Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Dadsguns on April 12, 2010, 06:55:51 PM
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DOW closed over eleven thousand today...... :banana:
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Too bad the fuel costs are going higher and at a higher pace than the "economic recovery" that we have now as well. Until something is done to fund alternative fuel and to make sure that we can recover fuel found in the continental US then we will be restricted for a while.
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DOW closed over eleven thousand today...... :banana:
The relative direction the stock market takes in no way indicates the general health of the economy. If all of these companies are making higher profits as a result of laying a large percentage of their workforce off, is that good or bad for the economy?
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See Rule #14
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It is nothing more than addicted investors. A correction will be along shortly to remind people why you set a sell limit to force a sale on stocks when they start the plunge.
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In the past, jobs tend to increase several months after the stocks rise. So it is an indicator, but not one that can be seen immediately.
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It could be a sign but the number one indicator is rising fuel prices. It will put the brakes on the economy. I own a service business and fuel for me is over $3.09 per gallon. I have to start a fuel charge. My service rates have been at $95 per hr for three years. Once we hit the psycological limit of $100 per hr the brakes come on until the rotors melt.
The houseing bubble never would have been as bad as it was and most people would still be in there homes if fuel prices would have remaind lower in 2007 008. Fuel took away all discretionary spending. because it raised all prices and people could not make there house payments.
We are headed for another mess IMO
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In the past, jobs tend to increase several months after the stocks rise. So it is an indicator, but not one that can be seen immediately.
That may be true, but a lot of companies are scar to hire after what it has been like in the past two years. Some business are seeing good qurtoe report but hesitate to hire in fear what may lay a head in the next year. IMO, we will see another economic down fall in the next year or two. If oil price keeps going up and see the $100.00 or more barrel crap, it could hurt this already weak economy.
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DOW closed over eleven thousand today...... :banana:
Give you one guess where it will close tomorrow....
*Hint* Not above 11K
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Give you one guess where it will close tomorrow....
*Hint* Not above 11K
why is that?
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why is that?
It's a well known characteristic, everytime a landmark gain is made in the NYSE a sell off always follows. This gain made the news so there will definantly be more sellers tomorrow than buyers.
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It's a well known characteristic, everytime a landmark gain is made in the NYSE a sell off always follows. This gain made the news so there will definantly be more sellers tomorrow than buyers.
OK. yea i can see that. Do you think we will see another economic down fall soon like we did over a year ago?
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OK. yea i can see that. Do you think we will see another economic down fall soon like we did over a year ago?
Nah, probably a couple hundred of points at the most, nothing major. I do see this 11K as a 10K marker, I have a feeling the market will be flirting with 11K for awhile.
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I think the RSI for the S&P is around 75 or 80....pull back immenent :)
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Nah, probably a couple hundred of points at the most, nothing major. I do see this 11K as a 10K marker, I have a feeling the market will be flirting with 11K for awhile.
Personally, i think many people have not learn from the economic downfall and will go right back to their bad habits for trying to make money. That there is nothing wrong of making money but a lot of companies will lie, cheat and steal to get it.
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Personally, i think many people have not learn from the economic downfall and will go right back to their bad habits for trying to make money. That there is nothing wrong of making money but a lot of companies will lie, cheat and steal to get it.
That's usually the case and unfortunate for the general public.
My only concern is to consistently see this rise so that business will gain some confidence in hiring more in their workforce due to demand, it will take time to completely be stable, but at least its an upward trend.
Hopefully, and this is a stretch, but hopefully Wallstreet learned something from all of this besides how better to work at stealing our money.
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That's usually the case and unfortunate for the general public.
My only concern is to consistently see this rise so that business will gain some confidence in hiring more in their workforce due to demand, it will take time to completely be stable, but at least its an upward trend.
Hopefully, and this is a stretch, but hopefully Wallstreet learned something from all of this besides how better to work at stealing our money.
Wall Street learned absolutely ZERO from the last couple of years. The reason they learned nothing is because both the previous administration and the current one have deemed businesses "Too big to fail."
That ain't the case guys; no company is ever too big to fail and its going to take more of what has happened to make them realize it. Maybe the 2012 scenario isn't about an awe inspiring smackdown on the earth itself...maybe it is an economic collapse the likes of which have never been seen before and will bring about the SHTF scenario we are all looking for.
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It could be a sign but the number one indicator is rising fuel prices. It will put the brakes on the economy. I own a service business and fuel for me is over $3.09 per gallon. I have to start a fuel charge. My service rates have been at $95 per hr for three years. Once we hit the psycological limit of $100 per hr the brakes come on until the rotors melt.
The houseing bubble never would have been as bad as it was and most people would still be in there homes if fuel prices would have remaind lower in 2007 008. Fuel took away all discretionary spending. because it raised all prices and people could not make there house payments.
We are headed for another mess IMO
Good call. It's amazing that people don't realize how the price of petroleum products affects the entire global economy. As long as the oil companies are allowed to dictate prices and gain excessive profits...there won't be an economic recovery. Amazingly we don't see any federal lawsuits going on against the oil companies for price fixing.
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Economy on the rise? Woah, maybe if you have blinders on! Take a peek around the corner, and look at what they are hiding back there.. Don't want you to see that yet! Ummmmmm, it's not good! There is still time to prepare yourselves tho..
Better tighten up!
Good luck to us all, we're gonna need it!
:salute RC
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DOW closed over eleven thousand today...... :banana:
if the economy is going up, then people are spending again. THAT is the economy,.
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Good call. It's amazing that people don't realize how the price of petroleum products affects the entire global economy. As long as the oil companies are allowed to dictate prices and gain excessive profits...there won't be an economic recovery. Amazingly we don't see any federal lawsuits going on against the oil companies for price fixing.
The oil companies don't set prices, OPEC does. And, unfortunately, foreign cartels are immune to our anti-trust laws.
if the economy is going up, then people are spending again. THAT is the economy,.
We've got states that have 13%+ rates of unemployment. Things aren't better yet.
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The oil companies don't set prices, OPEC does. And, unfortunately, foreign cartels are immune to our anti-trust laws.
Yeah, and the Sicilian mafia never existed. The oil companies do have the power to directly influence foreign oil production and artificially inflate the cost of fuel.
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That's usually the case and unfortunate for the general public.
My only concern is to consistently see this rise so that business will gain some confidence in hiring more in their workforce due to demand, it will take time to completely be stable, but at least its an upward trend.
Hopefully, and this is a stretch, but hopefully Wallstreet learned something from all of this besides how better to work at stealing our money.
A lot of business are afraid to hire people and want to save up the money that lost and prepared for the next year or two if the economy drops again.
Economy on the rise? Woah, maybe if you have blinders on! Take a peek around the corner, and look at what they are hiding back there.. Don't want you to see that yet! Ummmmmm, it's not good! There is still time to prepare yourselves tho..
Better tighten up!
Good luck to us all, we're gonna need it!
:salute RC
I remember some people talking that we could face the whole world economy that will crumble in the next five years. Something that will over shadow the 1930s economy collapse. If that is the case, i am glad that i am poor now and not rich.
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See Rule #14
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what ripchord said is about right, i have yet to see any kind of turn around, our county still hovering around 18% unemployed, places still closing down, massive school cuts, Ive been looking hard sense Sept for a job, lost my job of 6 years just 4 months after buying my home for me and my son, Freaking owner gave my job to there grandson because he couldn't keep a job any place else, been traveling almost 100 miles out to look for work, theres just nothing, unemployment is not enough to keep me even every month, so Ive been using my retirement account to make up the difference, The Economy is not going up, well maybe it is for mutimillion dollar companies and CEO's, dont see to many blue collar workers agreeing its going up
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what ripchord said is about right, i have yet to see any kind of turn around, our county still hovering around 18% unemployed, places still closing down, massive school cuts, Ive been looking hard sense Sept for a job, lost my job of 6 years just 4 months after buying my home for me and my son, Freaking owner gave my job to there grandson because he couldn't keep a job any place else, been traveling almost 100 miles out to look for work, theres just nothing, unemployment is not enough to keep me even every month, so Ive been using my retirement account to make up the difference, The Economy is not going up, well maybe it is for mutimillion dollar companies and CEO's, dont see to many blue collar workers agreeing its going up
NOT TRYING to be wise.....just asking.....
are you also looking for other things you know how to do, but outside of your chosen profession?
i had a guy helping me at my shop, doing the simple stuff.......tune ups, brakes, etc. he's a comms system installer/troubleshooter for the military. his position was eliminated a few months ago......he looks for anythign though, to keep himself off of unemployment.
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Cap yes i have been sense i had 3 verts crushed from a construction accident, over 25 years in that Field Hvy Equipment Operator did all phases of dirt work, foundations septics, drainfeilds, clearing building roads ended up with a Level 2 permanent partial disability with a 20lb weight restriction, pain is 24/7 the amount of pain depends on the amount of activity i do the day before, where I'm screwed is the 20lb weight limit and i have to disclose to employers my disability I cant lie about that.
So being 50, a single dad who get nothing from his son's mom, level 2 disability weight restrictions and plus i stutter, lemme tell you its hard, its come now to where i need to eliminate things and I'm going to have to stop AH for now, keeping my home and food on the table takes importance, i just never imagined this would ever happen, not after being told by my former employer that my job was very stable and part of the family prior to buying my home, still trying to get that knife out my back
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are you also looking for other things you know how to do, but outside of your chosen profession?
A better question is: how many jobs are out there where they're hiring people with no experience in the field? I'll tell you--zero. That's something that happens when unemployment is very low. Further, if you're overqualified for a job that seems simple, no one will hire you because they expect you to bolt for a better opportunity as soon as things pick up. Some of the classical economic theory is simply not working right now.
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(http://www.google.com/finance/chart?q=INDEXDJX:DJI&tlf=12)
An update on the score for you all to argue about, the graphic is live and will continue to change as teh day passes
~enjoy~
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A better question is: how many jobs are out there where they're hiring people with no experience in the field? I'll tell you--zero. That's something that happens when unemployment is very low. Further, if you're overqualified for a job that seems simple, no one will hire you because they expect you to bolt for a better opportunity as soon as things pick up. Some of the classical economic theory is simply not working right now.
i think that may be an area to area thing.
i've got customers that're doing other things besides their chosen profession. the guy helping me did. a couple of friends are. most of the delivery drivers from where i order my lunch are.
there are people out there hiring. they may not be willing to pay what you're asking.....but then again, something is better than nothing. i know, 'cause i've done it in the past.
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Don't get me wrong, I share everyones fear of the unknowns about our economy and our future, knowing full well that it will take some time for things to get back to normal and gain stability, but the economy is recovering, slowly. Its going to take some time for that to trickle down to the public that's for sure, but its coming.
Fragile does not even come close to describe the worlds economy, we would all agree on that. One major event could bring it all crumbling down, but at least its going upward and not down, for now.
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Don't get me wrong, I share everyones fear of the unknowns about our economy and our future, knowing full well that it will take some time for things to get back to normal and gain stability, but the economy is recovering, slowly. Its going to take some time for that to trickle down to the public that's for sure, but its coming.
Fragile does not even come close to describe the worlds economy, we would all agree on that. One major event could bring it all crumbling down, but at least its going upward and not down, for now.
It is like i tell people, this is not forever. It sucks but better than some other country where you may have a job but no guarantee that you get pay. Some people who lost their job refused to get another, low paying job while other are willing to do anything to make end meet.
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See Rule #14
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It is like i tell people, this is not forever. It sucks but better than some other country where you may have a job but no guarantee that you get pay. Some people who lost their job refused to get another, low paying job while other are willing to do anything to make end meet.
I would agree to some extent about the type of job someone would be willing to do, but some areas just dont have ANY jobs available at this time. I also agree that it could be far worse than what it is and what it has been, we are a spoiled nation of greedy people that control our money and the small guy pays for it in the long run.
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Not as many individual traders playing the market as there was a couple years ago. Lot of the selloffs -market drastic fluctuations- were individuals trying to make a quick kill in the day trades, and automatic software indicators telling the money market plans that a selloff is in place, time to get out. Market may hold a little longer until the saturation level goes up with individuals playing again.
Or China calls in its notes... you can bet there will be a market reaction then... lol
:O
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Don't get me wrong, I share everyones fear of the unknowns about our economy and our future, knowing full well that it will take some time for things to get back to normal and gain stability, but the economy is recovering, slowly. Its going to take some time for that to trickle down to the public that's for sure, but its coming.
Fragile does not even come close to describe the worlds economy, we would all agree on that. One major event could bring it all crumbling down, but at least its going upward and not down, for now.
The problem is that the down fall of the economy was at the speed of light, the recovery is at the speed of a snail. I'm 62, out of work, out of funds, out of time.
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The problem is that the down fall of the economy was at the speed of light, the recovery is at the speed of a snail. I'm 62, out of work, out of funds, out of time.
Just like the crash in 1929, it when fast and it took over 10-15 years before it recover. Correct me on that if i am wrong.
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The problem is that the down fall of the economy was at the speed of light, the recovery is at the speed of a snail. I'm 62, out of work, out of funds, out of time.
traveler.....you're a cfi, right?
i was on liveatc.net yesterday, and noticed that on some of the airport listings, there were ads. one or two of them were cfi's. that might be something you could look into to get your name out there. same for the rest of you cfi's out there. :aok
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the economy is up because people are trying to spend their dollars before runaway inflation makes the dollars worthless.
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economy is on the rise for the haves while the have nots are getting less
how's that change working out for ya??
IMO the scary part is the economy is going directly in the direction the puppet masters want it to go and we spin round and round unable to affect any of it...
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Welcome back Archie Bunker!
On topic - I work in the telecom sector and a few years ago customers were
downsizing services and some were out right disconnecting some of what
they had in order to save a buck. This was nationwide not just in some
select geographic locations.
For almost a year now the reverse has been happening. Companies are
signing contracts for more services and others are upgrading what they
have. Again this is nationwide and not specific to any region.
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On topic
as stated here and else where, companies are profitable as they are doing more with less people. (could be why they can now afford your telecom services again eh?)
the rich get richer while the average joe continues to take it up the ..
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See Rule #14
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IMO we are not out of the woods yet as the "rise" is as fake as the bubble which created the fall
time will tell ... I'll leave it at that as I do not want to lock the thread with my response to your bs
good to see you again Westy LOL
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See Rule #4
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while i realize a lot of people are out of work........there is only one thing that's going to fix our economy. that is people spending money. that is what the economy is.
if people would spend money, then the out of work people would have more chance of finding jobs, to produce the stuff people are buying. it really IS that simple.
the economy is not some big blob that the govt wants you to think it is. it is you and me spending money.
i'll use my shop as example. if more people come in, and fix their cars(spend money), then i'll be too busy to do it all myself, thus creating a job or two.
same for the guy across the street. same for pretty much anything.
then as people are buying things, spending money, putting more people back to work, then all of them will have more disposable cash again, and will in the future be able to do things like fly, go boating, etc again.
you/we cannot sit and wait for the govt to fix things, as it's well known, that pretty much everythign they touch goes to poop.
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i'll use my shop as example. if more people come in, and fix their cars(spend money), then i'll be too busy to do it all myself, thus creating a job or two.
Agree 100%, but you have to admit there's a bit of a Catch-22 involved. If I don't have a job, I can't pay you to fix my car, and so on...
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Agree 100%, but you have to admit there's a bit of a Catch-22 involved. If I don't have a job, I can't pay you to fix my car, and so on...
yea...that is the catch-22 part.
i have a couple of customers i'm taking payments from, so that they could afford to get their cars fixed, so they could continue to try to find work.
it also comes down on those who still have jobs though. a lot pulled money out of the banks. a lot didn't, and are just sitting on what they have, waiting to see what happens.
if those with jobs just sit on their money, then it will continue to get worse for everyone. if those with jobs spend on things....even if it's minimal, and only things they need.......things will start to get better.
the big thing is that we all have to stop listening to the talking heads expounding how dire things are. they do nothing but put on the show that'll net them the most viewers, and the most money. if doom n gloom sells(which we all know it does) then that's what we're gonna hear from them.
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Have ya seen the numbers on personal debt over the last yr, dropped alot.. Thats where the money is going..
Thats a very good thing, because debt and defaults are what has caused this whole mess. Ppl spending money based on electronic projections of their worth... Ooops, the projections were wrong, numbers don't add up, bill is coming due.. Default!
The wave started some yrs ago, personal debt, home mortgage, banks, insurance co's, on and on..... See where it's going right?
Good news for CAP, is that ppl are fixing what they have, instead of buying new.. Or pulling things out of mothballs, and letting the bank have their new car back.. Alot of that going around.. Ppl will weather the storm, no doubt.. How well, depends on how big a hole you are in to start with.. Took a long time to get in this predicament, just has to work its way out again... Govt efforts to avoid it, are just making it worse! And WHAT kind of insanity, has them spending trillions, and turning things upside down in whole areas of the economy, at a time like THIS? Something going on there, :headscratch: not good!
It ain't over yet!
:salute RC
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See Rule #14
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I'm not a degreed economist but have some empirical knowledge.
Economy definitely on the mend but it got so ugly we have a long way to go. Unfortunately the pain index is still very real and will be for a while yet. Some indications of job growth but nothing to make your socks roll up and down.
Factory orders up, executives still sandbagging forecasts because they're afraid of getting burned.
What's different about this recent crash is the speed with which it spread to global markets. Like it or not, global economic perceptions are interconnected as never before. Perception (fear or optimism) drives markets, markets drive capital and capital drives jobs either directly or indirectly.
It is a new global economy and many (not all) of the classic rules are out the window. So comparisons to other depressions are not very valid.
Best thing to do is as the WWII-era British slogan says, "Keep Calm and Carry On". This will pass but it will take a bit.
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See Rule #2
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See Rule #2
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Have ya seen the numbers on personal debt over the last yr, dropped alot.. Thats where the money is going..
Thats a very good thing, because debt and defaults are what has caused this whole mess. Ppl spending money based on electronic projections of their worth... Ooops, the projections were wrong, numbers don't add up, bill is coming due.. Default!
The wave started some yrs ago, personal debt, home mortgage, banks, insurance co's, on and on..... See where it's going right?
Good news for CAP, is that ppl are fixing what they have, instead of buying new.. Or pulling things out of mothballs, and letting the bank have their new car back.. Alot of that going around.. Ppl will weather the storm, no doubt.. How well, depends on how big a hole you are in to start with.. Took a long time to get in this predicament, just has to work its way out again... Govt efforts to avoid it, are just making it worse! And WHAT kind of insanity, has them spending trillions, and turning things upside down in whole areas of the economy, at a time like THIS? Something going on there, :headscratch: not good!
It ain't over yet!
:salute RC
yea, you're right. it's not over by a longshot.
you're also right, in that my business is starting to go a little better because people are keeping their cars/trucks longer.
know what's funny though? the customers that could be considered poor, and have crappy jobs seem to be more willing to spend their money than those that have jobs that pay 2x what the other guys do.
they come in, and when they're given an estimate(and 2 of them this week, i recomended they get rid of their cars in favor of somethign better).....well......they just say "what the hell, it's gotta be done, go ahead and handle it."
those with the good paying jobs, and nicer cars(which SHOULD be maintained much better than they are).......well, those guys whine if ya tell em that a headlight bulb is gonna cost them $14.00.
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Hey, I did my part this week, paid 500+ bucks to fix my car only to find out when I picked it up that it aint fixed yet..... :D
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Hey, I did my part this week, paid 500+ bucks to fix my car only to find out when I picked it up that it aint fixed yet..... :D
i hate when that happens.
i tend to try to keep cars till i know they're fixed right.
i had a 94 caprice spend 3 weeks here, because each time i thought i had it licked, it fooled me.
the shop across the street has a windstar doing the same to him. i was just talking to him about it yesterday.
everyone thinks fixing cars is easy, when nothing could be farther from the truth.
on that note, if they told ya it was fixed, and they were sure, i'd take it back to them.
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I said some time ago the economy would see a resurgence of life this year. I said the bigger companies would start showing profits in May/June (I was off by a month), followed by housing prices in most locales rising in Aug/Sept (exception being California where it is already inflated), and (lastly) followed by a gradual decrease in the unemployment numbers.
A lot can prevent this ideal time-line from progressing; additional/restrictive taxation, a rise in the cost of energy, increased military conflict, and a few more natural disasters. I'm hopeful but I'm still preparing for the worst, this way I won't disappointed.
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In my area the economy is not on the rise, and won't be for quite a while, if ever. In the last 3 years we have lost Rubbermaid, Young Radiator, Toastmaster, a super Walmart, 2 auto parts stores, 3 movie rental places and all the tax revenue that goes along with it. Property taxes, utility bills, fuel prices, water and trash pickup, insurance, all went up.
We as a community here passed a 1/4 cent sales tax to fix up the city pool for the kids but the powers to be decided to redirect the moneys to a railroad that you never see a train on. We also lost the local landfill. Things are not good here.
As a result, folks are packing up and moving to the big city or out of the state completely.
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Anyone thinks we can spend our way out of this mess doesn't understand the basics.
Do not believe what our "leaders" tell you - uncontrolled spending (i.e. spending what you don't have or could never pay back) is what got us here. Another word for it is GREED - at all levels. Unsupported credit lines. Materialism - stupidity.
IMHO, until the "too big to fails" are allowed to fail and the markets adjust accordingly, we are pumping money into an over valued balloon that has a huge hole on the other side... A hole no one wants to admit is there. The pumping is just slowing the downward spiral, it doesn't patch the hole.
This "rise" is being created by printing money and the tax increases which have to follow (for all of us folks - not the j "rich" who make over 200k). If you think it is getting better, you have been fooled. If your little piece of the world is looking brighter right now, good for you. The problem is there isn't anything in place to perpetuate or expand on that improvement.
Pay down your debt; stop spending and start saving for worse times to come.
Have a nice day :)
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Goldman Sachs sued by the SEC.
Double Dip is started.
:banana:
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Anyone thinks we can spend our way out of this mess doesn't understand the basics.
Do not believe what our "leaders" tell you - uncontrolled spending (i.e. spending what you don't have or could never pay back) is what got us here. Another word for it is GREED - at all levels. Unsupported credit lines. Materialism - stupidity.
IMHO, until the "too big to fails" are allowed to fail and the markets adjust accordingly, we are pumping money into an over valued balloon that has a huge hole on the other side... A hole no one wants to admit is there. The pumping is just slowing the downward spiral, it doesn't patch the hole.
This "rise" is being created by printing money and the tax increases which have to follow (for all of us folks - not the j "rich" who make over 200k). If you think it is getting better, you have been fooled. If your little piece of the world is looking brighter right now, good for you. The problem is there isn't anything in place to perpetuate or expand on that improvement.
Pay down your debt; stop spending and start saving for worse times to come.
Have a nice day :)
bolded. this is is what is and will continue to make problems. people stop spending, then people get laid off, and those laid off people stop spending, so more get laid off, who also stop spending.
i'm not saying spend money you don't have.......i just paid off my last credit card a couple of months ago, and from here on in, i'll treat it like an american express card....in as much that whatever i charge will be paid off at the end of the month.
i'm also not saying our govt needs to keep spending. they need to stop it, and start eliminating unnecessary programs. i'm talking all levels, not just feds.
a customer was just here telling me that cherry hill west high school has a principle for each grade. now how stupid is that?
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It is nothing more than addicted investors. A correction will be along shortly to remind people why you set a sell limit to force a sale on stocks when they start the plunge.
Stop.
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Have any of you ever heard of the Paradox of Thrift?
Basically in a nutshell, if we all try to save then none of us will be able to.
If everyone starts to save money then less spending follows, if no one spends any money there is no money to be saved.
Saving in a recession, oddly enough, is not the thing to do. We need to start re-investing in capital to get the economy back on track. Without investments, progress can not be made.
Also here's a little lesson for some of you. We literally have no debt, technically. If China were to come over and say, "Hey we want our money paid back." All we have to do is write them a check for the amount. Simple as that. The reason why is because we create our own currency, that's why America can not go bankrupt all we simply have to do is create more money to pay off debts.
But we do not, because of the reason of inflation and loosing our credibility as a lender/borrower.
This nation runs on credit and debt, it is what gives the incintive to invest. Take for example the bankruptcy laws in place to protect citizens and companies. These laws give the incintive to invest without worry to be ruined in a bad investment, it gives you another chance to try again.
The banks are not to be blamed, at least not entirely. They were ordered to give out loans to finance housing for "every American gets a home." Were the banks screwed up was giving out loans of $250K to finance a house for a family with an income of $30K/Year or less. Banks are as crucial to our economy as air is to live, only 10% of our nations wealth is actually in paper currency, the other 90% is debt created by loans. In otherwords, if the banking system were to fail 90% of our nations wealth will disappear over night.
Let me elabortate on the subject above, the Reserve Rate is a percentage of total deposits that must be kept in cash by all banks. IE: You deposit $1000 into your account, the Reserve Rate is at 10%, the bank has to keep $100 in cash on hand. What about the other $900? That is lend out in loans, and thus this cycle actually creates money.
Let me demonstrate: Keep in mind that the banks are, by law, to give back the funds deposited if demanded. The reserve rate is at 10%.
Bank 1 Bank 2 Bank 3
Deposit: $1000 Deposit: $900 Deposit: $810 Total Deposits: $2710
Reserve: $100 Reserve: $90 Reserve: $81 Total Reserves: $271
Loan: $900 Loan: $810 Loan: $729 Total Loans: $2439
This person just deposited $1000 into his account, the bank lent out $900 to a guy to pay for a chainsaw. The chainsaw merchant takes the $900 and deposits it into his account at Bank 2. Bank 2 then lends out $810 to a guy who wants to buy a new Go-Kart, the Go-Kart merchant takes that $810 and deposits it into his account at Bank 3.
If all three account holders were to go to the bank and withdrawl all of their deposits at once, then only $271 will be avaliable. The bank is liable to give back $2710 upon demand, but only 10% was kept on hand by law.
Of the $2710 deposits $2439 of that was created through loans not income. If the banking system were to be regualted or were to fail then our nations wealth will vanish, fast. The only reason why this system of trust exists is because of the FDIC.
Saving is not the way to end a recession it will only prolong it, we need to start re-investing if we want to end this recession.
Heres a quote that I came to know and love:
"It is a recession when my neighbor looses his job, it's a depression when I loose mine"
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Flipperk, It sounds good on paper and using your explanation is a simple one no doubt, but how are you going to explain the billions the banks made in profit to pay for their CEO's and CFO's, and the numerous bonuses to the rest of the hordlings?
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Flipperk, It sounds good on paper and using your explanation is a simple one no doubt, but how are you going to explain the billions the banks made in profit to pay for their CEO's and CFO's, and the numerous bonuses to the rest of the hordlings?
It's simple actually, it is a incintive to work.
CEO's and CFO's are not your average employees, they are the bread and butter of the company. They are in a position of high importance, their decisions either make the company millions or looses it millions. The high pay and bonuses are an incinitive to keep working 100 hours a week, on call for 24/7, many sleepless nights and stress.
If you worked for a multi-billion dollar company, you were the CEO. You personally put in 80-100 hours a week to make sure everything is running smoothly, you deal with legal and financial turmoil. Would a 100K/ Year keep you happy? Maybe for the first year, but sooner or later you find your self making the company millions, if not billions a year because of your decisions. Your worth is $500 million a year, yet you are paid 100K/Year.
The whole reason for bonuses is to keep the high powered money makers in the office and not at their houses.
Now wether or not it is wrong, it's the companies decision to give out bonuses...not the governments or us.
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Having seen alot of CEO types in my former line of work, your assertion that they are the bread and butter
of the company is absolutely ludicrous. They are easily replaced and there seems to be very few whose company
lives or dies by their decisions.
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The endless tripe about bank ceo's is the equivalent to whizzing in the Atlantic ocean, it makes NO difference whatsoever, unless your end goal is to incite class-envy. If the ceo of B.O.A. is whacked down to $250k from 20 million, will it make any of us any richer? Aside from making certain people feel a little vindicated, it has ZERO affect on our lives, other than perhaps to thin the talent pool for future ceo vacancies, and make it politically palatable to pass more draconian laws
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The banks are not to be blamed, at least not entirely. They were ordered to give out loans to finance housing for "every American gets a home." Were the banks screwed up was giving out loans of $250K to finance a house for a family with an income of $30K/Year or less.
Thats what cracked me up years ago when it was a real estate agent's wet dream.
Guy from Mcdonalds has a $400, 000 home. When he then gets knee deep in trouble..he then cashes in his equity. Rinse/repeat. Soon that equity is not there anymore, tons of people just hand in their keys and say Im done. Now theres over 400-500 gs in this house and its only worth 250gs.
I predicted that his would happen soon just seing how my freinds got suckered in. They said "dont worry, see how fast these houses sell?" I heard one say " In the 2-3 years the payments go up on your mortgage, you will get a raise/promotion, so it wont be so bad"
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