Congress to Obama: "The ATM is Closed"

[jackson33]

iNow; It's a little difficult debating/discussing any issue with a moving target to start with, but then to arbitrarily disregard evidence as 'not relevant', when to me it's the subject being discussed is directly related, continuing seems futile. At this point, I'll offer you my closing argument for consideration, on this thread, BECAUSE you have also taken a good deal of time, for whatever reason....

 

The above link, indicates that the Corporate Structure, has INCREASED cash on hand, during a major slump/recession in the economy, currently not expecting to return to pre recession employment until 2012 OR LATER. I'll leave it to your imagination, why this sentiment exist, but one thing is for sure, stimulus has not changed their attitude.

 

I'm not particularly a believer in 'Consumer Sentiment' reports (based too much on a current News Cycle), but it may reflect the confidence of a share of the Consumer in turn, small business or potential start up business. If you like check it out, noting these figures in 1980-82, 1991-2, 2000-02 and 2007-8 and disturbing to me, 2009 to date.

 

http://research.stlouisfed.org/fred2/series/UMCSENT/

 

Your link states only that executives aren't expecting to bring employment back to pre-recession levels until roughly 2012. [/Quote]

 

No Sir, it says, cash on hand of those involved in the survey (a portion of the total) had increased 'Cash' on hand by nearly TWO Trillion dollars, UP 25% from the time the recession began. I'm not going to research this, but this is true both Internationally and in the investment world, where many dropped or got out during the Housing Peak (myself in 2007). I believe in all honesty, the Corporate World and the Investment community, may be holding back 30-40T$ worldwide.

 

First, how about you avoid speculating about my history, and avoid making personal comments about me in some vain attempt to support your hollow points.[/Quote]

 

I have been involved with business, all my life, my Dad was and his Dad, though both with in the Corporate Structure (Tobacco Farming/Sales and General Motors). I've failed a couple times and done well in others, but the ONE overwhelming reason I started, bought or operated another's business, was based on the certainty of the product, business model and the accompanying environment. There is no way, I would start a business, buy a business or invest in a business today, in the US.

 

As I've said before, I concede that uncertainty plays a role in which decisions get made. Where I am directly challenging you is on your proposal that uncertainty is what is causing the excess of cash to be held by businesses. The more reasonable explanation for high stores of cash is due to the excess capacity in the system...[/Quote]

 

OK, I'll address the moving target and your "explanation" is in part true, but business to grow if warranted, during these down turns or when daylight is seen, has always consolidated (merger/acquisitions) and it's just not happening. New markets sought out (new products) and that's not happening and topping it all off, research and development has all but ceased in many business sectors. I don't know any more ways to explain to you, there is no confidence in either this administration, the direction the country is headed (Free Market Capitalism, the point) or the attitude things CAN or WILL meaningfully turn around, anytime soon.

 

Please clarify your point. This doesn't make any sense.[/Quote]

 

" If anything Government Spending is creating that "liquidity trap".

 

The Nation as seen through a GDP and public resources (property/money/assets) has a value. Government has no value other than that. If Government creates a cost or debt it must take from the National Equities, liquidity must drop. Additionally in this case, not only have those equities dropped in value, spending from obligations created from 1965 to date increased, but several more obligations, have been or are being imposed.

 

I'm not optimistic that we'll come to agreement. I just hope that people see which side of the argument is logical, supported with numbers, and based on empirical evidence from history... and which resorts to personal attacks on people like Barney Frank and completely irrelevant comments about Fannie and Freddie.[/Quote]

 

No we are not going to agree, frankly I'm not trying to convince you of anything. You have been arguing the points being made by Ms. Romer, Krugman and others that feel Government should be in charge of THIS recovery, trying to legislate regulation to prevent further decay of this recession and unbelievable saying they can prevent future economic downturns. I know a good deal about your empirical evidence from History (the Romer's, I think have two books on the subject), finding only the archaic meaning of value..."quackery".

 

[archaic] Relying on medical quackery

"empirical treatment";

- empiric [archaic][/Quote]

http://www.wordwebonline.com/search.pl?w=empirical

 

As for Dodd, Frank and their connection to Freddie/Fannie, in the 1990's and the authors of the now passed 'Finance Reform Bill', it's VERY relevant to everything we have discussed. They personally sponsored bills to lessen the requirement for the F's and now are carrying the same items over to ALL Financial Institutions. Aside from the relevant parts, I do think they (in part)caused the Housing/Financial Bubble, have written some on this, here and may offer a thread later.

 

I rest my case.

[iNow]

iNow; It's a little difficult debating/discussing any issue with a moving target to start with

Wait, what? Excuse me? How do you figure?

 

You asserted that the stores of cash held by business is being held primarily due to uncertainty.

I countered by putting forth that businesses have excess capacity right now and hence are not investing in new capacity. For that reason, they have extra cash. I supported this with numbers.

 

I asked you to support your assertion since all you did was to repeat it. I asked you to support the assertion that cash is being held due to uncertainty in the market.

 

You put forth a study stating that employment would not return to pre-recession levels until at least 2012.

 

 

How in the world do you think that addresses my request? How in the world are you here now suggesting I'm putting forth a moving target?

 

The target has been the same this whole thread. Support your assertions with relevant information. It's not too terribly difficult... That is, of course, if your assertions have merit.

 

 

 

BECAUSE you have also taken a good deal of time, for whatever reason....

Because I enjoy learning, and I enjoy teaching, and I enjoy these types of discussions. We may disagree, but I enjoy showing you where your ideas are flawed (or, at the very least, where you are failing to support them).

 

 

The above link, indicates that the Corporate Structure, has INCREASED cash on hand, during a major slump/recession in the economy, currently not expecting to return to pre recession employment until 2012 OR LATER. I'll leave it to your imagination, why this sentiment exist, but one thing is for sure, stimulus has not changed their attitude.

I really couldn't disagree more. Without the stimulus, these same businesses would be trying to determine how many more workers to layoff this week. That's not so much an issue anymore. Now, they're trying to figure out how to get back to a point where investment of their cash makes sense... and how best to invest it. Their attitudes, however, would VERY MUCH be different right now without the stimulus because we'd be crashing into another great depression and they'd be making picket fence soup and boiling single leaves of cabbage for dinner.

 

 

iNow said:

Your link states only that executives aren't expecting to bring employment back to pre-recession levels until roughly 2012.

No Sir, it says, cash on hand of those involved in the survey (a portion of the total) had increased 'Cash' on hand by nearly TWO Trillion dollars, UP 25% from the time the recession began. I'm not going to research this, but this is true both Internationally and in the investment world, where many dropped or got out during the Housing Peak (myself in 2007). I believe in all honesty, the Corporate World and the Investment community, may be holding back 30-40T$ worldwide.

And I have no problem with those numbers. We are in agreement there. What you're failing to realize is that it does NOT support your contention that they have these excesses of cash due to uncertainty or fear about what will happen in DC. I think that's a fantasy, and thus far, your lack of support has implicitly confirmed my thinking.

 

 

 

Jackson said:

I'm sorry' date=' the only thing this tells me is you must have never been in business, it's all about uncertainty and that uncertainty has not been this high in a couple generations.[/quote']iNow Replied:

how about you avoid speculating about my history' date=' and avoid making personal comments about me in some vain attempt to support your points.[/quote']

 

I have been involved with business, all my life, my Dad was and his Dad, though both with in the Corporate Structure (Tobacco Farming/Sales and General Motors). I've failed a couple times and done well in others, but the ONE overwhelming reason I started, bought or operated another's business, was based on the certainty of the product, business model and the accompanying environment. There is no way, I would start a business, buy a business or invest in a business today, in the US.

Good for you. Despite that, I'm still going to request that you avoid speculating about my history, and avoid making personal comments about me in some vain attempt to support your points. Additionally, I'll just point out that you are now using the logical fallacy of appeal to authority in an attempt to circumvent the burden of proof with which you've been bestowed for several posts now.

 

 

 

OK, I'll address the moving target

Sigh...

 

your "explanation" is in part true, but business to grow if warranted, during these down turns or when daylight is seen, has always consolidated (merger/acquisitions) and it's just not happening. New markets sought out (new products) and that's not happening and topping it all off, research and development has all but ceased in many business sectors.

Not happening? Really? That's odd. You see, because according to reports like the below, demand for loans by small businesses is up 6%, small business owners are MORE willing to hire and invest, and that tighter lending conditions are what are leading to weakened demand.

 

http://www.sba.gov/advo/research/sbqei1001.pdf

 

 

But... none of this really matters. It's a giant red herring, as it does nothing to support your point. You are talking about the motivation and reason why cash stores are high. Telling me that you think there are less M&As and fewer consolidations than there should be does not support that point. Telling me that new market expansion is lower than you think it should be does not support that point. Telling me that R&D is not happening is just flat out false (again, maybe at a lower level than you think appropriate, but it's still happening)... and also does not support your point.

 

Your logic is roughly this. New businesses are not starting up fast enough. There is a lot of cash in the system. The reason new businesses are not starting up is because of uncertainty, and the excess cash is there because small businesses are not using it to start up. It's totally non-sequitur, and a bit of a red herring ta boot.

 

Here's my logic. New businesses are not starting up fast enough because they cannot secure the up front capital required to kick off their business. They cannot secure capital because banks aren't lending unless the loan is fully secured (in which case, they wouldn't really need the loan anyway, eh?). Regardless, the desire is VERY much there... They just can't do it because of funding obstacles. It has nothing to do with uncertainty. That's a factor for some investment decisions, but not the driving force for the extra cash being held. The extra cash in the system is a different issue entirely. The extra cash is due to excess capacity. Businesses which do exist don't have enough demand, and so have no reason to invest and expand.

 

I'll just let readers determine about which seems more logical, and which has been better supported in this thread.

 

 

 

It seems that throughout this thread I've provided several counter examples and supported reasoning which directly demonstrates your point to be false. I'm guessing that won't shake you off your narrative though...

 

 

Jackson said:

If anything Government Spending is creating that "liquidity trap."

iNow Replied:

Please clarify your point. This doesn't make any sense.

 

The Nation as seen through a GDP and public resources (property/money/assets) has a value. Government has no value other than that. If Government creates a cost or debt it must take from the National Equities' date=' liquidity must drop. Additionally in this case, not only have those equities dropped in value, spending from obligations created from 1965 to date increased, but several more obligations, have been or are being imposed. [/quote']

 

 

 

Okay. All you've just demonstrated is that you have no idea what a liquidity trap is. Let me help you out here:

 

http://www-personal.umich.edu/~alandear/glossary/l.html

 

From The University of Michigan: Deardorff's Glossary of International Economics

Liquidity Trap: A situation in which expansionary monetary policy fails to stimulate the economy. As used by Keynes (1936)' date=' this meant interest rates so low that expectations of their increase made people unwilling to hold bonds. Today it usually means a nominal interest rate so near zero that lowering it further is impossible or ineffective. [/quote']

 

As I said, your point doesn't make sense, and has nothing to do with the one I've been making.

 

 

 

 

 

As for Dodd, Frank and their connection to Freddie/Fannie, in the 1990's and the authors of the now passed 'Finance Reform Bill', it's VERY relevant to everything we have discussed. They personally sponsored bills to lessen the requirement for the F's and now are carrying the same items over to ALL Financial Institutions. Aside from the relevant parts, I do think they (in part)caused the Housing/Financial Bubble, have written some on this, here and may offer a thread later.

 

I rest my case.

Good for you. I'm still not sure why you continue to ignore the multiple analyses I've shared with you demonstrating that Fannie and Freddie did not cause the housing bubble, nor am I sure how comments about Dodd, Frank, and Romer do anything to support your points or negate mine.

Oh... Wait a minute... They don't.

Edited July 17, 2010 by iNow