Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Eagler on July 11, 2002, 08:22:34 AM
-
Anyone see what the S&P 500 closed at yesterday?
I know most of you are independently wealthy and this is not a concern :), but anyone else get the feeling we aren't heading for a deeper recession but the mother of all depressions?
I’m not a market expert but have talk to a few who are much more knowledgeable about it than I & they say we are about to tank - big time! It's a snowball going downhill, getting bigger and faster as it goes and there isn't anyway to stop it.
The difference between now the 20/30 depression is we aren’t the same ppl. Can you see orderly bread lines of the unemployed or do you see widespread looting?
How would one prepare for this?
-
Its a good time to be a firearm owner! :D
-
Go ahead and have your recession, depression, economic downturn, etc...
I refuse to participate.
-
Originally posted by Garobi
Go ahead and have your recession, depression, economic downturn, etc...
I refuse to participate.
-
I believe you will hear nothing but gloom and doom until the first of November. Democrats and the press will be hitting this hard as the Democrats have no issues on which they can demonstrate a vote "for" them. They only have their old and tired story that America is going to hell without them in power. Will the party of fear, the Democrats, tactics work?
-
Originally posted by OZkansas
I believe you will hear nothing but gloom and doom until the first of November. Democrats and the press will be hitting this hard as the Democrats have no issues on which they can demonstrate a vote "for" them. They only have their old and tired story that America is going to hell without them in power. Will the party of fear, the Democrats, tactics work?
Yes, their exaggerations of the issue doesn't help but neither does almost daily 10,000 employee lay offs along with ever expanding discoveries that the "best economy of our lifetime" 93 - 00 was nothing but a bunch of hot air and corruption, just like the admin it emulated.
No, if anyone is happy about its, its the dems which will use and abuse it for their own political gain in 11/02. The Reps best defense is to try and lay out the beginning & reasons of the crash in terms joe 6pack can understand. Almost an impossible task & keep the "new tone" in DC - IMO....
-
Well, All I can see is a rosey future. My company has grown steadily each year, and 2002 has been a record breaker so far. Demographics say our customer base is growing geometrically and life is good. When I started here our stock was trading at 18. It was at 62 when it split this year. I think recessions can be created by panic. The economy of the 90's wasn't all hot air, and it wasn't all Clinton. Greenspan is the real hero, and he is still around so chill.
-
It's also a real shame that tax cuts, not the sham tax cut passed by Congress, aren't in place. Who knows that all that extra capital in the market place would have done!
-
Originally posted by midnight Target
Well, All I can see is a rosey future. My company has grown steadily each year, and 2002 has been a record breaker so far. Demographics say our customer base is growing geometrically and life is good. When I started here our stock was trading at 18. It was at 62 when it split this year. I think recessions can be created by panic. The economy of the 90's wasn't all hot air, and it wasn't all Clinton. Greenspan is the real hero, and he is still around so chill.
There is some truth within...the problem is this: When overseas investors start balking and pulling out of the stock market, it sends it spiraling down...our economic numbers show that its on the upswing, however the CEO scandals and booking cooking it countering any upswing in the economy...it only takes a fraction of overseas investors to pull out and the knee - jerk reaction from Wallstreet sends us into the tomb. Its happening as we type.(8774 and dropping)
-
I hope interest rates drop again. :) Need to buy a house eventually.
-
Right Rip
and with that confidence in the dollar slips which will result in inflation
watch the $$$ - with it goes the market and vise versa...
-
Inflation is the last thing we need to worry about right now. Deflation is a real possibility.
-
The war with Iraq will make us forget the economy. Should be starting about August 2003....just before the election.
-
Originally posted by Ripsnort
There is some truth within...the problem is this: When overseas investors start balking and pulling out of the stock market, it sends it spiraling down...
Which will drive the dollar down from it's inflated heights. Which means that our (US) products will be more competitive and foreign products less competitive - without tariffs and subsidies.
Jobs will be created and real economy benefit.
If the stock valuations return to the level where they belong - so what?
Also, withg lower dollar our companies will drop / are dropping much more for foreign investors then for us - punishing those stupid foreigners for helping drive our market and the dollar to unsustainable levels. With $$ falling, the US stocks will actually become much more attractive (cheaper) investment for foreignets again.
All those "retire at 40" hopes were stupid to start with. If the economy output is the same, that's what is going to be consumed - regardless how much the "market" is worth. The way it would have corrected itself would be when those retirees stopped buying and started cashing in their retiremet stocks - driving the market even lower then now.
Good thing it happened sooner - before those people quit their jobs and bought retirement houses, etc. It is much easier if your retirement savings evaporate when you still work then when you are already retired.
miko
-
heh Miko, I guess that would be a "optimists" approach...if you could call it that!
-
I suppose you beleive Nostrodamus too?
I'd prefer to think the future is dynamic to what we do today, static predictions and such seldom, if ever, mold.
-
miko
what about this angle:
"Almost all countries in the world use the U.S. dollar as their reserve currency. They have bought trillions and are holding them. If another currency becomes more valuable or is viewed as more stable, then the world will switch currencies, and trillions of dollars will come back into the country -- inflation would be inevitable and the dollar would lose its value.
In the week ending July 5, the dollar closed consistently at or near parity with the Euro. As of this posting it sits at (US) 99 cents and has been hovering there for more than a week. Since various economic" reforms" from the 1950s to the 1970s removed the dollar from the gold standard it has been a fiat currency, unconnected to any measure of intrinsic value. The full faith and credit of the United States -- along with its military -- have given the dollar its value. The Euro is partially backed by gold and there have been lingering but credible rumors for years that the U.S.'s gold reserves have been moved to Europe."
Wouldn't this scenerio result in a valueless dollar and booming inflation?
-
Originally posted by Eagler
How would one prepare for this?
If you believe that there is going to be a depression get out of equities now! Invest the funds into triple A rated Government Bonds....or to be really conservative, buy gold.
-
If the 80's were the decade of Greed, wtf was the 90's?
Baming Clinton is wrong, I really dont think either party had much to do with the economy good or bad.
It is rather funny to hear Tom Daschel barking like a rabid dog about GWB being responsible for everything bad that happened in the 90's (and we are paying for now) when you hear about this http://www.nypost.com/commentary/52305.htm
-
Originally posted by Krusher
If the 80's were the decade of Greed, wtf was the 90's?
Baming Clinton is wrong, I really dont think either party had much to do with the economy good or bad.
It is rather funny to hear Tom Daschel barking like a rabid dog about GWB being responsible for everything bad that happened in the 90's (and we are paying for now) when you hear about this http://www.nypost.com/commentary/52305.htm
spell check alert !!
-
War used to be what made the US economy spin up....but nowdays it seems no equipment lost in these wars the USA`s waging,thus no need for mass tanks and ships to roll out of assembly lines.
-
Originally posted by Eagler
Yes, their exaggerations of the issue doesn't help but neither does almost daily 10,000 employee lay offs along with ever expanding discoveries that the "best economy of our lifetime" 93 - 00 was nothing but a bunch of hot air and corruption, just like the admin it emulated.
That "best economy" was generated by a change in the pension laws that no longer forced companies to maintain an employee pension fund (instigated by a US government official who was too close to his business associates) which forced a lot of middle-class salary people to invest in the stock market ala 401(k) plans in order to build a retirement plan. The corporations stopped their pension funds as a cost-saving device and recouped that money to offset their losses, which made them look like they were going gang-busters on profits, which raised their stock value, which then caused the salary people to put their money in those companies because the company stock was high and the people thought their money would be safe there and be available when they retired in 30 years.
Eventually, the pension-cost savings were fully recouped and there was nothing left to offset the operating losses (and the uncontrolled corporate executive self-greed, but that's another issue). When the losses were realized, the stock price plummeted, taking the 401(k) plans with it and eroding consumer confidence.
Contributing to this was the large investment people were making (via their 401k stock plans) in the tech sector's dot-Com companies, which was fueled by the growth of the Internet, which was in turn fueled by the increase in homes with access to a computer and a modem. All of those dot-com companies needed bandwidth and servers to accomodate their business transactions and the telecom industry began to flourish. As the .Com companies expired into bankruptcy due to either faulty business models or lack of demand for products, the tech sector went belly-up, taking the traditional communications companies with it.
But there was also another factor contributing to the expiration of the telecom business: the de-regulation of long distance services and fees which split the AT&T core business and opened it up to competition from companies like MCI/Worldcom and Qwest Communications (names sound familiar?), companies who were fueling their low prices by offsetting their losses with cash recovered from the closed pension funds. As one company undercut their costs with low prices, the other companies were forced to do the same in order to remain competitive in sales.
Now, the telecom companies are teetering on the edge of collapse. I predict Worldcom will get broken up and bought out for pennies by a local carrier or foreign investor (if the government/taxpayer money doesn't prop it up, which I don't see happening); AT&T will be laying off employees by the end of this month, with more to follow at year-end (you can bookmark this thread if you don't believe me); and Qwest will close its doors or go the way of Paradyn Communications (a DSL provider that went through severe lay-offs, then cut salaries because they got to the point that if they laid any more people off, they'd cease to function as a business). Check out Global Crossing for a glimpse into the future of the telecom industry. I wouldn't be surprised if Adelphia Communications becomes nothing more than a name on a sports arena by this time next season.
But its not just tech and telecom that's hurting. All of that online business needed shipping in order to deliver the goods that were being purchased, and FedEx and UPS saw increases in demand for their services. Don't be surprised if UPS, FedEx, and Airborne Express start announcing lay-offs (they've already reduced the number of hours their hourly employees are worked).
So how can the economy turn around?
First, reinstate the pension plans so that people feel they have some long-term security. We've already seen what happens when the general population (typically, people with only a high-school education) try to handle their own retirement plans. When the consumer confidence is restored, people will be more likely to make purchases.
Second, invoke criminal charges against Scott Sullivan (CFO of Worldcom) and conduct extremely public trials for corporate wrong-doing. Send a message to the business leaders. Bring Ross Perot to task for his involvement in the manipulation of energy prices during the California energy crisis (remember that?).
Third, make it unprofitable for companies to give executives buy-out packages to dismiss. Tax them to the point that it hurts. Right now, executives can come into a company, determine how its run, but make those decisions risk-free. K-Mart did that and ended up paying their ex-CEO big money for running the company into the ground and then resigning. The bankers supporting K-Mart's bankruptcy proceedings are now suing to recover those funds (but I don't see it being successful). The decision-makers should bear the risk for bad decisions. As a stockholder, I want the guy controlling my money to have some skin in the game.
Fourth, re-instate regulation of the telecom and transportation industries, two industries with strong implications for national security. Airlines began collapsing left and right when the US gov't deregulated the industry, forcing airlines to cut expenses to remain competitive, which led to airlines' reduction in spending on such things as airport security (gee, I wonder what would've happened on Sept. 11, 2001 if gov't regulation had been in place). Worldcom is going to go the way of Braniff, Eastern, and other major airlines and its going to take down AT&T with it.
And finally, continue farm subsidies. When the American lifestyle ends up in the crapper, we're going to need a lot of bread for those breadlines.
-
Does anybody remember the Great Depression of 1992? The depression that was "the greatest depression in American History?" The depression that was a depression until the economic reports for the last quarter of that year came out in January of 1993, after the presidential election was history?
Did anyone see the news special hosted by Peter Jennings during 1992 (filmed in Detroit I believe) in which he interviewed the family of an auto worker who was worried about potential layoffs? He began the special with a preliminary speech in front of a 300 thousand dollar home with 50 thousand dollars worth of cars in the background.
In spite of the hoopla in the media, it appears in retrospect that the economy was merely catching its breath while businesses reorganized. Actual economic growth for the last quarter of that year was over 4 percent, a rate that continued almost unabated for the next 8 years.
Nevertheless, the "bad economy" was an issue that helped propel Clinton into the White House.
The current economic crisis is more real than that one. However, there is nothing wrong with the economy or the stock market that cannot be weathered with a little confidence and steady nerves.
If you want to know what a real depression is read a history of the 1930's. Talk to a few of the old timers who lived through that period. My parents had one pair of shoes, which were worn on Sundays. They went to school barefoot. The droughts of the early 1930s caused many of the families to lose their farms. They looked starvation in the face. Many hunted, fished, and trapped to meet the basic necessities of life. My mother's family lived in a tent for while building a house out of timber torn out of an old barn on land purchased with a New Deal loan. More than 25% of the workforce was unemployed. The expansion of government programs and power that began during that period continues to this day.
A similar depression in the year 2003 would sweep the Democrats into Congress in landslide elections. Programs of government largess would expand greatly, as would taxes. Eventually, so many people would be dependent upon government "benevolence" that they would begin to sap the economy and the working class of their energy. As the decades went by the U.S. would slowly become a second rate economic power.
If you don't believe it can happen just study the long slide downward of the economies of Great Britain and France.
Regards, Shuckins
-
"CHICAGO (Reuters) - Sprint Corp., the No. 3 U.S. long-distance telephone company, said on Friday it will cut about 1,200 positions and eliminate certain high-speed Internet platforms in some cities to cut costs amid the telecom industry slowdown. "
In other news, it was revealed that Duke Energy Corp. is the subject of a federal investigation into claims of "roundtrip trading", where volumes of equal units are traded with another company as a way to pump up volumes of trading and reflect increased revenues, a practice that came to light during the investigation into Enron Corporation. Duke Energy became the subject of the investigation when questions arose concerning its practices during an energy crisis last year. Its stock is tumbling as a result of the investigation.
On a side note, the American populace laid the blame on the Great Depression on 4 types of people: bankers, brokers, businessmen, and bureaucrats. If a 2003 depression emerges, the blame would probably be laid on businessmen, brokers, and bureaucrats (in that order). Might be the first time in US history that the banks aren't blamed for economic woes, mostly because the banks are offering low interest rates on loans and account holder's savings are federally insured against loss.
During the Great Depression, my grandmother raised 9 kids in a tar-paper shack by farming, raising chickens, and, for awhile, selling hot meals out of the back of a boardinghouse kitchen while my grandfather drank himself to death. I've seen photos of the family that were taken for special events (since photographs were something special to them due to the cost of equipment and film processing). They didn't have any money, and my grandmother never wore a smile in any of the pictures, but the children weren't depressed because they had something the businessmen, brokers, bankers, and bureaucrats couldn't take away: hope, faith, and the ability to endure hard work.
My mother was the first of her family to get a college degree, and she did it on federal grants and scholarships to nursing schools.
4 of my aunts now have college degrees, my uncle is a successful farmer and citrus distributor, another aunt works for a judge, and my other 2 aunts are active in their churches teaching Bible school and working in an Assisted-Care Living Facility. My other uncle died of a water-born disease - hepatitis C - which attacks the liver and was unknown at the time.
The way I see it, if they can endure, so can I. I already have my Bachelor's Degree. I'll just have to tighten up the belt. Good thing I already paid for AH six months in advance :)
-
Thanks for the responses, interesting views
what has, in your opinion, keep the economy afloat say the last 12 months?
My guess is credit. Whether its in credit cards or borrowing against your home. It's credit.
How does an economy thrive/grow on borrowed money?
How many of you are up to your eyeballs in credit card debt?
What's the typical debt level of the average American?
Betcha that's a scary number...
Most ppl don't know what it is to pay cash for something anymore, to wait and save for something. They just grab the last credit card at 19% interest they got in the mail yesterday and go get it...
Just another side effect of the me, me, me society we have created.
I think its time to pay the piper..
-
Look OUt Below!
-
Originally posted by Eagler
Look OUt Below!
441 point drop...surprised there are not a few day traders jumping out of their condo's
-
DOW back up above 8000, no troubles : )
-
Originally posted by gofaster
I wouldn't be surprised if Adelphia Communications becomes nothing more than a name on a sports arena by this time next season.
Hey, look! I'm a prophet!
http://www.foxnews.com/story/0,2933,58606,00.html
By the way, last Monday WorldCom announced that it would be selling off some of its business. That makes two for me.
For my hat trick, AT&T will announce lay-offs by month-end!
-
Originally posted by Eagler
what has, in your opinion, keep the economy afloat say the last 12 months?
My guess is credit. Whether its in credit cards or borrowing against your home. It's credit.
My guess is cash reserves and bank loans (credit). Large-scale businesses make decisions quarterly, but announce them whenever outside forces dictate. Credit will work for consumers short-term, so long as consumers can meet their minimum monthly payments, but for larger corporations its a matter of getting funds through profits, investors, investments, and bank loans. The first three are in the tank. That leaves bank loans (credit), and those are usually given with longer lifespans.
If the economy doesn't turn around, look for the other shoe to fall: foreclosures. I'm sure there are some farmers out there that can explain in vivid detail what its like to see your whole world put up for auction.
-
don't you hate being right sometimes ?
-
Can we blame Dubya?
consortiumnews.com
Twice as Bad as Hoover
July 23, 2002
George W. Bush is shattering records for the worst first 18 months in office for a U.S. president as measured by the benchmark Standard & Poor’s 500. In his first year-and-a-half in the White House, Bush presided over a 36.9 percent decline, almost twice the percentage drop of Herbert Hoover, the president who led the nation into the Depression.
Hoover recorded an 18.6 percent decline and now ranks third from the worst, with Richard Nixon in second place with a 23.6 percent fall in his first 18 months. In other words, in the 75-year existence of the S&P 500, no president has seen the stock market index fall as much as one-quarter, before Bush’s decline of more than one-third.
Ironically, given the Republicans’ business-friendly reputation, the four worst performing stock-market presidents in the first 18 months are all Republicans. Ronald Reagan’s 15.3 percent decline joins Hoover, Nixon and Bush at the bottom. The top two performing presidents, as measured by the S&P in their first 18 months, are Democrats, Lyndon Johnson at a plus 27.5 percent and Franklin Roosevelt at 55.1 percent.
Bill Clinton ranked sixth with a 4.2 percent gain in his first 18 months.
While almost doubling Hoover’s decline in the S&P, Bush trailed the Depression-Era Republican slightly in the blue-chip Dow Jones Industrial Average, which measures the performance of 30 top U.S. companies. In Hoover’s first 18 months, the Dow fell 24.8 percent. In Bush’s 18 months, the Dow’s drop was 24.3 percent. [NYT, July 22, 2002]
Though some presidents reversed the early returns of the stock markets, Bush has so far failed to inspire confidence either with his personal performance or his policies. The stock market has greeted speech after speech by Bush with double-digit declines in the Dow.
Accelerating Pace
The pace of the stock market crash under Bush also is accelerating. In the 10 trading days since Bush visited Wall Street to promote his economic plans, the Dow has dropped almost 1,500 points or 16 percent. [NYT, July 23, 2002]
The Bush speeches have done little to persuade investors that happy days are here again – or for that matter, likely in the foreseeable future. Bush’s top economic proposals speak to different conditions than are apparent today.
His demand for a permanent repeal of the inheritance or “death” tax had more appeal to Americans who were watching their stock portfolios swell in the Clinton Era, along with their inflated dreams of multi-million-dollar wealth to pass on to their descendants. Now, after a battering of their net worth, many of these Americans are simply hoping to have enough money to pay for a modest retirement.
Fast-track trade agreements also are out of sync with a world far less enamored of U.S. economic leadership. Further, deregulation of industry and tort reform -- backed by Bush and Republicans in Congress -- have helped unleash some of the avarice that led to corporate collapses at Enron Corp., WorldCom Inc. and other companies.
Missing from Bush’s economic plan is any initiative that can inspire Wall Street with visions of economic expansion. By contrast, the Clinton-Gore administration promoted technological advances like the Internet that created a framework for the private sector to innovate. In Election 2000, Vice President Al Gore also proposed a partnership between government and industry to develop environmentally friendly vehicles and alternative energy sources, in part, to prime the pump for economic growth.
Major stock indexes are Wall Street’s rough measures of expected business growth. At least during George W. Bush’s first 18 months, investors are judging that those expectations are lacking – on a historic scale.
-
yeah, it must be hell to follow a admin which was corrupt and full of hot air into the White House
Bill Clinton ranked sixth with a 4.2 percent gain in his first 18 months
Do you honestly think slick had ANYTHING to do with this or was he just in the right place at the right time to benefit from measures the previous admin had set in place. Just as Bush JR walked into a pile of cow crap left behind by his predecessor.... :rolleyes:
-
Originally posted by Eagler
Do you honestly think slick had ANYTHING to do with this or was he just in the right place at the right time to benefit from measures the previous admin had set in place. Just as Bush JR walked into a pile of cow crap left behind by his predecessor.... :rolleyes:
I think it's rarely that simple. Certainly, the previous White House tenant could get some blame/credit in the first months or year or so. It's defies logic if we blame Clinton for what's happening today while crediting Bush Sr. for anything that happened during Clinton's second term.
The easiest way is to simply blame/credit the guy in the seat. That's where the bucks stop.
-
Stock market crashes do NOT lead the country into a depression. They are simply indicators that there are areas in the economy that are weak. The Crash of 1929 did not cause the Great Depression, but overproduction, the close of the post-war markets for American goods in Europe, subsequent lay-offs of factory workers, and rapidly falling farm prices did.
All of those problems existed before Herbert Hoover took office. Yet he caught much of the blame for them. What history seldom teaches is that many of the New Deal programs of Roosevelt's administration were simply expanded versions of Hoover's ideas.
Nixon took over as president while the Vietnam was in full bloom. The slow winding down of that conflict, which the public was demanding, saw the economy begin a long slide into recession. That slide continued through the Ford and Carter administrations and into the start of the Reagan administration.
The economy had a minor economic downturn during the last year of the first Bush administration, but had begun to come out of it by the time Clinton took office. Economic growth during the last quarter of 1992 was above 4%, and that rate continued almost uninterrupted through the entire Clinton term.
More often than not, government interference has a negative impact on the economy and national productivity. The economy is healthiest when government involvement is minimal.
To blame these, or any of our presidents, for economic problems that existed before they came into office simply reveals our own political agendas.
Regards, Shuckins
-
Originally posted by Shuckins
Stock market crashes do NOT lead the country into a depression. They are simply indicators that there are areas in the economy that are weak. The Crash of 1929 did not cause the Great Depression, but overproduction, the close of the post-war markets for American goods in Europe, subsequent lay-offs of factory workers, and rapidly falling farm prices did.
Overproduction = see the telecom marketplace
Close of markets = see US trade deficit
Lay-offs of workers = see Ripsnort's thread about IT job losses
Falling Farm Prices = what's the current trend in pork belly futures? Grain? Citrus?