The Fundamentals of are economy are STRONG?????

[iplaw]

quote:Forbes thinks we're in trouble, Greenspan thinks so, and a lot of others are very tight lipped. If the best thing you can say is "the fundamentals are strong..." Lord help us that says a lot.

I should hope Greenspan has something to say as his fingerprints are all over this mess, especially Fannie and Freddie.

Here is a summary of the latest economic numbers that matter:

*  New orders for manufactured goods in July, up five consecutive months, increased $5.9 billion or 1.3 percent to $465.4 billion, the U.S. Census Bureau reported today.

*  New orders for manufactured durable goods in July, up three consecutive months, increased $2.9 billion or 1.3 percent to $219.6 billion, unchanged from the previously published increase. This followed a 1.4 percent June increase.

*  Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.3 percent in the second quarter of 2008

*  The Census Bureau of the Department of Commerce announced today that the estimate of U.S. retail e-commerce sales for the second quarter of 2008, adjusted for seasonal variation, but not for price changes, was $34.6 billion, an increase of 2.9 percent (±1.0%) from the first quarter of 2008. Total retail sales for the second quarter of 2008 were estimated at $1,034.8 billion, an increase of 0.9 percent (±0.3%) from the first quarter of 2008.

These stats come from http://www.economicindicators.gov/ for anyone interested in reading actual statistics.

Finally, the dollar has been rallying against the Euro for the last few months bringing the exchange rate back to levels not seen since late '07  -- Yahoo Finance

[grahambino]

You're ignoring consumer confidence.
Which is a huge part of the broader economy.
Is that true?  If people are concerned about their 401k's losing 20-30% of its value, do you think, it's a good time to go out and buy that new washing machine?
Resulting to corporate welfare is a good thing for the economy?  Resulting to corporate welfare is an indication that things are hunky-dory with our economy?  

So, clarify this for me...its because the American public has been told that the economy is bad?  

How about you tell to the folks now unemployed in the Rust Belt states?
How about the you tell this to the folks that have been foreclosed on?
How about you tell this to the folks who will not be able to afford home heating oil in a Pennsylvania winter?

I'm sure you're doing quite well for yourself.  Maybe you shorted FNM, FRE, LEH a year ago.  Kudos if you did.  I wish I had.

However, I feel for you to deride problems our economy are having as just irrational behavior and that people are being manipulated by democrats or some other 'visible hand', only proves your own myopic view.

[Hoss]

quote:Originally posted by grahambino

You're ignoring consumer confidence.
Which is a huge part of the broader economy.
Is that true?  If people are concerned about their 401k's losing 20-30% of its value, do you think, it's a good time to go out and buy that new washing machine?
Resulting to corporate welfare is a good thing for the economy?  Resulting to corporate welfare is an indication that things are hunky-dory with our economy?  

So, clarify this for me...its because the American public has been told that the economy is bad?  

How about you tell to the folks now unemployed in the Rust Belt states?
How about the you tell this to the folks that have been foreclosed on?
How about you tell this to the folks who will not be able to afford home heating oil in a Pennsylvania winter?

I'm sure you're doing quite well for yourself.  Maybe you shorted FNM, FRE, LEH a year ago.  Kudos if you did.  I wish I had.

However, I feel for you to deride problems our economy are having as just irrational behavior and that people are being manipulated by democrats or some other 'visible hand', only proves your own myopic view.

Yeah, it almost sounds like someone calling Americans, when it is regarding the economy, whiners...oh, wait a minute, Phil Gramm already did that.

[iplaw]

quote:Originally posted by grahambino

You're ignoring consumer confidence.
Which is a huge part of the broader economy.
Is that true?  If people are concerned about their 401k's losing 20-30% of its value, do you think, it's a good time to go out and buy that new washing machine?

Consumer confidence is an easily manipulated commodity.  I prefer objective information.

quote:
Resulting to corporate welfare is a good thing for the economy?  Resulting to corporate welfare is an indication that things are hunky-dory with our economy?  

Of course not, but is the economy going to spontaneously combust from it.  I highly doubt it.

quote:
How about you tell to the folks now unemployed in the Rust Belt states?

The rust belt?  What is this 1983?

quote:
How about the you tell this to the folks that have been foreclosed on?

You mean those folks that decided to buy homes they can't afford?

quote:
How about you tell this to the folks who will not be able to afford home heating oil in a Pennsylvania winter?

Like hyperbole much?  During the Clinton years the story was that people were going to have to resort to eating Alpo to pay bills.  I've heard this same song before.

[pmcalk]

quote:Originally posted by Gaspar

quote:Originally posted by pmcalk

quote:Originally posted by Gaspar

quote:Originally posted by pmcalk

So McCain once again said yesterday that the fundamentals of our economy are strong, while the stock market plummeted 500 points, and Lehman Brothers filed for bankruptcy.  Unemployment is high, and the deficit is soaring.  The news networks—never ones to underplay a crisis—were warning of the apocalypse.  Plenty has been and will be written about how out of touch McCain must be, but his statement signaled something else for me.

How inept must a politician be to be quoting Herbert Hoover on a day like yesterday?

I am really curious if perhaps McCain is losing it.  

Strange.  You haven't mentioned the fundamentals of the US economy in your post.  The stock market and a few failed banks and investment/insurance firms does not the economy make.  Hint: how about indicators (those are numbers).

Keep going.

You miss the point.  Whatever you think about the economic indicators is irrelevant.  Why would your candidate be quoting Herbert Hoover on a day that the majority of Americans feel that the economy is in shambles?  It's kind of like quoting Custer before a battle.

If he is this inept at running for president, what sort of administration would he have?

Thats what I was waiting for. . . the word FEEL.  All done here!

GDP up. GNP up. CPI down (actually going down another .1 % today).   Consumer spending up.  Mortgage refinance index up 15.4% Wow!  Housing starts jump 1.6% announced today.  Target futures on oil are at $88 a barrel (unrelated but I'm happy about it none the less, gonna buy some options).

So while most libs FEEL like the economy is in shambles, most actual people, including libs, aren't showing it.  Actions and numbers speak louder than tears.

Tell that to the 600,000 people who have lost their job in the last year.  Tell that to the people who have lost their home, filed for bankruptcy, lost their job, put off retirement.  I understand that people married to billionaires with 9 houses may not feel the pain, but it is out there.  It was politically stupid to quote Herbert Hoover when the stock market plunged.  Maybe that's why Obama has moved ahead of McCain in national polls.

[Gaspar]

quote:Originally posted by rwarn17588

quote:Originally posted by Gaspar

GDP up. GNP up. CPI down (actually going down another .1 % today).   Consumer spending up.  Mortgage refinance index up 15.4% Wow!  Housing starts jump 1.6% announced today.  Target futures on oil are at $88 a barrel (unrelated but I'm happy about it none the less, gonna buy some options).

Gaspar, I don't think even the biggest optimist is delusional enough to be doing cartwheels over the current economy.

There have been just too many shocks to the system in a short time. The housing bust, doubled inflation, staggeringly high oil prices, rising unemployment and now a slew of financial houses teetering on collapse. About the only reason the GNP was in positive territory in the third quarter was the stimulus checks.

Yes, the U.S. economy is resilient. But no economy stands strong when it keeps absorbing massive body blows. You don't stand strong; you grab onto the ropes and hold on for dear life until the crisis passes.

That's not what this thread is about.  This thread is about the "fundamentals of our economy" as indicated in the title.  I agree that there are some very unfortunate economic occurrences that have slowed growth. But the fundamentals are still healthy and growth is still positive.

I typically ignore consumer confidence numbers because they are subjective and I haven't ever found a use for them in predicting anything.  The sample is far to low to be accurate (5,000 households give or take 3%) and is mostly a number for media to use, not sound investors.

[iplaw]

quote:That's not what this thread is about.

If I had a dime for every time I had to tell her that I'd be Obama rich.  Get used to it.  The moment the debate starts to go south it's deflection city.  Usually involves obsession with a tangential issue.

[iplaw]

quote:Originally posted by pmcalk
Maybe that's why Obama has moved ahead of McCain in national polls.

Correct me if I'm wrong but wasn't it YOU that said this last week:

quote:Little advice, IP--don't try to prove your points with daily polls.

[rwarn17588]

quote:Originally posted by Gaspar

quote:Originally posted by rwarn17588

quote:Originally posted by Gaspar

GDP up. GNP up. CPI down (actually going down another .1 % today).   Consumer spending up.  Mortgage refinance index up 15.4% Wow!  Housing starts jump 1.6% announced today.  Target futures on oil are at $88 a barrel (unrelated but I'm happy about it none the less, gonna buy some options).

Gaspar, I don't think even the biggest optimist is delusional enough to be doing cartwheels over the current economy.

There have been just too many shocks to the system in a short time. The housing bust, doubled inflation, staggeringly high oil prices, rising unemployment and now a slew of financial houses teetering on collapse. About the only reason the GNP was in positive territory in the third quarter was the stimulus checks.

Yes, the U.S. economy is resilient. But no economy stands strong when it keeps absorbing massive body blows. You don't stand strong; you grab onto the ropes and hold on for dear life until the crisis passes.

That's not what this thread is about.  This thread is about the "fundamentals of our economy" as indicated in the title.  I agree that there are some very unfortunate economic occurrences that have slowed growth. But the fundamentals are still healthy and growth is still positive.

Fair enough.

However, the recent developments about AIG would make one question the fundamentals.

If AIG -- one company -- going belly-up would result in economic Armageddon, doesn't that call into question the true strength and fundamentals of the economy?

Should a economy with supposedly strong fundamentals have its fate that crucially tied to one insurance firm?

Or is the gloom and doom about letting AIG perish just hyperbole to satisfy a few Wall Street fatcats?

Again, these questions aren't rhetoric. I'm genuinely curious about your response.

[Cats Cats Cats]

You guys don't know what you are talking about.  The fundamentals of the economy are super strong.  Until our economy is about the transaction of money, things like all the banks going under won't change anything.  By all banks, I mean just the big ones

[Gaspar]

quote:Originally posted by rwarn17588

quote:Originally posted by Gaspar

quote:Originally posted by rwarn17588

quote:Originally posted by Gaspar

GDP up. GNP up. CPI down (actually going down another .1 % today).   Consumer spending up.  Mortgage refinance index up 15.4% Wow!  Housing starts jump 1.6% announced today.  Target futures on oil are at $88 a barrel (unrelated but I'm happy about it none the less, gonna buy some options).

Gaspar, I don't think even the biggest optimist is delusional enough to be doing cartwheels over the current economy.

There have been just too many shocks to the system in a short time. The housing bust, doubled inflation, staggeringly high oil prices, rising unemployment and now a slew of financial houses teetering on collapse. About the only reason the GNP was in positive territory in the third quarter was the stimulus checks.

Yes, the U.S. economy is resilient. But no economy stands strong when it keeps absorbing massive body blows. You don't stand strong; you grab onto the ropes and hold on for dear life until the crisis passes.

That's not what this thread is about.  This thread is about the "fundamentals of our economy" as indicated in the title.  I agree that there are some very unfortunate economic occurrences that have slowed growth. But the fundamentals are still healthy and growth is still positive.

Fair enough.

However, the recent developments about AIG would make one question the fundamentals.

If AIG -- one company -- going belly-up would result in economic Armageddon, doesn't that call into question the true strength and fundamentals of the economy?

Should a economy with supposedly strong fundamentals have its fate that crucially tied to one insurance firm?

Or is the gloom and doom about letting AIG perish just hyperbole to satisfy a few Wall Street fatcats?

Again, these questions aren't rhetoric. I'm genuinely curious about your response.

Don't fall for media hype.  A % of the market is speculators and they will indeed be hurt.  The fate of the market is not tied to any one company.  The federal government takes action to soften the blow (though I don't agree with that).  But it looks like the private sector will mount a defense first (and far far more effectively).  

Lots of people moaning, but the intelligent large-scale investor, your fat cats, just see this as a buying opportunity and they will continue to inject oil into the engine.  

Now if the "fundamentals of the economy" were weak, the private sector would begin to build walls to protect their capital, and we would be in a crisis.  

Either way this is fodder for both sides, but more for Obama in this election, because his followers are far less likely to have an understanding of the market.  

Stop right there!  I'm not saying that Obama supporters are stupid, I'm just saying that his target demographic has other aspects of life that they focus on rather than the intricacies of the american stock market or the economy.

[Conan71]

quote:Originally posted by iplaw

quote:Forbes thinks we're in trouble, Greenspan thinks so, and a lot of others are very tight lipped. If the best thing you can say is "the fundamentals are strong..." Lord help us that says a lot.

I should hope Greenspan has something to say as his fingerprints are all over this mess, especially Fannie and Freddie.

Actually, Greenspan should keep his yapper shut since he is no longer in the paid position of being a "director" of our economy.  He only stands to do more damage.

What I'm seeing a number of you doing is to over-look the Pygmalian Effect that glass-half-empty economists and election cycle media have on the economy.  Obama has zero compunction about saying "worst (insert noun here) since the Great Depression".

No, the economy is not ideal, mainly due to the finanical and lending markets making stupid bets and losing.  The overall picture does not match the hyperbole being thrown around though.

The quickest way to cause large-scale recession is to scare healthy businesses and individuals into putting off investment and purchases.  If a business owner is flush with cash, but is being reminded that the economy might crash down around his ankles at any minute, he's likely going to put off buying new equipment or hiring more people.  Multiply this effect by hundreds of thousands and you WILL create a recession.

Scare people who are working in healthy industries into believing that they are going to lose their job because U/E is up to 6.1% and they will put off purchases which help the rest of the economy.

There are plenty of companies flourishing in the U.S.  It appears that lending and financial services are the two sectors hurting the worst.  Small business as a whole is still strong.  In my line of work, I follow liquidation auctions, and I've seen no significant increase in shuttered manufacturing operations over the last four years, it's pretty stable actually.

Manufacturing numbers are very strong.  Unemployment in the "Rust Belt" is planned obsolescence in getting rid of jobs no longer needed in auto manufacturing due to automation, consolidation to reduce overhead, and changes in consumer habits.

If you choose to believe that either Obama or McCain can fix the economy you are a total dupe.  

The only thing a leader can do is inspire confidence or tear it down.  To this point, McCain understands this concept.  Obama wants you to be scared so he can swoop in and save the day.  His kind of campaigning is dangerous and doesn't show any sort of conscience, other than his total blind ambition to be President, regardless of the cost to everyone else.

[Cats Cats Cats]

quote:

Stop right there!  I'm not saying that Obama supporters are stupid, I'm just saying that his target demographic has other aspects of life that they focus on rather than the intricacies of the american stock market or the economy.

I think you are highly overestimating the public and republicans.  I am sure it is around the board on both sides.  But I have flat tax republicans complaining its wrong that if they make 78,849 they have to pay 25% and if they make 78,851 they pay 28% so they make less money!  I seriously doubt much of anybody knows what the hell is going on.  In fact, I would say that if we had another party in power they would swap sides whoever claimed the economy was strong.  I mean the worst the economy ever was was when Clinton was in power.  At least thats what I hear from some people.

[Conan71]

quote:Originally posted by rwarn17588


Should a economy with supposedly strong fundamentals have its fate that crucially tied to one insurance firm?

Right, wrong, or otherwise-

AIG, along with other insurance giants is a large institutional investor which has kept capital flowing in the economy which has benefitted many segments of the economy outside the financial services industry.  That is what they do.  Large insurers like this have more functions than just writing life insurance.

Typically, the taxpayer is going to pick up the tab for failed insurance companies, so this could have been a pre-emptive strike on the part of the gov't.  Though it is usually state insurance funds who step in to make policy holders whole again when an insurer fails, not the feds.

I'm more against this bail-out, but without knowing all the facts, nor facets of AIG's business, it's a bit premature to say whether or not this was definitely the right thing to do, and why it would be more appropriate to bail them out than Lehman.

[we vs us]

quote:Originally posted by Gaspar

Lots of people moaning, but the intelligent large-scale investor, your fat cats, just see this as a buying opportunity and they will continue to inject oil into the engine.  

Now if the "fundamentals of the economy" were weak, the private sector would begin to build walls to protect their capital, and we would be in a crisis.  

From Bloomberg today:

"Money-Market Rate Jumps, TED Spread Soars on Credit Squeeze

By Gavin Finch and Kim-Mai Cutler

Sept. 17 (Bloomberg) -- The cost of borrowing in dollars for three months jumped the most since 1999 as banks hoarded cash amid concern more financial institutions will fail.

The London interbank offered rate, or Libor, rose 19 basis points to 3.06 percent, the British Bankers' Association said today. The increase is the biggest since Sept. 29, 1999, during the run-up to the new millennium. The difference between what banks and the Treasury pay to borrow, the so-called TED spread, widened 64 basis points to 283 basis points. That's the biggest spread since Oct. 20, 1987, when stocks collapsed around the world on what became known as Black Monday.

[snip]

``Everybody is worrying about which bank is going to go bankrupt next,'' said Ronald Tharun, a money-market trader in Stuttgart at Landesbank Baden-Wuerttemberg, Germany's biggest state-owned bank. ``There's almost nothing being traded in the money markets. Nobody trusts anyone else.''

[snip]

"The Fed added $70 billion in temporary reserves yesterday, while the European Central Bank offered 70 billion euros ($100 billion) in a one-day refinancing operation. The Bank of England injected 20 billion pounds ($36 billion), the Bank of Japan added 2.5 trillion yen ($24 billion) and the Reserve Bank of Australia injected A$1.85 billion ($1.5 billion)."

This is just one article of a brazillion that have come out since the Fed opened its discount credit window to all comers.  Essentially, private funding has done the exact opposite of what you're suggesting, Gaspar.  It's completely dried up.  Banks are hoarding capital because they don't have reserves to cover the vastness of their bad loans.  That's why you're seeing central banks around the world injecting "liquidity" (ie. cash) into the banking system.  The large scale private investor is scared ****less, in other words, and hiding under the kitchen table.