Where is the US economy headed?

CI QUOTE:

Quote:

Our past three year average increase has been over ten percent - even after our spending

You've repeated this comment many, many times on A2K. Did you know that a Index500 fund from a company like Vanguard would also pay you, on average, about 10%/year?

Why belabour this 10% result, when it's so easy to come by.

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au1929 wrote:

cicerone imposter wrote:
Halfback, I have read articles on the very subject of 401k's and how the market will react when the baby-boomers begin to retire and begin withdrawing their investments. It's a whole new ballgame when that begins to happen, and 401k investments begin to shrink.

The real problem may show up when those institutions do not have enough cash flow to pay off those withdrawals; more cash going out than coming in.

I'll probably be gone from this world when that begins to happen.

You are basing your assumptions it would seem that as these people retire the flow of $'s into 401 K's will abruptly cease. Nonsence, it will continue with the nexrt generation of "baby boomers" or whatever they are called. In fact as companies continue to drop pension plans it will IMO increase.

Don't forget that Boomers are big spenders and in fact, that a good amount of what's withdrawn will be re-invested...

Dark clouds overhead?? No way, Jose'...

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Miller is correct: the baby-boomers 401k withdrawals will not have a huge effect on the stock market. There are several reasons for this; the first being that baby-boomers do not have a material amount in the market to affect it; the average investment is $50,000. There have been reductions in 401k plans for several years, and rather than an increase in investments, there have been a decrease. Another reason is that most funds now are international funds; not strictly based on US companies. Finally, the GAO have done studies to show that the macro-economics of the effect from baby-boomers will not be material enough to affect equity prices.

My mistake; I depended on my "gut feelings" to post my previous opinions on this topic.

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Sinking Currency, Sinking Country

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xingu, Excellent post, but most Bush supporters will miss the meaning and content of it. Sad isn't it? They are blind to the realities of what Bush has wrought on the American Public, and 27 percent still think he's god.

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I agree that Bush is one of the people responsible for the sinking Dollar. But please don't forget the Constitution gives Congress the responsibility to set spending and taxation.

We're supposed to have a balance of powers among the three branches of government. Not two branches of rubber stamping.

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Jim wrote:

I agree that Bush is one of the people responsible for the sinking Dollar. But please don't forget the Constitution gives Congress the responsibility to set spending and taxation.

We're supposed to have a balance of powers among the three branches of government. Not two branches of rubber stamping.

Sure, but please remember that you have the Republicans in Congress to blame for this.

The Dems can be blamed for being unable to overcome opposition; they have been weak in their efforts to undo some of the damage the Republicans and Bush did. Some of them are complicit in pushing it, the big-business bastards. But let's not kid ourselves.

Cycloptichorn

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Miller wrote:

CI QUOTE:

Quote:
Our past three year average increase has been over ten percent - even after our spending

You've repeated this comment many, many times on A2K. Did you know that a Index500 fund from a company like Vanguard would also pay you, on average, about 10%/year?

Why belabour this 10% result, when it's so easy to come by.

Show me by evidence that the majority of investors are gaining on average ten percent/year?

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Baby Boomers are 79 million strong. The last generation where children per family was somewhat above "parent replacement rate".

You say that the money going out of 401's will be replaced by "incoming" from next generation. I say no.

1) Generation "X" (I believe that was the term in vogue) is not nearly so numerous as "Boomers" (as a "block"). (Exactly why the Social Security fund is going to go "bust")

2) Middle income jobs are shrinking rapidly. It is those who are above poverty level who are most likely to invest in 401Ks.

The stock market, fueled by many factors, now just coming into troubled times, is due for a serious adjustment. The great majority of Americans have been living on borrowed money as has our Government. Real estate has been inflated, stocks have been inflated, cost of living has been inflated. The only thing that has not been inflated recently is the value of the US Dollar.

Now, toss in a nice tax raise by the next Administration, KA-BOOM! Our little "Bubble" is gonna burst. Hopefully we won't be left with too much sticky residue on our collective faces.

Halfback

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This goes beyond party politics. They are ALL responsible for this. BOTH Republicans AND Democrats.

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cicerone imposter wrote:

Miller wrote:
CI QUOTE:

Quote:
Our past three year average increase has been over ten percent - even after our spending

You've repeated this comment many, many times on A2K. Did you know that a Index500 fund from a company like Vanguard would also pay you, on average, about 10%/year?

Why belabour this 10% result, when it's so easy to come by.

Show me by evidence that the majority of investors are gaining on average ten percent/year?

Not to mention the fact you said +10% AFTER SPENDING. Little part that Miller didn't take into the equation.

Cycloptichorn

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Miller, How do you respond to this? It's the cumulative growth rate of stocks since 2000? According to their calculations, $1 in 2000 is now worth .96c in 2006.

2006 12.80
2005 3.01
2004 9.00
2003 26.39
2002 -23.37
2001 -13.04
2000 -10.14

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CI: Relying on "Gut feeling" is exactly what the market depends on. It is all dependent on "Consumer Confidence". In troubled times it does not take much to shake that confidence. GAO would be the last entity on earth that would do anything to "shake" that confidence. :wink:

Oh well. "Don't mean nothin'". I'm retired, virtually no debt left and my family could get by on 40% of our current take home, push come to shove. About the only thing that could possibly irritate me is if our Government "bails out" all those folks who are beginning to feel the pinch for living above their means. Financial responsibility not being a strong suit in your average consumer (or your average Congressperson, for that matter). Rolling Eyes

Halfback

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Three major factors for fall of US$:

1) Gross trade imbalance. (We GOTTA have those relatively cheap imported toys!)

2) Import of OIL!

3) Government deficit spending.

All political parties are to blame and the US consumers are also to blame.

It's time we dropped our illusions of grandeur and started to get our house in order and the first item on that agenda is to explore a viable alternate energy source. The second is to balance the Government budget and to begin to reduce the National Debt. The third is to revamp our mass transportation methods away from the internal combustion engines.

That is probably too tall an order for the average American to "buy into", but it is essential.

Halfback

P.S. I suggest heavy invention and investment into geothermal means of electricity generation, as a start.

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Halfback
How do you feel about the Government bailing out victims of hurricanes, floods and fires. Particularly when the rebuild in vulnerable areas time and time again?

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Halfback wrote:

Three major factors for fall of US$:

1) Gross trade imbalance. (We GOTTA have those relatively cheap imported toys!)

2) Import of OIL!

3) Government deficit spending.

All political parties are to blame and the US consumers are also to blame.

It's time we dropped our illusions of grandeur and started to get our house in order and the first item on that agenda is to explore a viable alternate energy source. The second is to balance the Government budget and to begin to reduce the National Debt. The third is to revamp our mass transportation methods away from the internal combustion engines.

That is probably too tall an order for the average American to "buy into", but it is essential.

Halfback

P.S. I suggest heavy invention and investment into geothermal means of electricity generation, as a start.

Geothermal is good, but the real limiting factor is in battery storage technology and electrical grid technology.

Here's an article on Ultracapacitors - sort of a mix betwixt capacitors and batteries. Has great potential and really represents the tip of the iceberg when it comes to upcoming technologies.

Cycloptichorn

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Halfback and Cyclo, The problem with our negative balance of trade is simply that all those countries are now buying American assets on the cheap, because our currency has lost value against most major currencies. Not only our realty, but they're buying up our companies.

Thanks all to George W Bush.

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I have no problem with various levels of Government responding with temporary food, shelter, medical, etc., for victims of nature's vagarities. However, I DO draw the line at rebuilding their homes and businesses for them. There are perfectly good insurance companies in existance exactly for that purpose.

If it turns out that the victims are unable to afford the insurance for their beachside home afterwards, they should consider "downsizing" or relocating. (Folks on the Outer Banks of NC are, even now, paying greatly increased insurance premiums for the Katrina aftermath.)

Sorry to be such a "hard ass" but the Government absolutely cannot keep all it's citizens insulated from the little downturns of life. Lord knows we all have them. (Well, most of us, anyway.)

I don't know where the general American soul got the idea that once one acheived a certain level of comfort in life the Government is expected to insure that you stay at that level. Not very realistic. Question

Halfback

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We have a "Nationwide" electrical grid now.

Battery tech needs work, but how about, having abundant electricity from geo source, we use "golf cart" vehicles for trips under 10 miles.

Would that reduce motor vehicle use about 30%? A good start on both the OIL problem AND global warming (should that be a major consideration in the equation).

Halfback

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Halfback wrote:

We have a "Nationwide" electrical grid now.

Battery tech needs work, but how about, having abundant electricity from geo source, we use "golf cart" vehicles for trips under 10 miles.

Would that reduce motor vehicle use about 30%? A good start on both the OIL problem AND global warming (should that be a major consideration in the equation).

Halfback

With better storage technology, you could go a hell of a lot further then 10 miles off of geothermal power. Honest.

When I say 'electrical grid' I'm not talking about our national grid, but the home itself! Most people's homes are not wired to input power from a variety of sources - solar, wind, as well as from the wall - and aren't robust enough to handle small amounts of charge. Increasing our home electrical grid technology will be a big step towards energy independence.

Cycloptichorn

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Where is the US economy headed?

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