OT: Your Reason For Not Believing We Are in a Boom
Dougster
a) we abandoned the gold standard; nothing good can happen after that
b) we did not follow the policies of Ayn Rand; the world deserves severe economic retribution and will get it!
c) we did not follow the policies of Libertarians; the world deserves severe economic retribution and will get it!
d) how could the world have not followed my political ideologies and be experiencing a boom? that causes cognitive dissonance. when I look at a hundred facts I'll focus on the 10 that lean toward skepticism and ignore the other 90. that will make the cognitive dissonance go away
e) I don't know. Stevie-girl said it won't happen; therefore it won't
f) It's all just due to low interest rates; once those are gone we are toast
g) It's just a stock market bubble a la 1999-200
h) the stock market was down yesterday; every day it is down think the top is in
i) most in the financial media are skeptical; I let them think for me so I am too
j) A genuine boom would help all income levels; what it is? Okay, but I still hate the Cock Brothers, so it's not a genuine boom
k) I can just keep saying it's not a boom; it will collapse tomorrow. I can say that 3,000 times and since tomorrow is always a day away it isn't 100% certain I am wrong!
l) if there was a boom it happened under the Obama's watch, when I heard his policies would destroy the economy, and they will! Therefore there is no boom
m) just wait until Obama care really kicks in!
n) it's all just central banks printing money; will have hyperinflation thanks to them and then a deflationary crash
o) the labor force participation has declined steadily since around 2000. Could it be more people, women in particular in school and hence good? Nah! Gotta be people just giving up looking for work
p) Dougster said it and we all disagreed. I hate that guy! Can't agree and make him look right.
q) but China's growth is only 7%! That is just a disaster!
r) there's about an average level of geopolitical concerns but I don't have perspective so I'll say it worse than ever
s) Mark Cuban said "bubble" now he was talking about a rather small private subset of private equity, but still he used the "b" word, so let's forget the context
t) once they raise wages it's all over!
u) Wall Street always makes these things get carried away - I can't decide which way to argue; that's happen already; or it's about to happen; either way there can't be a genuine boom with them around
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And, lest we forget, we still have significant portions of our economy being propped up by near zero interest rates. I am very concerned about what will happen to the stock and housing markets when interest rates are finally increased.
At best, our current growth could be characterized as fragile, with a lot of headwinds.
v): ZeroHedge is a financial blog with an excellent record for prognostications and impartiality. They say there is no boom. Therefore, there is no boom!
@RickyBoy: I can go either way. Just playing by the rules you guys do. Funny how it's okay for your side but it's a foul when I copy your style.
https://www.tuscl.net/postread.php?PID=3…
Bad news for RickyBoy's father.
W) it's only the Fed's QE that is holding up the markets and the economy. When the Fed ends that it's all over.
But the really strong numbers came after that, so you don't hear that argument anymore. But the crowd who parotted have just moved on to saying it is rising rates that will make the sky fall
I also know that we will be coming up on a Presidential election. The Republicans and their Tea Party backers are not going to let the Democrats claim credit.
And also, I know that all of these booms of the last 25 years are nothing more than booms in investor confidence.
So for those of you who bought low, I think you should be considering selling high, like NOW.
For myself, I could not care less about booms, and I have no desire to try and make money that way.
SJG
To be a broken record: jobs are a lagging indicator. This boom cycle is in the late stages.
The main reason rate hikes are needed is to give banks more incentive to lend. I believe the American consumer learned their lesson and it appears they have seriously delevered and aren't likely to fall into that trap again anytime soon. As you can see in this third their is general skepticism now about speculation in the markets or real estate and also considerable legislation enacted to "de-risk" the system. For that reason, now is the right time for banks to start lending again. Consumers will benefit as will businesses (both as lending target and from the benefits they will see from increased consumer activity). This is especially true give the rising interest of millennials in entrepreneurship.
Meanwhile for older, more risk averse folks, higher rates also obvious give people more incentive to save - which means bigger balance sheets for the banks to loan against (fractional reserve banking).
My feeling on rates was that it was a good move to keep them low for some time following the crisis (excellent work Bernanke - who put all of his academic studies of the great depression to good practical use) but they were kept too low for too long. The economy has recovered despite low rates not because of it. A real testimony to what a steam roller the American economy is when it is ready to go.
All that being said, it is still where we are in the product cycle that is the main driver of the economy and stock market. That is so important it easily the most important factor far beyond things like the geopolitical day to day; whether interest rates are 1% or 0.25%; which party the president belong to; whether some small nation will default or not; whether the top capital gains tax is 15% or 22.5%; whether we have Obamacare or not. A rise in rates is just a little extra juice at this point.
The stock market, OTOH, is a leading indicator and guess what it's saying? This boom is in its early stages - with so many of the new technologies still in the early stages of the product cycle. These things typical last at least a couple of decades so if 2009 was the bottom and we are just 6 years in...
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The lefty blogosphere is arguing that, while we have nearly full employment, there's barely a hint of wage increases. Pumping up rates now might result in less job growth. So leave rates as they are until we see some hint of inflation; it's far easier to deal with some inflation than a Japanese style deflation.
This recent run up is fueled largely by debt. What happens when we start paying it back? Or after it runs it's course?
X) Boom? My favorite political/economic/market blog would have told me if such a thing was happening. But they are all gloom and doom. I'll believe no sooner than they do, and then exactly when they do. Because I'm good at thinking for myself like that.
After the Civil War there were several booms and busts. With each cycle the rich got richer and the poor got poorer. But there were also counter actions, like the Grangers and Teddy Roosevelt taking on the monopolies, and the beginnings of a labor movement.
Then we had a huge boom in the 1920's, and though the rich got very rich, the poor were still hurting. And then we had a huge bust. And so the people voted for reforms, regulation on the banks, and regulation on securities, and for the government to use it's power to tax and spend to try and prevent there from being any more booms and busts.
Thorstein Veblen had explained the psychodynamics of it, and John Maynard Keynes had worked out the economics. It worked, it worked well, and it worked for many decades. America enjoyed increasing productivity, an increasing standard of living, and a reduction in poverty which was extending to all regions and starting to cross over racial barriers.
But then some Iranian radicals took Americans hostage in an embassy, and Jimmy Carter was trying to enforce the 1964 Civil Rights Act prohibition on racial discrimination on Bob Jones University, and so the Evangelicals dumped him and endorsed a Hollywood playboy divorcee.
From then on we've had boom and bust after boom and bust after boom and bust. And so absolutely this is another round. And I am right now holding my breath because I believe the bubble could burst at any moment. 2016 is after all an election year.
SJG
Deep Purple
https://www.youtube.com/watch?v=BamOGaIz…
Boom chock-a-locka-locka... Boom!!!