments, and invest (on their own) in The Market.