Ok. . . This is terrifying.

[Conan71]

Conan, most businesspeople have no concept of economic theory. Economic theories are testable and have been tested. Do you really think that listening to economists when you want to know about the economy is a bad idea? What you wrote is the equivalent of saying that gravity is just a theory, despite it having a strong effect on our daily lives.

Responsible borrowing isn't an issue. Businesses need money to expand, and banks aren't giving much of it out. Let's use Gaspar's 3 Guys products as an example. He previously posted that they are unable to put product in all the Reasor's stores because it would require about $50,000 to produce enough product, which they do not have. Given that it market tested so well, it seems like it would be reasonable to borrow the $50,000 and jump start sales. The extra sales would likely more than outweigh any interest paid.

Part of the problem in real estate is the constantly repeated mantra that "they're not making any more of it" to bolster the idea that real estate prices will always increase. Obviously, that's not a correct conclusion, as has been shown many times throughout history. When people disassociate from reality, it causes problems. Debt isn't really the issue. Alan Greenspan once called the phenomenon "irrational exuberance," and this is one of the most free marketeer people walking the earth. Even he recognizes that sometimes the market gets it wrong because its participants aren't acting rationally.

Combine that with the misaligned incentives that still exist in the mortgage market and the inability of most organizations to look beyond next quarter and it's quite clear how we got the real estate market we did.

Most business people have no concept of economic theory? Where do you keep coming up with this stuff? That's as bad as saying illegal immigrants don't harm anyone but themselves when they cross the border.

Economic theory doesn't take into account human behavior as business owners and consumers.  It's not as simple as setting a pallet of new $100 bills in a mall parking lot and everyone taking a share of it spending the money at the mall.  If economic theory were finite and had predictable outcomes, we would not be in the mess we are right now.  The steps put in place to get us here were not intended to make the economy fail.

[nathanm]

The steps put in place to get us here were not intended to make the economy fail.

But they had that predictable effect, as always happens when incentives aren't aligned with sound economic theory. There are places where economics breaks down, but we're not in that situation. Not even close.

And yes, if more businesspeople understood economic theory, they'd not be so focused on next quarter. They wouldn't collectively lay off millions of people and then sit around scratching their heads wondering why nobody is buying their stuff. Most businesses fail in under five years. Seriously. That's largely due to a lack of understanding of economics (and business in general).

[heironymouspasparagus]

Conan said;
Wrong answer.  We don't need a stimulus to get the wheels rolling again.  Cash is out there, it's sitting idle.  People who run corporations and small business want inspiration and confidence that the worst is behind us and they will start spending money again.


Yep, that is for sure!  We put a trillion dollars into big banks and they are leaving it sit idle - NOT loaning to small business to try to get things moving again.  Now THERE was an inspired "investment" - directly due to George Bush, the ripples of which will continue for decades.


Vast majority of illegals not only don't harm anyone, but bring a very positive effect to your standard of living.  Just because "blank-out" Jan Brewer and the Arizonians don't really understand economics, doesn't mean everyone doesn't.

The government is doing now what has been done successfully for 80 years, during our downturns.  And the 'economy' is improving.  This time I am skeptical about really good results because of the way we have shipped jobs overseas for 30 years.  Jobs won't be coming back for a long, long time.  You cannot have an economy without manufacturing - and 9% of the economy in manufacturing ain't enough.  We are screwed.

[guido911]

Looks like the poverty rate in the U.S. is on a record pace:

http://news.yahoo.com/s/ap/20100911/ap_on_bi_ge/us_poverty_in_america

I am curious, which charities that provide services for the impoverished do the folks at TNF donate?

[RecycleMichael]

I give to the Day Center for the Homeless. There are plenty of places that offer a bed at night, but this one gives the homeless support during the day.

I also contribute to the Tulsa Food bank and have a relative who works there and have volunteered there myself.

Thanks for asking.

[guido911]

I give to the Day Center for the Homeless. There are plenty of places that offer a bed at night, but this one gives the homeless support during the day.

I also contribute to the Tulsa Food bank and have a relative who works there and have volunteered there myself.

Thanks for asking.

Just need to know what is local here in town. Most of my donations go to disease research, food for the poor, pro-life, veterans groups, domestic violence shelters, and Catholic Charities.

[heironymouspasparagus]

Sounds like the United Way.

Salvation Army is my favorite.  You all probably guessed that already, since I work them into a discussion whenever possible.

There are an almost infinite number of places to donate to or work with.  The need is ongoing and constant  One must pace oneself to avoid "donor burnout" with either money or time.

Am very proud of grandchild who is continuing the tradition.  This weekend the Union school ROTC spent some time at the food bank working for a few hours.  Unfortunately, they lost to Jenks Friday night!  No good deed goes unpunished, huh?

[guido911]

I also know one TNFer who does great work for MS charities. Nice to see some folks here getting things done to help those suffering.

[guido911]

What this leader of Home Depot is saying is what I have been trying to say for years now:

[Conan71]

Reminds me, our "CEO" is going to be on CNBC for a town hall Monday night to talk to us "shareholders"

[guido911]

Reminds me, our "CEO" is going to be on CNBC for a town hall Monday night to talk to us "shareholders"

Here's what Marcus said about our national CEO and his crew:

[Cats Cats Cats]

Here's what Marcus said about our national CEO and his crew:

Kind of crazy how everything he said pertains 100% to CEOs.  I'm not saying he isn't wrong in what he says.  Just listen though, its explains just about every CEO.

[guido911]

Kind of crazy how everything he said pertains 100% to CEOs.  I'm not saying he isn't wrong in what he says.  Just listen though, its explains just about every CEO.

I assume you are excluding Bernie Marcus given that he was one of the founders of Home Depot

[Conan71]

Kind of crazy how everything he said pertains 100% to CEOs.  I'm not saying he isn't wrong in what he says.  Just listen though, its explains just about every CEO.

Except CEO's are still charged with the successful operation of an entire company and ultimately responsible for their employees. 

Many tenured professors have never worked off campus since they started post-grad nor have they run anything remotely close to a corporation, and they live under the assumption the rest of the world operates like the idealistic little academic world they occupy.  To them it's all theories and suppositions.  They have limited responsibility and are usually protected from negative impact of their actions.  CEO's answer to shareholders and a board of directors.

[Cats Cats Cats]

Except CEO's are still charged with the successful operation of an entire company and ultimately responsible for their employees. 

Many tenured professors have never worked off campus since they started post-grad nor have they run anything remotely close to a corporation, and they live under the assumption the rest of the world operates like the idealistic little academic world they occupy.  To them it's all theories and suppositions.  They have limited responsibility and are usually protected from negative impact of their actions.  CEO's answer to shareholders and a board of directors.

If by "answer" you mean if they do a bad job they will get fired early, bought out, get a pension for life a giant bonus.  Then move onto the next company who needs a CEO with "experience".