Why is The American Stock Market going to crash?

[iNow]

For the second paragraph, I see you are from oil country. Do you find that those in the oil industry understand the need for alternatives better? (that would be rather ironic)

I don't know. Austin isn't really oil country. Austin is much more like the silicon valley out in San Jose than like any oil country. You may be thinking of Houston or Galveston, and I'm not too familiar with that area or the feelings of industry leaders there.

 

 

So, we could be having lean times and a volatile stock market due to lack of incentives to move retained earnings into better areas.

I don't think that's the case. There's no evidence for it. That's really just a WAG, and not a very good one. The issue is lack of demand and lack of jobs. The issue is the market sees lack of growth, and a lack of political will and wisdom to execute actions which would result in growth.

 

My conversation above about cash on hand was peripheral to the thread topic and was offered in response to something else brought up by Jackson33 (who mentioned that he thought lowering taxes on corporations so they would have EVEN MORE cash on hand would somehow magically fix the lack of employment). He then moved the goalposts and started talking about uncertainty in the future, and that's wrong, too. He then said government spending couldn't stimulate the economy or would take too long so we shouldn't try, and that's wrong, too.

 

 

If retained earnings are taxed it may further push into R and D to not pay the tax.

That's not R&D. That's just smart business. R&D is for new products and entering new markets and gaining market share. What you're referring to is quality accounting and knowledge of the system. You can't blame the companies for minimizing costs and taking advantage of tax code loopholes. If you want to assign blame, place it on the proper target and get our lawmakers to fix the tax code itself. Obama and team have been talking about exactly that, but in response he's being accused of "raising taxes." In fact, the proposal is to fix some flaws in the tax code, the closure of which would assist us in mending the deficit about which so many people seem to lament.

Edited August 16, 2011 by iNow

[mooeypoo]

Swansont , I'm assuming you're an expert at not plain and simply answering the questions you've been asked and asking instead a question to them . Did you learn that in grade school ?

 

!

Moderator Note

Personal attacks of any kind are unacceptable, Hal. You know this.

Personal attacks that come as an off-topic attempt to hijack a thread is even less acceptable.

I recommend you refresh yourself on our rules, in case you forgot them, and start following them.

 

 

Don't make things worse by arguing about moderation notes. You're supposed to know better.

[jackson33]

Sorry, what? Yes, they do pay taxes. What you've said here is simply wrong.[/Quote]

 

iNow, granted I am doing a very poor job of articulating this point. One of any Corporations biggest considerations, is keeping their investors, through dividends of increasing their invested value, market capitalization. It's these people that in the end pay all the expenses including taxes, not to mention the consumers. Here is an example of whom loses, when the ultimate case is bankruptcy, that just happens to be Evergreen Solar...

 

Here’s the nut of the story for investors: Evergreen said that “based upon the estimated value of the company’s assets, the assets are expected to be insufficient to satisfy all its obligations to its creditors. Accordingly, it is expected that no distributions will be made to holders of common stock and the common stock will be extinguished upon consummation of the Chapter 11 plan.”[/Quote]

 

http://www.forbes.com/sites/ericsavitz/2011/08/15/evergreen-solar-files-chapter-11-stock-likely-headed-for-zero/?partner=yahootix

 

For the record Evergreen, in 2008 was 60$/Share, with a market cap of about 6B$, now gone.

 

http://finance.yahoo.com/q?s=ESLR&ql=0

http://finance.yahoo.com/echarts?s=ESLR+Interactive#chart1:symbol=eslr;range=5y;indicator=dividend+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

 

 

Also, one example does not a trend make. Apple is the exception, not the rule.[/Quote]

 

iNow, virtually every Corporation or Business doing business or supplying Natural Resources in/into China, can't keep up, then add on other emerging markets, primarily India and South America and it's simply not possible without building additional facilities, factories, new mining sites etc...

 

You're oversimplifying. This is true sometimes, but it's hardly the infallible axiom you suggest. Clean energy is a clear example. Simply transfer the subsidies from oil to solar and wind and that would go a VERY long way to stimulating job growth in these sectors and across worker type... in manufacturing, installation, and service... and it would help the environment. [/Quote]

 

Probably the cleanest energy available for electricity is Geothermal and never talked about, available nearly anyplace today with deep drilling potential, but to stay on topic, if any business is profitable, with the ability to have and hold a consumer base, they won't need any subsidies nor would the Federal Government need to obligate itself for years of debt, with the risk of total failure.

 

High speed internet, too. You can't seriously be here suggesting to all of us that people in rural areas enjoy having slow internet and an inability to watch simple videos or perform online transactions? Come on, Jackson. You're really straining credulity here in an attempt to stick to your ideological guns.[/Quote]

 

I don't keep up with these new gadgets, but Verison, ATT, Apple and others seem to provide most people in some really remote areas, with all you mention and more. I hope your not suggesting we start providing the tools as well, which some business concerns (Microsoft) have been doing in Educational Facilities for years.

 

 

My conversation above about cash on hand was peripheral to the thread topic and was offered in response to something else brought up by Jackson33 (who mentioned that he thought lowering taxes on corporations so they would have EVEN MORE cash on hand would somehow magically fix the lack of employment). He then moved the goalposts and started talking about uncertainty in the future, and that's wrong, too. He then said government spending couldn't stimulate the economy or would take too long so we shouldn't try, and that's wrong, too.[/Quote]

 

We did try, in the 30's and again from 2008 to today and it hasn't worked.

 

By itself, reducing the Corporate Taxes, won't fix the problems, but a factor. Perceived uncertainty by small business (70% of job creations), without tax hikes or the current mandates under Obamacare, would alone stimulate job creation with them, but not necessarily with Corporations, who can simply move or produce elsewhere.

Edited August 16, 2011 by jackson33

[iNow]

iNow, virtually every Corporation or Business doing business or supplying Natural Resources in/into China, can't keep up, then add on other emerging markets, primarily India and South America and it's simply not possible without building additional facilities, factories, new mining sites etc...

I disagree. SOME businesses can't keep up with demand, not virtually all. Apple is the exception. There are few others. The plural of anecdote is "anecdotes," not "evidence."

 

 

 

Probably the cleanest energy available for electricity is Geothermal and never talked about, available nearly anyplace today with deep drilling potential, but to stay on topic, if any business is profitable, with the ability to have and hold a consumer base, they won't need any subsidies nor would the Federal Government need to obligate itself for years of debt, with the risk of total failure.

It's really irrelevant to the point. My point was that government investment now could encourage the growth we need. I was providing some high level examples of areas where they could spend. One of those examples was on encouraging cleaner energy to be more wide-spread. Also, implicit is your point is that oil is not subsidized, but it is. I propose that simply moving those subsidies AWAY from oil and TOWARD clean energy would have many benefits... But none of this is relevant to the central point. The central point is that the government has many things it could invest in now to encourage growth and help the economy, and this point is based on evidence and reason, not on ideology.

 

 

I don't keep up with these new gadgets, but Verison, ATT, Apple and others seem to provide most people in some really remote areas, with all you mention and more. I hope your not suggesting we start providing the tools as well, which some business concerns (Microsoft) have been doing in Educational Facilities for years.

I've already clarified my suggestion above.

 

 

 

We did try, in the 30's and again from 2008 to today and it hasn't worked.

This point seems to miss where that money from stimulus went, and where would have been without out. It's not that stimulus was tried and failed. It's that the stimulus was too small and focused on immediate social safety net programs. It helped stop the fall, but didn't really have the magnitude to stimulate the economy overall in the way that was needed. Those who understand the concept of the stimulus were arguing up front that the proposal put forth was too small to have the desired effect. They correctly predicted what would happen, and it did.

 

Now, what do you mean we tried in the 30's and it didn't work? All data suggests the contrary. It was the huge government push in wartime that led to huge increases in employment and money in the hands of workers. There were some businesses which struggled since the government spent on specific areas (and took so much steel and metals and other materials and focused them into the war ramp), but overall the economy grew as a direct result of this intervention. Any ideas which argue contrary to this are based on unfounded claims and a lack of understanding of the reality we faced.

 

 

By itself, reducing the Corporate Taxes, won't fix the problems, but a factor.

Can you elaborate? You stipulated that corporations already have a ton of cash on hand that they're simply not spending. How does further reducing their taxes (which gives them EVEN MORE cash on hand) make things better? Please explain that.

 

 

Perceived uncertainty by small business (70% of job creations), without tax hikes or the current mandates under Obamacare, would alone stimulate job creation with them,

I don't disagree with this. Where we disagree is in the magnitude of that effect. You seem to think that these slight changes will magically fix all of the challenges we have right now with unemployment, lack of consumer cash availability, mortgage debt, and the refusal of banks to lend money to even business with good credit. I disagree. I think there will be an effect if we address those things, but that the effect will be minimal. It's like your house is on fire and you're suggesting the best course of action is to move the couch from the living room into the kitchen, instead of putting out the fire.

[Hal.]

Moo , Swansont knows differently .

 

If you decide I am personally attacking Swansont and trying to hijack a thread , what can I say , I must state my position as you have stated yours and we will not argue this as you request , I disagree , whilst expecting you will allow for the difference in stating a position and arguing one .

 

Rules are common sense , thank you for your notes .

[swansont]

Can you elaborate? You stipulated that corporations already have a ton of cash on hand that they're simply not spending. How does further reducing their taxes (which gives them EVEN MORE cash on hand) make things better? Please explain that.

 

A lot of the cash on hand is held overseas. To transfer it to the US would incur a significant (further) tax and most companies find that to not be a great use for the money, so overseas it sits. Or is used to build facilities to create jobs overseas. If you believe the CEOs, they would repatriate a large chunk of the money if the tax were lower, and invest in US facilities. Hypothetically, it makes it cheaper to make profits here. The problem is that we had a tax holiday in 2005, and virtually all the money went to dividends and stock repurchases and not job creation. One can argue that it would be different if the tax were permanently reduced, but it would be easier to believe if there was a track record of this happening.

[swansont]

Perceived uncertainty by small business (70% of job creations), without tax hikes or the current mandates under Obamacare, would alone stimulate job creation with them, but not necessarily with Corporations, who can simply move or produce elsewhere.

 

Why "business needs certainty" is destructive

http://www.salon.com/news/opinion/glenn_greenwald/2011/08/14/business_certainty

[iNow]

That reminds of the (possibly apocryphal) Adlai Stevenson quote:

 

"That's not enough, madam, we need a majority!"

 

Great quote! Hadn't encountered that before.

 

 

 

Why "business needs certainty" is destructive

http://www.salon.com/news/opinion/glenn_greenwald/2011/08/14/business_certainty

Some interesting points made there which certain reinforce where I'm coming from. Some tid bits:

 

If you read the business and even the political press, you've doubtless encountered the claim that the economy is a mess because the threat to reregulate in the wake of a global-economy-wrecking financial crisis is creating "uncertainty." That is touted as the reason why corporations are sitting on their hands and not doing much in the way of hiring and investing.

 

This is propaganda that needs to be laughed out of the room.

<...>

So why aren't businesses investing or hiring? "Uncertainty" as far as regulations are concerned is not a major driver. Surveys show that the "uncertainty" bandied about in the press really translates into "the economy stinks, I'm not in a business that benefits from a bad economy, and I'm not going to take a chance when I have no idea when things might turn around."

 

The "certainty" they are looking for is concrete evidence that prevailing conditions have really turned. But with so many people unemployed, growth flagging in advanced economies, China and other emerging economies putting on the brake as their inflation rates become too high, and a very real risk of another financial crisis kicking off in the Eurozone, there isn't any reason to hope for things to magically get better on their own any time soon. In fact, if you look at the discussion above, we actually have a very high degree of certainty, just of the wrong sort, namely that growth will low to negative for easily the next two years, and quite possibly for a Japan-style extended period.

<...>

The problem with the "blame the government" canard is that it does not stand up to scrutiny.

[jackson33]

I disagree. SOME businesses can't keep up with demand, not virtually all. Apple is the exception. There are few others. The plural of anecdote is "anecdotes," not "evidence."[/Quote]

 

iNow; While referencing "majors" (virtually all), most all Agricultural concerns could ship twice what they produce, most involved with chemicals, heavy equipment and others could do better and I have no idea what the wait time, is for Aircraft (Military/Civilian) today....They are all closing the gap to some degree, by building infrastructure nearer the consumer, but this doesn't help matters in the US.

 

The central point is that the government has many things it could invest in now to encourage growth and help the economy, and this point is based on evidence and reason, not on ideology.[/Quote]

 

With borrowed money, that doesn't make sense to me. I don't understand what ideology has to do with econ 101, but you simply don't throw money at projects, for the sake of short term theoretical results.

 

 

 

 

This point seems to miss where that money from stimulus went, and where would have been without out. It's not that stimulus was tried and failed. It's that the stimulus was too small and focused on immediate social safety net programs. It helped stop the fall, but didn't really have the magnitude to stimulate the economy overall in the way that was needed. Those who understand the concept of the stimulus were arguing up front that the proposal put forth was too small to have the desired effect. They correctly predicted what would happen, and it did.[/Quote]

 

As with most action since TARP, we don't know what would have happened. I'd suggest without TARP, several financial institutions would have reorganized, both here and in Europe, be absorbed by the more efficient firms or simple gone through liquidation bankruptcy. As it stands today, at least in the US, most all banks hold a fraction of the value they had in 2007 and REMAIN vulnerable today. If correct, the recession might had been over, in 2009.

 

Then I would suggest, programs, policy and legislation to correct what I believe was a make believe (made up) crisis, would have never been implemented.

 

Now, what do you mean we tried in the 30's and it didn't work? All data suggests the contrary. It was the huge government push in wartime that led to huge increases in employment and money in the hands of workers.[/Quote]

 

Yes, I know your a promoter of Keynesian Economics, a Krugman fan, but what Government was doing then and to some degree now, was total control over business and much business was operating just fine in Europe.

 

Can you elaborate? You stipulated that corporations already have a ton of cash on hand that they're simply not spending. How does further reducing their taxes (which gives them EVEN MORE cash on hand) make things better? Please explain that.[/Quote]

 

It's called competition; If all Corporations were simply not taxed, or somehow taxed to the point they were all paying near the same end percentages, they would be forced to compete. Then as I've been trying to relay, the consumer or investors pay those taxes to start with and I'll throw in loop holes, credits and overseas incomes...

 

All of this has had a dramatic impact on the income of the federal government. Corporate taxes now account for less than 7 percent of all federal revenue. Back in the 1950s they accounted for about 30 percent of all federal revenue. [/Quote]

 

http://endoftheamericandream.com/archives/10-facts-about-corporate-taxes-that-will-make-your-blood-boil

 

Aside from being a good article on Corporate Taxes, if correct it only amounts to about 200B$ of expected 2011 Federal Revenues...at 35%

.

http://www.usgovernmentrevenue.com/united_states_total_revenue_pie_chart

 

 

I don't disagree with this. Where we disagree is in the magnitude of that effect. You seem to think that these slight changes will magically fix all of the challenges we have right now with unemployment, lack of consumer cash availability, mortgage debt, and the refusal of banks to lend money to even business with good credit. I disagree. I think there will be an effect if we address those things, but that the effect will be minimal. It's like your house is on fire and you're suggesting the best course of action is to move the couch from the living room into the kitchen, instead of putting out the fire. [/Quote]

 

In responding generally to comments, I don't have the time or inclination to cover all the components involved and do frequently neglect to mention important ones. Since this thread is basically concerned with the markets, which over longer periods react to complex issues, I'd suggest TODAY, those people that drive the markets are concerned with; Uncertainties, Tax Rates, Regulations and International Competition, each with about 10 components.

 

 

"Risk" is what Donald Rumsfeld characterized as a known unknown. You can still estimate the range of likely outcomes and make a good stab at estimating probabilities within that range.[/Quote]

 

From your article, swansont; I think you understand from early on this thread, as does iNow from elsewhere, I'm not pessimistic on the future of US Markets. Under Rumsfeld theory, looking at the US political climate and changing climates and results in Canada or Australia from 10-20 years ago, things can be reversed here. The problem to me is 5 more years of what's been happening over the last 3/5 years, will not fit into my optimistic projections. In some ways, I feel the markets, or those driving them, feel the same. I don't like using polls (snap shots), but you might say the general US sentiments are already falling into line.

[amanda more]

 

 

Then I would suggest, programs, policy and legislation to correct what I believe was a make believe (made up) crisis, would have never been implemented.

 

Yes, I know your a promoter of Keynesian Economics, a Krugman fan, but what Government was doing then and to some degree now, was total control over business and much business was operating just fine in Europe.

 

 

From your article, swansont; I think you understand from early on this thread, as does iNow from elsewhere, I'm not pessimistic on the future of US Markets. Under Rumsfeld theory, looking at the US political climate and changing climates and results in Canada or Australia from 10-20 years ago, things can be reversed here. The problem to me is 5 more years of what's been happening over the last 3/5 years, will not fit into my optimistic projections. In some ways, I feel the markets, or those driving them, feel the same. I don't like using polls (snap shots), but you might say the general US sentiments are already falling into line.

 

 

Whose general US sentiments are falling in line with what? Policy generally swings back and forth. Off the golf courses there is a sea change in attitude. People are currently too overwhelmed. But the wild outlaw cowboys may have to leave the prairie town. The townspeople want the sheriff back. Even if no one yet is putting a posse together to immediately get some law and order.

 

 

 

 

 

 

 

[iNow]

iNow; While referencing "majors" (virtually all), most all Agricultural concerns could ship twice what they produce, most involved with chemicals, heavy equipment and others could do better and I have no idea what the wait time, is for Aircraft (Military/Civilian) today....They are all closing the gap to some degree, by building infrastructure nearer the consumer, but this doesn't help matters in the US.

I don't understand why this has become such a difficult point with you. MOST businesses are lacking demand. A few counter examples does not change that.

 

I tell you what. I'll cut you some slack. Let's assume that 100% of the agriculture sector cannot produce enough to meet their demand, and that they desperately wish they could keep up and sell more than they currently do. Agriculture still only accounts for 1.2% of GDP. There's still another 98.8% of sectors in the GDP not in that same condition.

 

And aircraft building? Really? That's only 0.73% of the economy.

 

I don't wish to be mean here, but your response is silly on it's face, and is really not appropriate as a reply to what I'm saying. I don't disagree that you can find some examples of areas where demand exceeds supply. I'm simply telling you that's the exception, not the norm.

 

 

 

With borrowed money, that doesn't make sense to me. I don't understand what ideology has to do with econ 101, but you simply don't throw money at projects, for the sake of short term theoretical results.

Okay, that's a fair question. You are struggling to understand the argument, and have implicitly asked me to clarify it. That's fine. I am going to treat it very remedially, and this is not to be condescending, but merely a reflection of the fact that I don't know where the confusion resides.

 

Businesses sometimes borrow money so they can invest in their growth. When they borrow, they want to keep the interest rate as low as possible so when they repay that loan most of the payment goes toward principle. That investment often results in growth, and they ultimately earn more in return than what they borrowed. That's the basic structure we're discussing here (obviously, oversimplified).

 

Government in this case is incredibly similar. They borrow money, seek low interest rates, and then invest that money into sectors which have a high return on investment. The point is that they need to invest it areas which have a stronger growth outcome than debt increase. Now is actually an ideal time to borrow because interest rates are lower than they have been in decades. It would be better to borrow now while it's cheap to do so than to wait until we'll have to pay higher interest. I can offer a lot more detail if needed on how the only thing "short term" is our debt in the present, and how the long term change is significant if we make such investments immediately. I just fear that when I do that you'll merely dismiss my post as "theoretical" instead of countering any specific point or claim I make. It's frustrating, really, and you do it regularly.

 

 

 

As with most action since TARP, we don't know what would have happened. I'd suggest without TARP, several financial institutions would have reorganized, both here and in Europe, be absorbed by the more efficient firms or simple gone through liquidation bankruptcy. As it stands today, at least in the US, most all banks hold a fraction of the value they had in 2007 and REMAIN vulnerable today. If correct, the recession might had been over, in 2009.

I'm unsure why you've introduced the Troubled Asset Relief Program (or, TARP) into this discussion. It is not equal to the American Recovery and Reinvestment Act (or, stimulus) which we are discussing. Please try not to conflate the two. They are different, with different purpose, and different intent.

 

 

Then I would suggest, programs, policy and legislation to correct what I believe was a make believe (made up) crisis, would have never been implemented.

I am comfortable with you holding that opinion, but that's all it is, and it's one which is significantly discredited by the evidence available.

 

 

Yes, I know your a promoter of Keynesian Economics, a Krugman fan, but what Government was doing then and to some degree now, was total control over business and much business was operating just fine in Europe.

That does nothing to address the point that US government spending on the WWII wartime effort did a great deal to stimulate the economy and had long-term lasting effects on our growth.

 

 

It's called competition; If all Corporations were simply not taxed, or somehow taxed to the point they were all paying near the same end percentages, they would be forced to compete. Then as I've been trying to relay, the consumer or investors pay those taxes to start with and I'll throw in loop holes, credits and overseas incomes...

Again, that does nothing to address the point. The point is corporations are (generally) already sitting on a lot of cash, the highest amounts in years. You're recommending we remove their taxes, which will do little more than give them even more cash on top of what they already have, and you're making the argument that this will fix the economic hardship currently being faced. Why? That doesn't even begin to make sense.

 

With taxes or without, they still must compete. Who is burdened most by those taxes and who pays them is also completely irrelevant to the point. You have yet to address the question about why adding to an already large supply of cash is supposed to create the growth we need, or why they would invest in making more products when demand for products is so low.

 

 

In responding generally to comments, I don't have the time or inclination to cover all the components involved and do frequently neglect to mention important ones. Since this thread is basically concerned with the markets, which over longer periods react to complex issues, I'd suggest TODAY, those people that drive the markets are concerned with; Uncertainties, Tax Rates, Regulations and International Competition, each with about 10 components.

So, to paraphrase, you're ignoring all of the data already shared with you by me and others, and don't feel like supporting your own comments with any. Got it.

[amanda more]

 

That does nothing to address the point that US government spending on the WWII wartime effort did a great deal to stimulate the economy and had long-term lasting effects on our growth.

 

 

 

Again, that does nothing to address the point. The point is corporations are (generally) already sitting on a lot of cash, the highest amounts in years. You're recommending we remove their taxes, which will do little more than give them even more cash on top of what they already have, and you're making the argument that this will fix the economic hardship currently being faced. Why? That doesn't even begin to make sense.

 

With taxes or without, they still must compete. Who is burdened most by those taxes and who pays them is also completely irrelevant to the point. You have yet to address the question about why adding to an already large supply of cash is supposed to create the growth we need, or why they would invest in making more products when demand for products is so low.

 

 

 

Very well put. Now for some market analytics. Ever heard of the VIX? I hadn't. But I have heard of system theory. I couldnt upload the graph. Since it is a measure of volatility and is going nuts recently it may mean lots. It -can- presage crashes as imminent.

 

The market appears unstable. Here I had thought it would have immediately tanked.

 

Reason: US govt folly and other bad news sent the market into wide swings causing instability and soon to be crash.

 

 

 

[swansont]

With borrowed money, that doesn't make sense to me. I don't understand what ideology has to do with econ 101, but you simply don't throw money at projects, for the sake of short term theoretical results.

The US can borrow at 3%. Surely there are investments that have a greater return on capital than that. Maintenance and expansion of bridges, roads and rail would reduce congestion and improve productivity, but even at a more basic level, it's cheaper to repair them now than wait and fix them later when the problems are worse. In appropriate areas we could be installing solar panels on government building roofs to reduce future electrical costs, or at least painting them white to cut down on summertime AC costs. All of that with the added benefit of putting people to work and collecting taxes on their income and spending rather than paying them unemployment.

 

Very well put. Now for some market analytics. Ever heard of the VIX? I hadn't. But I have heard of system theory. I couldnt upload the graph. Since it is a measure of volatility and is going nuts recently it may mean lots. It -can- presage crashes as imminent.

 

The market appears unstable. Here I had thought it would have immediately tanked.

 

Reason: US govt folly and other bad news sent the market into wide swings causing instability and soon to be crash.

Are you familiar with the story of chicken little?

 

Most Insider Buying Since 1998

http://finance.yahoo.com/news/Fearless-Front-Office-Most-cnbc-597865170.html?x=0&.v=1

 

The people running companies don't seem to be too worried about a crash. They're buying stock like crazy.

[jackson33]

The US can borrow at 3%. Surely there are investments that have a greater return on capital than that. Maintenance and expansion of bridges, roads and rail would reduce congestion and improve productivity, but even at a more basic level, it's cheaper to repair them now than wait and fix them later when the problems are worse. In appropriate areas we could be installing solar panels on government building roofs to reduce future electrical costs, or at least painting them white to cut down on summertime AC costs. All of that with the added benefit of putting people to work and collecting taxes on their income and spending rather than paying them unemployment.[/Quote]

 

swansont; Ten year bonds actually got down to 2.3% last week and Government can simply print money, no interest ever due, but both have consequences. When that 10 year note comes due, it will, being 40/60 plus years from ever be paid off, it's going to be higher, probably each cycle. Printing money, only devalues what's already out there and everyone pays the price, via inflation.

 

This spin going around, that US Highway Infrastructure is falling apart is simply nonsense to promote higher taxes, where there is no intention to fix anything. We already have one tax, State/Federal Gas Tax, that should more than cover any cost of maintenance or new construction, often spent on other items, like high speed transit, sport stadiums.

 

Through the combination of state and federal taxes, the government collects an average 48 cents on each gallon of gasoline sold in the United States. Gasoline taxes are far higher in some states, such as California and New York, where motorists pay about 66 cents. Taxes are even higher on diesel, which fuels commercial transportation.[/Quote]

 

http://www.exxonmobilperspectives.com/2011/04/30/where-do-your-gasoline-dollars-go/

 

On unemployment, the 26 week benefit used for most the 60 years available, paid for by the employers (not the worker, as said by the President of the United States), has worked just fine. There might be a few professionals flipping hamburgers or teachers cutting grass, but that's the way life works.

 

 

Whose general US sentiments are falling in line with what? Policy generally swings back and forth. Off the golf courses there is a sea change in attitude. People are currently too overwhelmed. But the wild outlaw cowboys may have to leave the prairie town. The townspeople want the sheriff back. Even if no one yet is putting a posse together to immediately get some law and order.[/Quote]

 

Generally speaking amanda, I don't put much weight with "Consumer Confidence", however long range future markets and the US Stock Markets are in agreement with current CC, since their concerns are more Worldwide. What I was referring to was the political future and my opinion that the current administrations desired direction for the Country, is coming to an end. I do find your chart interesting, in that as bad as Bush 43 was characterized, from the 2008 election to date, Obama has done much worse....

 

iNow, it will take some time to reply to your post and will get on that later, I'm not ignoring you...

[amanda more]

The US can borrow at 3%. Surely there are investments that have a greater return on capital than that. Maintenance and expansion of bridges, roads and rail would reduce congestion and improve productivity, but even at a more basic level, it's cheaper to repair them now than wait and fix them later when the problems are worse. In appropriate areas we could be installing solar panels on government building roofs to reduce future electrical costs, or at least painting them white to cut down on summertime AC costs. All of that with the added benefit of putting people to work and collecting taxes on their income and spending rather than paying them unemployment.

 

 

Are you familiar with the story of chicken little?

 

Most Insider Buying Since 1998

http://finance.yahoo...0.html?x=0&.v=1

 

The people running companies don't seem to be too worried about a crash. They're buying stock like crazy.

 

Well, that is like saying ignore the sick patient because it is highly likely he won't die today. A concerned physician even would be chicken little.

 

This question came from Why is the American economy deteriorating? There was little argument there that it was. There seems to be this huge disconnect. Businesses close around us. People known to us to be industrious aren't working. It is easier to get to work as there aren't traffic jams (unless you are in Washington DC or Houston)

 

Companies today are often not in the business of goods and services. They are in the business of paper. And Wall Street is happy to trade on paper.

 

Until it isn't.

 

There are big words that are thrown around. Fundamentals show that the economy is sick. An understanding of these would well point to a then sickened stock market. My interest is to ferret out all the downside reasons. Optimism may well, somehow win out.

 

America is infected with Horatio Algerism as its current religion. Precious data on it. Just announced huge numbers of children in poverty. I wonder, of course, about European fatalism. Either is centered on emotions.

 

An observation: Economic data which has shown increased sales are, instead, a measure of stagflation. Food prices have been impacted by $1 box of food now with $.70 in it. When it sells for $1.40 that is not a 40% increase over the last few years but a de facto 100% increase.

 

Households switch to bulk rice muting overall prices. That can't continue to have effects as prices rise.

 

Reason: Stagflation is already happening causing increased havoc and then stock market woes. (plus Federal Reserve has judged it won't intervene on inflation usinf interest rate for a couple of years)

 

 

 

[iNow]

iNow, it will take some time to reply to your post and will get on that later, I'm not ignoring you...

Thanks for the head's up, Jackson. I appreciate that, it's really no problem. I look forward to your response(s).

 

 

swansont; Ten year bonds actually got down to 2.3% last week and Government can simply print money, no interest ever due, but both have consequences. When that 10 year note comes due, it will, being 40/60 plus years from ever be paid off, it's going to be higher, probably each cycle. Printing money, only devalues what's already out there and everyone pays the price, via inflation.

Interestingly, the fact that rates are at 2.3% instead of 3% only further strengthens swansont's central point... That now is a great time to borrow. With that said...

 

I think it's important to note that in a situation where we're experiencing moderate inflation in the short term there are actually quite a number of very positive benefits (again, at least in the short term, and especially given that we're in a liquidity trap and pressed against the zero bound).

 

With a higher level of inflation, the value of the dollar is decreased relative to other currencies and relative to it's past value. When the value decreases relative to it's past value, our debt becomes lower and it's essentially easier to pay off. For every dollar of debt we owe, inflation reduces the impact of the payments on that debt since each dollar is worth less, but we still owe the same number of dollars overall. For example, if we owe $100, and we experience 5% inflation, then the value of that $100 we pay back is actually closer to $95 at the time we entered into the debt. In essence, we get a free discount on our debt if moderate inflation is allowed in the short term. This adds up to some enormously large savings when that debt is larger than $100 (for example, when it's $14 Trillion like our government currently holds).

 

Also, moderate inflation in the immediate term would make US exports much more attractive to other countries, and would help boost manufacturing in the US. More people would be put to work because companies would have more demand for their products (because those products become much more attractive to purchasers paying in other currencies in an environment where the dollar is worth less than their own currency... It's like going to Mexico and being able to get tons of stuff for just a few bucks since the dollar is worth so much more than the peso). That higher demand for US produced products overseas would increase employment within the US. There are obviously some challenges in that imports would cost more when purchased with the US$, but overall some inflation now would help manufacturing (and job creation) rather significantly.

 

So, my basic point is that, no. If we experience some moderate inflation now, it is NOT true that "everyone pays the price."

Edited August 17, 2011 by iNow

[amanda more]

 

Interestingly, the fact that rates are at 2.3% instead of 3% only further strengthens swansont's central point... That now is a great time to borrow. With that said...

 

I think it's important to note that in a situation where we're experiencing moderate inflation in the short term there are actually quite a number of very positive benefits (again, at least in the short term, and especially given that we're in a liquidity trap and pressed against the zero bound).

 

With a higher level of inflation, the value of the dollar is decreased relative to other currencies and relative to it's past value. When the value decreases relative to it's past value, our debt becomes lower and it's essentially easier to pay off. For every dollar of debt we owe, inflation reduces the impact of the payments on that debt since each dollar is worth less, but we still owe the same number of dollars overall. For example, if we owe $100, and we experience 5% inflation, then the value of that $100 we pay back is actually closer to $95 at the time we entered into the debt. In essence, we get a free discount on our debt if moderate inflation is allowed in the short term. This adds up to some enormously large savings when that debt is larger than $100 (for example, when it's $14 Trillion like our government currently holds).

 

Also, moderate inflation in the immediate term would make US exports much more attractive to other countries, and would help boost manufacturing in the US. More people would be put to work because companies would have more demand for their products (because those products become much more attractive to purchasers paying in other currencies in an environment where the dollar is worth less than their own currency... It's like going to Mexico and being able to get tons of stuff for just a few bucks since the dollar is worth so much more than the peso). That higher demand for US produced products overseas would increase employment within the US. There are obviously some challenges in that imports would cost more when purchased with the US$, but overall some inflation now would help manufacturing (and job creation) rather significantly.

 

So, my basic point is that, no. If we experience some moderate inflation now, it is NOT true that "everyone pays the price."

 

So, the dollar would normally be such that it takes more dollars to buy foreign goods (inflation)

 

The trade deficit has currently increased. Wholesale prices have suddenly risen.

 

For the trade deficit to decrease this country would need to either stop buying as much goods and since they normally come from abroad then that decreases the deficit. Or companies gear up to produce American goods that are sold overseas or replace goods normally bought overseas.

 

The dollar with however bad the US economy may get, may end up as strong do to being the only game in town. Anyone for Euros or Yens? That strong dollar may prevent an effect to decrease the trade deficit?

 

Reason: An oddly strong dollar could prevent increases in manufacturing for foreign customers further crippling the economy and the stock market.

 

 

 

[swansont]

swansont; Ten year bonds actually got down to 2.3% last week and Government can simply print money, no interest ever due, but both have consequences. When that 10 year note comes due, it will, being 40/60 plus years from ever be paid off, it's going to be higher, probably each cycle. Printing money, only devalues what's already out there and everyone pays the price, via inflation.

 

Lower interest. Great! Makes it easier to find investments that would benefit from borrowing.

 

This spin going around, that US Highway Infrastructure is falling apart is simply nonsense to promote higher taxes, where there is no intention to fix anything. We already have one tax, State/Federal Gas Tax, that should more than cover any cost of maintenance or new construction, often spent on other items, like high speed transit, sport stadiums.

Which came first, the lack of money, or the absence of an intention to fix anything? Not that it matters. We don't spend the necessary money. I'm saying that we can borrow money to fix things now that will eventually break if left unmaintained, and it's cheaper to do it now. The cost of delaying will be greater than the interest payments.

 

The federal gas tax revenue is about $25 billion a year. The tax isn't indexed to inflation nor is it a percentage of the gas price, so the buying power of the money has gone down in the 18 years since it was last increased (when gas was less than $1.50 a gallon). States bring in perhaps an additional $40 billion. The American Society of Civil Engineers estimated in 2009 that we need $930 billion spent over 5 years to fix deficient roads and bridges. 5*(25 + 40) = 325. So no, gasoline taxes don't cover what we need to spend.

 

http://www.infrastructurereportcard.org/

[swansont]

Well, that is like saying ignore the sick patient because it is highly likely he won't die today. A concerned physician even would be chicken little.

A doctor who screams CANCER! YOU GONNA DIE without even running any analysis on the patient is being chicken little. Less fear-mongering. More facts and analysis. (My use of more might be interpreted to imply that I think there has been some already; that would not be my intent)

[jackson33]

I don't understand why this has become such a difficult point with you. MOST businesses are lacking demand. A few counter examples does not change that.[/Quote]

 

iNow: Maybe it's because I follow market trends. While Wal Mart is down (seven quarters), in the US, a slight amount for existing stores year to year sales, Target, Dollar Stores and many others, including some high end retailers, are up and though overall real consumer spending has leveled off, it remains at all time highs. The point of the discussion was those majors, doing business Internationally, could be expanding in the US, if incentivised.

 

http://www.data360.org/dsg.aspx?Data_Set_Group_Id=2038

 

I tell you what. I'll cut you some slack. Let's assume that 100% of the agriculture sector cannot produce enough to meet their demand, and that they desperately wish they could keep up and sell more than they currently do. Agriculture still only accounts for 1.2% of GDP. There's still another 98.8% of sectors in the GDP not in that same condition.

 

And aircraft building? Really? That's only 0.73% of the economy.[/Quote]

 

Probably I should turn this around and ask what percentage of energy, classified alternatives to fossil and how much as been subsidized over the past 30 years, just to get to (guessing) 2% of produced energy, could be justified. I believe the increased price of Automobiles, Trucks and refining Gasoline alone, to meet thousands of regulations, from the Federal, 50 States and a few Cities has been more destructive or costly to the economy than any single event.

 

Since were "granting slack", the US today is a service based economy and no doubt hurting. People can go online, doing things electronically, buying stuff, doing their taxes, banking or hundreds of things, people use to be required. As for agriculture, while employing a smaller number of people today, to produce much more, keep in mind thousands are required to bottle, can, slice, butcher, box, ship, promote and display, each item, sectors can overlap, but I understand your point.

 

Service economy can refer to one or both of two recent economic developments. One is the increased importance of the service sector in industrialized economies. Services account for a higher percentage of US GDP than 20 years ago. The current list of Fortune 500 companies contains more service companies and fewer manufacturers than in previous decades.[/Quote]

 

http://www.answers.com/topic/service-economy#ixzz1VJAdqhF7

 

Businesses sometimes borrow money so they can invest in their growth. When they borrow, they want to keep the interest rate as low as possible so when they repay that loan most of the payment goes toward principle.[/Quote]

 

Small business and most start up business, yes, but not necessarily Corporations. Most do maintain "lines of credit" with the larger financial institutions or might barrow for acquisitions or for major new facilities, but most can simply apply, to inject new stock into the markets.

 

Government in this case is incredibly similar. They borrow money, seek low interest rates, and then invest that money into sectors which have a high return on investment. The point is that they need to invest it areas which have a stronger growth outcome than debt increase.[/Quote]

 

I'll offer my opinion on this in response to both you and swansont current post, even though I have already answered. Government today "rolls over every bond", that is they barrow the money to pay off the one due and at today's rates. This works fine when notes from 30 years ago, when interest on 30 year bonds were maybe 8% (now about 3.7%), as you both say are at all time lows and correct. The problems are with a current debt of 14.6T$, trillion dollar projection of Budget Deficits well into the 2020's, unreported inflation, a Federal Reserve that simply has artificially controlled Short Term Interest Rates for 12 years (all other rates are based on), they are GOING to have to increase. Government simply can't keep up with any increase. Said another way, any of the 2.4T$, covering the next 16 months debt is expected to be loaned for 10 years at, lets say 2.5%, will likely be 5% in ten years and since there's no projected surplus, certainly in ten years, Government will be obligated to pay twice the interest and so on...

 

http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

 

That does nothing to address the point that US government spending on the WWII wartime effort did a great deal to stimulate the economy and had long-term lasting effects on our growth.[/Quote]

 

IMO, it was post WWII that gave the US the economical boost, where both Europe and Japan had been destroyed by war and the US could retool to peace time manufacturing, they could not.

 

 

Which came first, the lack of money, or the absence of an intention to fix anything? Not that it matters. We don't spend the necessary money. I'm saying that we can borrow money to fix things now that will eventually break if left unmaintained, and it's cheaper to do it now. The cost of delaying will be greater than the interest payments.[/Quote]

 

swansont; This is all very complicated and I'm sure you want citations, but both States and the Federal Government have always collected more G/D User Tax, than needed and even this year, some collected has been spent on other items, not to mention all the permits, even your drivers license, vehicle/trailer license, tolls, fees and special trucking permits, that are intended for road repairs. The fact the money was not correctly used or the economy is now in trouble, does not give Government the right to additionally barrow money, which in part will never be used for them.

 

Since States are primarily responsible for non-interstate roads and/or infrastructure, bridges, train crossings and the like, and does collect (it doesn't go to the Federal) and some things are in desperate need of repair, they should get the job done. If the Federal 25B$ annually, (think States is much more than 40B$), they can increase the user tax, anytime they please. I'm getting a little tired of Government, regulating auto/truck travel, then complaining the results are decreasing fuel purchases, in turn revenue, where does this end.

 

I like your link, even though it's obvious biased toward modern engineering over past times, if you or anybody thinks 2.2T$ is going to be available, even in good times, over five years to fix all the problems, well it's just not going to happen.

[iNow]

iNow: Maybe it's because I follow market trends. While Wal Mart is down (seven quarters), in the US, a slight amount for existing stores year to year sales, Target, Dollar Stores and many others, including some high end retailers, are up and though overall real consumer spending has leveled off, it remains at all time highs. The point of the discussion was those majors, doing business Internationally, could be expanding in the US, if incentivised.

Why would they expand if sales are down? Me saying demand is low is equivalent to sales being down, which they are, in the US... Due to the bad economy... Due to people not having jobs... Due to the unemployment preventing these people from having money... to spend... at Wal-Mart, or at Target, or at wherever.

 

 

Let's look at their sales over the past several years so you can see in graphical form what I'm saying here. My point is a simple one: Demand is low. Demand is where the incentive is, and they're lacking it. This isn't tied to uncertainty or government policies in the way you keep asserting.

 

 

http://seekingalpha.com/article/254276-retailers-kick-off-earnings-parade

 

Walmart (WMT): The world’s largest retailer reported results that beat analyst estimates, but struggles at its North American stores continued. Total sales in the fourth quarter increased 2.5% to $115.6 billion, but U.S. same-store sales dropped 0.8% (the seventh straight quarterly decline), which consisted of a 1.8% comparable sales drop at Walmart.

 

 

 

 

 

 

Probably <snip> (guessing) <snip> I believe <snip> my opinion <snip> simply can't <snip> lets say <snip> IMO

This is getting a little annoying.

 

 

 

I like your link, even though it's obvious biased toward modern engineering over past times, if you or anybody thinks 2.2T$ is going to be available, even in good times, over five years to fix all the problems, well it's just not going to happen.

Here again you are being defeatist, despite your previous claims to the contrary. It's important to note, Jackson, that the only limitations here are political or ideological in nature, not economic.

Edited August 18, 2011 by iNow

[amanda more]

Why would they expand if sales are down? Me saying demand is low is equivalent to sales being down, which they are, in the US... Due to the bad economy... Due to people not having jobs... Due to the unemployment preventing these people from having money... to spend... at Wal-Mart, or at Target, or at wherever.

 

 

Here again you are being defeatist, despite your previous claims to the contrary. It's important to note, Jackson, that the only limitations here are political or ideological in nature, not economic.

Thanks for the graphs. I do love data. The nearby Target store took out plants and some other things and replaced with food. I know that increased its sales. I read a Manager's book about Wal-Mart requiring managers to cut personnel on Fridays. They promoted rotten service.

 

My experience I had with K-mart was that I would go in for a few things and spending a lot on things I didn't really need. I got to where I bought things at Walgreens instead.

 

Target has a card - I haven't used yet that gives 5% off. Since that is the profit for food generally, high use would hurt profits. So, they may have been angling for some kind of better position in the markets. Or the strategy worked and more people are shifting department store to Target purchases after coming in for food.

 

So what I am saying is with these few nit-picking details that it may not be that Target is all that healthy and maybe people on hard times dislike the added stress of a hateful fifteen minutes in a line at Wal-Mart.

 

Another Econ 101 thing that many don't realize with Jackson etc. is the multiplying effect. Henry Ford said he wanted to pay factory workers the outrageous level of $5 a day because then they could afford to buy cars. That factory worker may have paid 20 cents to the diner down the street at lunch break. He could save for a home which paid carpenters etc. the $20 etc. as part of the expense for the $1000 home. The clothing store could count on selling a few even $15 suits so he could look great on Sundays. When he pays these bills these people in turn pay their bills and it is a multiplying effect.

 

There are even equations to show how income from employment gets spent. The opposite happens when government cuts jobs and money. Joes Diner down the street from the federal building notices some familiar faces aren't there. Without a minimum amount of business can they pay the light bill? They have fixed expenses and may have to close down without a certain minimum number of customers. Joe used to buy himself a nice car occasionally but now he is working as a fry cook for minimum wage.

 

"limitations here are political or ideological in nature, not economic."

 

The banks did the equivalent of holding a gun to our heads , "Your money or you financial life." But in spite of feeding wall street fat cats and foreign corporations the banks are in trouble now and they may still tank. So will the result be that the government will wholeheartedly increase the supply of jobs and therefore money at this late stage? Or will they again take the waitress's wages and hand it to BOA?

 

Reason: Paralyzed or destructive government politicos hamstring a full implementation of a massive Roosevelt style New Deal crashing Banks again which causes government to have to spend again on them instead of the economy.

 

 

 

 

 

 

[swansont]

iNow: Maybe it's because I follow market trends. While Wal Mart is down (seven quarters), in the US, a slight amount for existing stores year to year sales, Target, Dollar Stores and many others, including some high end retailers, are up and though overall real consumer spending has leveled off, it remains at all time highs. The point of the discussion was those majors, doing business Internationally, could be expanding in the US, if incentivised.

 

http://www.data360.org/dsg.aspx?Data_Set_Group_Id=2038

 

Why would anyone expand during that 5% dip in consumer spending we had, or while it is "leveled off"?

 

 

I'll offer my opinion on this in response to both you and swansont current post, even though I have already answered. Government today "rolls over every bond", that is they barrow the money to pay off the one due and at today's rates. This works fine when notes from 30 years ago, when interest on 30 year bonds were maybe 8% (now about 3.7%), as you both say are at all time lows and correct. The problems are with a current debt of 14.6T$, trillion dollar projection of Budget Deficits well into the 2020's, unreported inflation, a Federal Reserve that simply has artificially controlled Short Term Interest Rates for 12 years (all other rates are based on), they are GOING to have to increase. Government simply can't keep up with any increase. Said another way, any of the 2.4T$, covering the next 16 months debt is expected to be loaned for 10 years at, lets say 2.5%, will likely be 5% in ten years and since there's no projected surplus, certainly in ten years, Government will be obligated to pay twice the interest and so on...

 

http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

The point is that if you invest in areas that improve economic efficiency, people make more money and tax revenues go up, and you won't have to borrow as much in the future. If you improve government efficiency, such as my suggestions about energy efficiency, you pay less so you have to borrow less. Both reduce the deficit going forward. Why shouldn't they be in the overall plan to reduce the deficit?

 

swansont; This is all very complicated and I'm sure you want citations, but both States and the Federal Government have always collected more G/D User Tax, than needed and even this year, some collected has been spent on other items, not to mention all the permits, even your drivers license, vehicle/trailer license, tolls, fees and special trucking permits, that are intended for road repairs. The fact the money was not correctly used or the economy is now in trouble, does not give Government the right to additionally barrow money, which in part will never be used for them.

 

It's actually quite simple. You claimed that the gas tax raised more than enough for maintenance, and I gave information that showed that to be in error. Changing the argument to include other sources of revenue doesn't make your original claim correct. Why can't you either just admit that it was wrong, or show me where I was wrong? Why do you have to move the goalposts?

 

Since States are primarily responsible for non-interstate roads and/or infrastructure, bridges, train crossings and the like, and does collect (it doesn't go to the Federal) and some things are in desperate need of repair, they should get the job done. If the Federal 25B$ annually, (think States is much more than 40B$), they can increase the user tax, anytime they please. I'm getting a little tired of Government, regulating auto/truck travel, then complaining the results are decreasing fuel purchases, in turn revenue, where does this end.

 

Where do you get your information that it's much more than $40B? I used the average state gas tax for the country, which is a little more than the federal amount, and adjusted accordingly. The average gas tax is $0.47, including federal, meaning the states charge 28.6 cents, which is 55% higher than the federal. 1.55*25 = 39

 

I like your link, even though it's obvious biased toward modern engineering over past times, if you or anybody thinks 2.2T$ is going to be available, even in good times, over five years to fix all the problems, well it's just not going to happen.

 

The longer we wait, the bigger the problem gets. As I see it, the attitude of "can't solve it completely, so we might as well do nothing" is flawed. If we don't spend it now we'll spend more later, but if we at least did something, the problem won't become a crisis, or at least it won't be a crisis as quickly. Doing nothing is the most irresponsible thing, and we've had way too much of that lately.

[jackson33]

NEW YORK (MarketWatch) -- Target Corp. /quotes/zigman/253872/quotes/nls/tgt TGT -2.18% said Thursday its June same-store sales rose 4.5%, beating the Wall Street estimate of 3.2% in a survey of analysts by Thomson Reuters. The Minneapolis retailer said its total sales for the five weeks ended July 3 increased by 5.7% to $6.26 billion. The company said its same-store sales came in at the top end of its expected range. [/Quote]

 

http://www.marketwatch.com/story/target-june-same-store-sales-up-45-beats-view-2011-07-07

 

iNow; Wal Mart, same store sales are slightly down the last seven quarters (2010/2011) and Targets are up the this quarter and reported expectations on increase to 2017. You have said "demand" is the problem and all I'm telling you is demand has not fallen near the degree of the markets.

 

Here again you are being defeatist, despite your previous claims to the contrary. It's important to note, Jackson, that the only limitations here are political or ideological in nature, not economic. [/Quote]

 

Well, to me it's called reality, not defeatist. I'm not sure of your point here, but political influence in the economy, more so recently with regulations, has everything to do with the economy, not separable....

 

WASHINGTON (Reuters) - U.S. consumer spending was flat in May, breaking a string of 10 straight months of gains, as households struggled with rising prices and automakers failed to deliver the models Americans wanted.[/Quote]

 

http://uk.finance.yahoo.com/news/U-S-consumer-spending-set-reuters_molt-367060839.html?x=0

[iNow]

iNow; Wal Mart, same store sales are slightly down the last seven quarters (2010/2011) and Targets are up the this quarter and reported expectations on increase to 2017. You have said "demand" is the problem and all I'm telling you is demand has not fallen near the degree of the markets.

This doesn't make sense. Just because their QoQ sales are up a bit doesn't mean demand is not low. If you read the previous chart I shared, you can easily see that pre-recession the sales growth was over 12%. A bit of growth after several very weak quarters does not mean they're at pre-recession levels, nor does it mean that demand is not an issue as you continue to assert.

 

 

 

 

 

I'm not sure of your point here, but political influence in the economy, more so recently with regulations, has everything to do with the economy, not separable....

I never denied they were related, nor did I suggest they were separable. As I stated several posts ago, and have since supported, the effect is not of the magnitude you assume. Sure, politics and regulations have an impact. It would be silly to deny that, however, it's much more silly to assume this is the core reason for low business investment.

 

As you yourself stipulated, corporations are generally sitting on a lot of excess cash right now and are not investing it into expansion, or new equipment, or more workers. You suggest this is because of big-bad-Obama and policies and taxes, and that somehow cutting their taxes more will magically cause investment.

 

You have yet to address the very simple question. Why would they invest if demand is so low? You tried to suggest that demand is NOT low and that sales are high. The information shared in response shows your claim to be remedially false.