The US Economy

Tartarin wrote:

Timber -- could we maybe settle down here and agree that the economy affects us all? I want Bush to fall flat on his face but I'd just as soon he do it over another issue and not the economy.

Yeah, maybe you can hope that a lot more of our soldiers get killed in Iraq.

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Tartarin, timber is just timber, an individual with the same rights and obligations of expression as any other member, not Moderator, which is a committee of volunteers to which timber happens to belong. Timber may disagree with what you opine, but Moderator doesn't give a damn what you say, only how you say it. If you've got a problem with any of that, take it up with Moderator.

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What is more interesting about this report on job growth is the cautious nature of the stock market. You would think with all this good news, the market will spike up like crazy, but it seems to struggle on it's upward trend. I think "caution" is good, because most stocks are already over-priced.

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The modest market reaction indicates to me both that continuing improvement has already been priced in by "The Smart Money", and that as opposed to "bubble expansion" we are witnessing real, sustainable growth. I don't see that "most" stocks are "over-priced" at all. Some are, yes, but for many others, solid fundamentals and an overall economic upturn bode quite well. For the first time in several years, Insider Direct Acquisitions are on the increase, and Insider Sales are on the decline. When the officers and directors of a firm put their own money into that firm, there's solid reason for optimism. Hell, even the Telecoms are starting to show tentative signs of life.

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Our estate manager who was an executive at Hughes said the bargain market was gone by early this Summer. We keep stock for ten to twenty years -- I don't personally want to play the specialists game and a stock broker client of mine told me the same thing. Vegas may bring a better return.

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LW, Your estate manager is right; the p/e ratios are up too high for earnings to justify the high prices of most stocks. The S&P 500 gives a pretty good picture of the whole market's performance expectations, and earning $1 for $35 dollars of investment sounds pretty risky to me. If you lose 10 percent of the market value, it's going to take several years to make up that loss in earnings - IMHO. Still pretty risky in my books.

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So we agree on complexity?

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I'm very happy with the recent upswing rather than devasted. I have been devasted before and this recent upswing didn't do it for me. Cool

Let's see 3,2000,000 - 125,000 = 3,187,000 -126,000 = 3,174,900. Rolling Eyes

Yup, things are good, we've still only lost 3 million jobs. That's very good, don't you think? Laughing

The Democrats ought to take a page out of the GOP book and claim that this spurt of recovery would have taken place as the economy recovered on it's own merits, which is what the GOP claimed after the economy soared under Clinton. So this set of three job spurts would have happened without the Bush tax cuts, and maybe sooner.

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Joe, If anybody bothers to look at the Bush tax cuts, and how much of that tax cut was actually spent by the middleclass and the poor, it's too small in relation to the over-all GDP to make any difference. Most of that extra spending comes from the refinancing of homes at lower rates that produced a bit more cash in the home budget that produced that extra consumer spending. Gotta remember, though, that that's borrowed money, and it has to be repaid to the mortgage companies.

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Wait until the middle class sees their tax bill with the minimum tax law in effect. The lower denominator tax payer got enough back to buy a six pack of coke a week. I wouldn't call that stimulating. The rich only need one toaster per house. It's the middle class that really makes up the volume of consumer spending. The very wealthy are hanging onto it (yacht sales in Newport Beach are still extremely sluggish).

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LW, maybe that's because THEY ARE POOR?!

What shoulod they have got? New cars and homes with microwave ovens?

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You're missing the point, Mcgentrix, the tax cuts were unnecessary. All they did was what Al Gore said they would, re-enrich the already richest 1% of this country. Every GOP economist agrees that government cannot truly guide an economy, so why not keep the money and avoid the giant deficits of the past two years? Because you gotta pay off the big fish. and you sprinkle a few $600 checks in there for the guppies like you and me.

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In this interesting article in The Nation, William Greider picks up on the concern of a law professor at Georgetown about US contravention of the 1949 Geneva Convention which could very well cost this country a staggering amount in lawsuits, adding a considerable burden to the economy:

Quote:

An explosive legal obstacle, currently ignored, lurks beneath the surface of the Iraq war debate--international law likely to ensnare and possibly crumple the American conqueror's grandiose plans to transform the nation it now occupies. Despite what many people, including many Washington officials, seem to believe, the US government is prohibited from simply seizing Iraqi oil revenues and spending the money however it chooses. Indeed, the US occupying force cannot remove the country's judges and suspend Iraq's domestic laws. Nor may it create massive unemployment by firing police, civil servants or military troops. On the contrary, an occupying force is required to maintain civil order and humanitarian necessities, to protect private property and public assets as well as individual rights. In fact, international law is designed to prevent an occupying nation from transforming a defeated society into its own likeness...

...If the United States and Britain had obtained a specific resolution from the United Nations beforehand, spelling out the concrete purposes and justifications for the action, the two would have been relieved of their legal vulnerability...

...If the future government of Iraq does not wish to sue, then groups of citizens might still become plaintiffs. They could be joined by the foreign creditors who lent billions to Iraq in Saddam's time--including French and Russian interests. "The issue may be: Has the authority properly distributed Iraqi assets that were seized?" Scheffer asks. "If you were Russia or any other large creditor nation, there might be a basis for a very careful accounting of whether money that could have paid off debts was used for other purposes." This may help explain why foreign governments are so reluctant to make cash contributions to Iraqi rebuilding and, when they do, insist on depositing their money in separate funds, where it will not be commingled with the Iraqi funds managed by Americans. No one wishes to commingle with the potential liabilities.
These legal distinctions also make the recent US Congressional debates seem absurdly out of touch. Some members wanted to rebuild Iraq with Iraqi oil money and argued that Americans should send $10 billion as loans, not grants. But no government exists in Iraq, none that could legally contract for a loan on behalf of the Iraqi nation. In the end, the loan idea, which was opposed by the White House, was scotched.
The United States created a trap for itself in Iraq. Now it has to find a way out.
http://www.thenation.com/doc.mhtml?i=20031117&s=greider

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Yes, we know, McGentrix -- let 'em eat cake. (The third movement of Berlioz' "Symphony Fantastique" playing in the background. Laughing

)

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Joe Nation wrote:

You're missing the point, Mcgentrix, the tax cuts were unnecessary. All they did was what Al Gore said they would, re-enrich the already richest 1% of this country. Every GOP economist agrees that government cannot truly guide an economy, so why not keep the money and avoid the giant deficits of the past two years? Because you gotta pay off the big fish. and you sprinkle a few $600 checks in there for the guppies like you and me.

Funny thing about those deficits. Last time I looked they were getting smaller. Yep, it's amazing the stuff that is going right despite all the hopes and prayers for more and more wrong. Cool

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No, a yacht.

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Let's have a link on those diminishing deficits, puh-lease, Scrat.

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Quote:

The Treasury Department on Monday said the budget gap - the amount by which spending exceeds revenues - grew to $374.2bn (£224bn) in the year to 30 September.

It was in line with independent economists' expectations, but fell short of the US government's own forecast of $455bn.
BBC

Lets see;
$455 Billion Projected, $374.2 Billion Accounted.

$455,000,000,000.00 -$374,200,OOO,00.00 = $80,800,000,000.00 less than projection.

Quote:

About one third of the improvement since the July estimate was because actual revenue collections totaled $26 billion more in 2003 than the White House projected, for a total of $1.782 trillion.

Part of that improvement was because in July, the White House assumed a $15 billion drop in tax collections because of "revenue uncertainty" a drop that never occurred.

Most of the rest was due to better than expected collections of individual and corporate income taxes improvements that could mean that a stronger economy is raising peoples' and companies' incomes, which translates to higher tax liability.

ABC

Ahhh, what the heck ... the numbers are the same there, too. Both articles are full of cautionary, if not downright dubious spin, but the numbers are the numbers.

Here are some more numbers:

The then-record $290 Billion deficit of 1992 was posted against a GDP of $7.3 Trillion, for a ratio of a bit over 3.97%. The current deficit of $374.2 Billion is posted against a GDP of $10.25 Trillion, or roughly 3.6%. In 1983 the ratio was just over 6%.

Those are the numbers, however you want to spin them. Those are the numbers.

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Which is to say that the deficit at present (-374 Billion) matchs the total deficit for all of last year 2003 and adds to the deficit from the year before that. The Congressional Budget Office reports the shortfall for the month of October is estimated at 71 billion about 17 Billion more than was expected, so Timber's September numbers start to look a little wistfully hopeful at this point. link ftp://ftp.cbo.gov/47xx/doc4718/11-2003-MBR.pdf

Who knows? Maybe the 25 top employers will hire on an extra 3 million workers for Christmas, I know that Wal-Mart is short about 400 cleaning crew members.

The point remains that these deficits were unnecessary and came at a time when our nation needs to be fiscally responsible. Ronald Reagan came to his senses over the depths of his then-record deficits and he re-assessed his tax policy. George Herbert Bush looked at the damage his no-new-taxes read-my-lips policy would have caused and compromised with the Democratic leadership in the Senate. ( A fact that one of my neo-con friends (yes I have several) claims is the reason the Clinton economy got started on the right foot. Rolling Eyes

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Gotta say I agree with your freind, Joe. Its my view that Reagan/Bush handed over a legacy which took the following administration two terms to bankrupt; a remarkable achievement either way. I really have to wonder where The Economy today would be had it not suffered eight years of flagrant mismanagement. My honest supposition is that "The Boom" would not have occurred, nor would The Bust. Rather, I really believe a sustained growth of somewhere in the high 2% to mid 3% range over the intervening period would have resulted in an overall significantly more favorable economic climate than now exists, and that the geopolitical situation would be much less contentious. Of that I have no doubt.

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