BF2S Forums US Economy, is it really this good?

It's kinda amazing the lengths the U.S. media go to to make Bush look bad.

The things you list would be heralded as major achievements were Al Gore or Kerry the potus.

If the American medias anything like some of the British news it seems bad news and attacking people sells more news papers/gets more viewers etc.

There could be a major scientific breakthrough that would have global implications and be a wonder to mankind but that would probably be on page 5 after the bit about some celeb calling Britney Spears fat

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.

Last edited by Kmarion (2007-01-18 19:10:37)

Honestly, I agree with you in all aspects. In defense of the media, the most important things to anyone is what is going wrong, not what is doing well. You don't need to worry about what is fine, just leave it, but something going wrong needs attention. So the media, though not very balanced or uplifting, is pretty practical.

Kmarion wrote:

Dow gains 27, reaches 3rd record close

Excellent. Yet as usual, I'm left wondering how the Dow is indicative of a "good economy".

Market indices are predicated on nothing other than prices of stocks, and prices of stocks are only indirectly related to actual corporate earnings. Oversimplified, the price of a single share of a company's stock = net earnings per share (times) a market multiple. Market multiples are based on the collective estimations of the millions of people who trade a particular company's stock every day, and can be based on anything from a fund manager's  careful analysis of the company's market position and future earnings to the random musings of a granny with a savings account and a dartboard.

Market valuations are based on a combination of rational and irrational expectation, are by nature arbitrary, and are the weakest possible indicators of the state of an economy.

Kmarion wrote:

Trade deficit falls in U.S. for third consecutive month

Indeed. But it's not like we have the Bush administration for that. We can thank the plummeting price of crude oil. Spot prices for crude is now hovering just above $50/bbl versus $78 just a few months ago.



Not to mention that trade balance is an inherently "long" indicator. The nature of the recording of corporate shipments and the annual purchasing calendar renders month-to-month comparisons fairly meaningless. Annual (or year-on-year comparison of semiannual) trends are much more meaningful.

And by the way, how is that annual trend going? From the linked article:

Canadian Business Online wrote:

The overall deficit for 2006 is running at an annual rate of $765.4 billion, putting the country on track to see a record imbalance for the fifth consecutive year. The deficit for all of 2005 was $716.7 billion.

A five year trend, versus a three-month blip. You can decide for yourself what's more meaningful. To me, it sounds less than rosy.

Kmarion wrote:

The nation's unemployment rate dropped to 4.6 percent

Excellent.

Kmarion wrote:

The US Dollar saw fresh 3-month highs against the Euro

A single day of FX traders jumping at the chance to react positively to the trade balance data.

That versus the dollar's slow freefall over the past 12 months.

Kmarion wrote:

Housing Slump Could Be Ending

Construction of new homes up 4.5% in December. Good news, definitely.

Kmarion wrote:

Inflation has best showing in 3 years

Excellent news.

Kmarion wrote:

Tax Revenues Drive Down US Federal Deficit

They're comparing YTD vs YTD 2005. So the amount that the government overspent for the past 3 months was less than the amount that they overspent for the same period last year. HUZZAH. Was it due to a seachange fundamental shift in fiscal policy? Nope - it was a surprise windfall in tax revenues.

As I've said elsewhere, it's a matter of course that the federal deficit will come down over the next year. It's thanks to a new Congressional program called "Aunt Pelosi takes away all the blank checks Little Georgie was getting from Coach Hastert".

Kmarion wrote:

It's pretty easy to see how all of these factors are intertwined.

Please, consider me a layman when it comes to these matters and let me know exactly how these factors are intertwined?

Kmarion wrote:

The point is it seems the economy only hits the mainstream media when the outlook is grim.(In the states that is)

Yet, a quick google news search for articles mentioning both "economy" and "reuters" brings up a ton of positive articles carried by well-known newspapers across the country. I'm sure I'd get the same results if I bothered to search for other feeds as well. CBS News has a ton of glowingly positive articles up right now. I don't buy this "the media only writes about the negative stuff" wingeing - clearly, the MSM reporters are doing their jobs and reporting the news.

It's not hard to look for positive things that the press is reporting:

"House Democrats finish '100 hours' agenda by passing oil revenue bill"

Or negative things that they are not reporting:

"Bush is the first president ever not to raise taxes during wartime, thereby contributing massively to the national debt and conveniently forcing our children and grandchildren to pay off the massive bill, not to mention accrued interest"

Kmarion wrote:

If you are wondering market is indicative of the economy research the Great Depresion and the Wall Street Crash of 1929.

Cop-out straight from the pages of Lowing's Style of Argumentation: rather than actually SAYING anything, you say "go research it". If you have something to say, say it - the burden of proof is on YOU. State your facts, not just disingenuous shorthand with a dismissive tone. You have to go further than just name-dropping 1929.

But the AMAZING irony is that your example proves MY point, not yours! In 1929, exuberance was irrationally out of control. Market valuations were not grounded in fundamentals nor reality of any sort. Multiples soared thanks to over-exuberance and speculation. If you and I were in a Wall Street pub in mid September 1929, YOU'd be the one saying "Hey look Shipbuilder, the Dow hit a record high on Sept 3! The economy is clearly in great shape!" to which I'd respond, "Um... Kmarion I keep telling you, the market is NOT an indicator of the state of the economy."

Gotta love how moving the economy is like changing the direction of a freight train.

the economy is fine.

will it be in 8 years? probably not.

i admit this adminstration has dipped a bit far into it's pocket's.

Kmarion wrote:

The_Shipbuilder wrote:

The stock market says something about people's expectations of the economy, but NOTHING about the fundamental state of the economy itself. All feeling, no facts. All anticipation of movement, no measure of present status.

.

I assume you are talking about consumer confidence?

???

I have no idea what you mean by that. Taking it at face value: NO, I'm not. I'm showing why stock market indices are poor indicators of the state of the economy.

D34TH_D34L3R wrote:

The_Shipbuilder wrote:

The stock market says something about people's expectations of the economy, but NOTHING about the fundamental state of the economy itself. All feeling, no facts. All anticipation of movement, no measure of present status.

You might as well include the headline "Fortune Teller Predicts Good Year for US Economy" to support your point.

And I thought that expectations is an important part of economy..
At least that's what my teacher always said to me.. And some of the world's most well known economists..
Guess they're all wrong..

Indeed, the formula posited by the theory of rational expectation is used to derive equilibrium price.

Is this is a concept anyone can learn in a high school economics class? YES.

Does the concept have anything to do with using stock market indices as indicators for the health of the economy? NO.

Should one insert himself into a conversation by employing a condescendingly sarcastic tone and a queer "dual period" style of punctuation, only to demonstrate an inability to grasp the subtleties of the very topic about which he speaks? NO.

lowing wrote:

You mean of all my posts, I have said nothing other than "go research it"?? If I have had something to say, I don't say it? You of all people should know better than that shipbuilder.

Well, you did just tell him to go reasearch all of your posts...just kidding.

Shipbuilder - this is nothing but good news.  If you want to poop on it, fine.  But its still good news and you know it.

I perscribe to a different theory altogether, which is the global economy is based on evolutions of change.  The current economy isn't dependent on what we have now - its how fast a company can change itself to meet the competitive pressures when new technology is leveraged.  For example, 2% of the population are farmers...it used to be like 95%, right?  Same with manufacturing - the stores aren't empty.

And the pressures are immense - it's possible that even if you live in the smallest town in the US that the good ol' local business will eventually be in competition with international companies - because they want to service the same consumer base.  Increased competition only increases the rate of change...and its getting faster.

The assembly line?  The automobile? Computers? The Internet?  Great - but what's next?

I think its healthcare, genetics and nanotechnology.  And I feel comfortable that the US is doing a lot of cutting edge work in those areas.  But its a consistant and more rapid evolution everytime - if we stop to reap the rewards then the rest of the world will pass us by - and will the US be able to adapt fast enough is a better question in my opinion.

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.

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?

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?

Last edited by Pug (2007-01-19 22:29:58)