Yeah....I have to agree that this is the worst congress that I can think we ever had. Its all political back stabbing and bull shit.Kmarion wrote:
I think the Dems are out to destroy all of this..lol
Employers forced to pay higher min wages (FFS let the market decide) http://www.qctimes.com/articles/2007/01 … 528409.txt
Repeals on tax breaks (A good portion of what is stimulating all this.)http://www.cato.org/pub_display.php?pub_id=6882
And now they roll back oil company subsidies (Oil had been going down) http://news.yahoo.com/s/ap/20070119/ap_ … ngress_oil
Put the economy back in the toilet before the next Presidential Election.
First of all, stop using the word good. Good is a highly subjective word with heavy connotations, neither of which are conducive to scientific analysis or discussion of scientific theory.Pug wrote:
So your saying that increasing investments in US companies has absolutely no impact at all on the economy?jonsimon wrote:
Shipbuilder has this shit on lock. The stock market does not affect the economy directly, but it has an indirect long-term tendency to relate with investment. The day to day reports on the stock market are total bullshit and meaningless to the economy overall.
Like companies never should use the capital they raise to create new markets or new technology?
If the stock price is rising the company can float more shares to raise capital...to provide more return on capital...how is that not good?
Plus it attracts more foreign investors who want to invest in the US and not abroad...is that not good?
Also, isn't an increase in stock price tied to an increase in personal wealth, which increases spending, which is directly related to the economy?
Second of all, I didn't say squat about investment, and the stock market is not included in investment (I) in economics.
Honestly, if you're going to participate in an economic discussion, make sure you know what terms mean in economics. You improperly used the lay definitions of capital and investment, and if you can't use proper terminology our discussion will just devolve into meaningless drivel.
This is all I can really respond to:
An increase in stock price means nothing unless the stock is sold. It can only increase disposable income of an individual if they A) sell the stock B) recieve increased dividends or C) increases bank expectations that loans will be paid off which may allow the individual to take out more loans. None of these are direct, and even if they were they wouldnt form a direct relationship between stock prices and economic health. Because an increase in stock prices does not create a direct definite increase in any component of GDP stock prices are not a useful indicator of economic health.Also, isn't an increase in stock price tied to an increase in personal wealth, which increases spending, which is directly related to the economy?
Shipbuilder provided the best real example when he cited rises in stock prices just prior to the Wall Street crash in 1929.
Why not? You have no problem telling us all this is bad.jonsimon wrote:
First of all, stop using the word good. Good is a highly subjective word with heavy connotations, neither of which are conducive to scientific analysis or discussion of scientific theory.
Historically rising stock prices of a company attract more people to buy the stock. Companies can issue stock to raise more capital for future projects. If the history is positive, they are more likely to be successful in the offering, or the more they can raise. So I'm talking about opportunity...jonsimon wrote:
Second of all, I didn't say squat about investment, and the stock market is not included in investment (I) in economics.
Why must you be an asshole? Right, if forgot you're the expert.jonsimon wrote:
Honestly, if you're going to participate in an economic discussion, make sure you know what terms mean in economics. You improperly used the lay definitions of capital and investment, and if you can't use proper terminology our discussion will just devolve into meaningless drivel.
Capital - as in cash, fixed assets, long-term leveraged debt, or convertible equity. Investment - investment in company assets. What definition are you using?
Well, the stock price is the last price where the stock was sold. So A) they just sold the stock - so "an increase in stock price means nothing unless the stock is sold" is correct if you are holding the stock...but if your selling the stock, you have increased your wealth.jonsimon wrote:
This is all I can really respond to:An increase in stock price means nothing unless the stock is sold. It can only increase disposable income of an individual if they A) sell the stock B) recieve increased dividends or C) increases bank expectations that loans will be paid off which may allow the individual to take out more loans. None of these are direct, and even if they were they wouldnt form a direct relationship between stock prices and economic health. Because an increase in stock prices does not create a direct definite increase in any component of GDP stock prices are not a useful indicator of economic health.Also, isn't an increase in stock price tied to an increase in personal wealth, which increases spending, which is directly related to the economy?
Also, you can use the portfoilo as collateral - valued at a market price (rising) with the idea that the debt is then leveraged back to provide a return, or spent. So that's C) above. Also note the debt is spent = someone made money = increase in economy.
So I don't agree with you - because both of these items will directly increase spending.
Disposable income is not the only source for increased spending.
Woo-hoo. What are you rooting for another crash? Try being positive.jonsimon wrote:
Shipbuilder provided the best real example when he cited rises in stock prices just prior to the Wall Street crash in 1929.
Please. There's good news, and then there are other things that sound like good news if you spin it hard and/or don't really have a basic understanding of economics and reality. I debunked the latter in my post, and as you can see, agreed that other articles pointed to unequivocally good news. The economy is definitely not wheezing out a death rattle. But half of the "evidence" provided in the OP is either meaningless or misses the 5-year forest for the 3-month trees.Pug wrote:
Shipbuilder - this is nothing but good news. If you want to poop on it, fine. But its still good news and you know it.
You've got it all wrong. The Dow has nothing to do with capital issuance. It's an index of the stock prices of well-established companies. I'm surprised that the point needs to be brought up, but for those who don't know (and those who act like they know)... EA does not benefit when you buy its stock, nor does it suffer when you sell it. The transaction has nothing to do with them.Pug, in response to jonsimon's criticism of OP claiming the record-high Dow is evidence that the economy is doing well, wrote:
So your saying that increasing investments in US companies has absolutely no impact at all on the economy?
Like companies never should use the capital they raise to create new markets or new technology?
No. This logic just doesn't stand up to reason. Rising stock prices attract more people to buy the stock? No. The only people who would buy a stock BASED ON THE STOCK'S PRICE RELATIVE TO WHAT IT WAS ON A PRIOR DATE would be complete dunces who understand nothing about the stock market, rational thought, or common sense for that matter. Same goes for anyone who would buy into an offering based on the PRICE of a common share of stock. And anyway - for every such moron, you can find another non-moron shorting the stock just BECAUSE people are chasing the price.Pug wrote:
Historically rising stock prices of a company attract more people to buy the stock. Companies can issue stock to raise more capital for future projects. If the history is positive, they are more likely to be successful in the offering, or the more they can raise. So I'm talking about opportunity...
Wow. What are you talking about here? What is "the debt", when did anyone say anything about "debt"? What "portfolio"? You've lost me completely. And before you explain whatever it is that you're talking about, read this.Pug wrote:
Also, you can use the portfoilo as collateral - valued at a market price (rising) with the idea that the debt is then leveraged back to provide a return, or spent. So that's C) above. Also note the debt is spent = someone made money = increase in economy.
None of us are rooting for another crash. The difference is that we choose to ground our optimism in reality, rather than in a general misunderstanding of economics and capital markets.Pug wrote:
Woo-hoo. What are you rooting for another crash? Try being positive.jonsimon wrote:
Shipbuilder provided the best real example when he cited rises in stock prices just prior to the Wall Street crash in 1929.
What I'm saying is that a company which has a history of rising stock prices has more opportunity to raise capital by issuing more stock than one that doesn't have that luxury. Once the stock is issued, I understand then its done, I know that, but I'm talking about the general future opportunity. I'm talking about buying the new offering - not buying that already being traded. After re-reading above I said "buy the stock"...I meant "buy the newly issued stock". I didn't explain that well, so sorry about that.
As far as portfoilo & debt relation - if you go to a bank and borrow money, then they take a look at your investments. If you hold stock and the prices are high, you have more assets which equal the ability to borrow more money. The net-net for the borrower is nothing, unless they leverage it to provide a return.
And in any case, if debt is spent = someone got money = someone can then go out and spend money (monetary acceleration or something like that). True the debt burden slowed one player's future spending - I believe that accelerated spending has a greater impact than the drawbacks of the debt burdern.
Thanks for the discussion Ship
Do you think there is a connection between rising personal wealth and spending BTW?
As far as portfoilo & debt relation - if you go to a bank and borrow money, then they take a look at your investments. If you hold stock and the prices are high, you have more assets which equal the ability to borrow more money. The net-net for the borrower is nothing, unless they leverage it to provide a return.
And in any case, if debt is spent = someone got money = someone can then go out and spend money (monetary acceleration or something like that). True the debt burden slowed one player's future spending - I believe that accelerated spending has a greater impact than the drawbacks of the debt burdern.
Thanks for the discussion Ship
Do you think there is a connection between rising personal wealth and spending BTW?
The economic definitions. Capital is a resource and DOES NOT include money. Capital is machinery, buildings, and knowledge (in the case of human capital). Investment is a component of GDP which DOES NOT include financial trading and is comprised of purchases of capital, land, and labor and changes in inventory.Pug wrote:
Historically rising stock prices of a company attract more people to buy the stock. Companies can issue stock to raise more capital for future projects. If the history is positive, they are more likely to be successful in the offering, or the more they can raise. So I'm talking about opportunity...jonsimon wrote:
Second of all, I didn't say squat about investment, and the stock market is not included in investment (I) in economics.Why must you be an asshole? Right, if forgot you're the expert.jonsimon wrote:
Honestly, if you're going to participate in an economic discussion, make sure you know what terms mean in economics. You improperly used the lay definitions of capital and investment, and if you can't use proper terminology our discussion will just devolve into meaningless drivel.
Capital - as in cash, fixed assets, long-term leveraged debt, or convertible equity. Investment - investment in company assets. What definition are you using?
There is a ratio in economics called the Marginal Propensity to Consume (MPC) that describes the increase in consumption that results from an increase in disposable income.Pug wrote:
Do you think there is a connection between rising personal wealth and spending BTW?
Yeah, that's how the Fed indirectly increases the money supply. When a bank makes a loan and the loan is deposited, the excess reserves from the deposit can be used to make a new smaller loan, thus expanding the money supply. Eventually though the money supply must decrease in return assuming no loans are defaulted.Pug wrote:
And in any case, if debt is spent = someone got money = someone can then go out and spend money (monetary acceleration or something like that). True the debt burden slowed one player's future spending - I believe that accelerated spending has a greater impact than the drawbacks of the debt burdern.
The reasons you are citing and that I already explained are why the stock market has any indication of economic status at all, but none of them are direct relationships and likewise, the stock market does not have a direct or short-term relationship with economic health.Pug wrote:
As far as portfoilo & debt relation - if you go to a bank and borrow money, then they take a look at your investments. If you hold stock and the prices are high, you have more assets which equal the ability to borrow more money. The net-net for the borrower is nothing, unless they leverage it to provide a return.
Last edited by jonsimon (2007-01-20 21:18:19)
Thanks, its been awhile - you can tell.
We were using close enough definitions BTW...I always consider things that are about to be converted into capital as capital...
If the MPC ratio works then, didn't those who just sold at a high stock price just cash in and therefore are more likely to increase spending? Ahh no, its just another version of the debt shell game I talked about.
I get it, thanks.
We were using close enough definitions BTW...I always consider things that are about to be converted into capital as capital...
If the MPC ratio works then, didn't those who just sold at a high stock price just cash in and therefore are more likely to increase spending? Ahh no, its just another version of the debt shell game I talked about.
I get it, thanks.