FINANCIAL INSECURITY
the following survey results reflects on a society of people working very hard to make "ends meet" each and every week. not the best of situations for an highly leveraged society of people. its also a potentially disasterous situation for the banks that have been so willing to lend to these 'paycheck to paycheck' consumers. with an insatiable appetite for all the new stuff that corporate america's advertising engines keep telling us we need, we collectively seek out new and innovative ways to satisfy our desires. in doing so, we are able to keep living the american dream while we create a future nightmare of financial distress.
the american "rat race" provides the impetus for huge sales of anti-depressants and sexual aides, and it is setting the stage for lots and lots of unprepared employees who may continue to see corporate america laying off more and more of their friends, loved ones, and g-d forbid themselves. without any financial cushion, and lots of debt, the respondents, along with their peers, face some serious financial problems. many seeking the american dream of a new home have been fortunate enough to get a great deal on rates and down payments in the last 2 years. with their new homes, they needed new furniture, electronics, and appliances all financed by cheap credit with easy terms, some of which they got from the equity in their newly acquired homes. now, not only are they relying on their paychecks to stay current on their committments, but lots of banks are relying on those paychecks to get there monthly payments as well.
here is the survey i am referring to>>>>>>>>>>>>>>
By Jane J. Kim
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Most workers are living paycheck to paycheck, hurt, in
part, by a weak economy and rising health-care costs, according to a new study.
Although younger workers are more likely than older workers to live paycheck
to paycheck, slightly more than half of those nearing retirement age depend on
each paycheck, according to MetLife's 2003 Employee Benefits Trend Study,
scheduled to be released this week.
Individuals have been "challenged" by a weak economy and have seen the value
of their own assets decline, said Craig Guiffre, vice president of national
accounts at MetLife. And although overall inflation has been low, certain costs
are rising, such as medical care and college tuition. Meanwhile, employers have
been shifting more of costs of benefits to employees, he said.
"The percentage of people in the boat of people living paycheck to paycheck is
going up," he said.
Among those with children under 18, more than half, or 57%, rely on their
paycheck to manage finances. Even among employees earning $75,000 or more a
year, more than 34% live are relying on their paychecks to get by.
In fact, the survey found there were few differences across age, gender or the
respondents' ethnicities. "The interesting thing was there weren't huge
differences between all the populations," Guiffre said.
Due in large part to a heavy reliance on work income, more than two-thirds of
employees are extremely or very concerned about making ends meet. For example,
a majority of respondents, or 71%, do not have or don't know if they have a
financial plan.
"The good news is that even for folks who are living paycheck to paycheck, it
doesn't have to be expensive" to put together a financial plan, Guiffre said.
People can find free information and financial planning tools online or can get
information from their employers. And since most companies are in the midst of
open enrollment, now is a good time for workers to ask their employers for more
information. Nearly two-thirds of employees surveyed said they spend less than
an hour each year considering their household's financial needs during their
company's open enrollment for employee benefits.
The study consisted of two separate surveys: one survey polled 728 full-time
employees, age 21 and older, at companies with at least two employees and had a
margin of error of plus or minus 3.1%. The second survey polled 1,548 human
resources and benefits executives and had a margin of error of plus or minus
2.1%. Both surveys, which were conducted by NFO World Group, were conducted
online in September. END>>>>>>>>>>>>>>>>>>>>
paycheck to paycheck consumers are problematic in a fragile economic recovery. the banks that hold the loans will soon face problems handling the non-performing loans and credit losses.
have a grateful day!
larry
Wednesday, November 19, 2003
Monday, November 17, 2003
Is That An ELEPHANT I Smell?
As a perma-bear on most things economic these days, i seek out others with similar thoughts of doom and gloom. as there is a distinct minority of us pessimists, i always like to share my more mainstream findings. Morgan Stanley has a conference each year that brings together its clients, analysts, fund managers and others to discuss the state of the world economy and forces that may be important in the upcoming year. Stephen Roach wrote the following piece after the conference. i found it heartening to my thought process and intresting in its comments about the nervousness out there regarding the more macro decline of the U.S. and its world dominance financially and militarily. i have read it and i am equally as nervous as the people at the conference.
Global: Macro Passion
Stephen Roach (New York)
Our annual global investment conference in Lyford Cay has become an important milestone in my own macro journey. Client sentiment at this gathering provides those of us at Morgan Stanley with invaluable insights into the markets and offers a unique sounding board for our own views. But this isn’t just any conference. After 19 years, it has taken on a special character. Most of the attendees are repeat participants. And with that repetition comes familiarity -- almost like family. The feedback is fair and direct -- and often intense. Over the years, the dialog at Lyford Cay has become the marker by which I have learned to set my personal macro compass for the year ahead.
The mood this year was cautious, risk-averse, and introspective. Largely an equity crowd, you would have thought that the surge in global stock markets over the past eight months would have put the group in a giddy mood. That was not the case. Yes, by a margin of two to one, the group thought 2004 would be an up year in equity markets. But it was largely envisioned as a dull year of single-digit returns. I’ll leave it to our market strategists to comment on the specifics of the recommendations that came out of the round-table at the end of this event. But from my perch, there was nothing “early-cycle” about the collective insights of this seasoned crowd; in particular, there was little interest in consumer durables and capital equipment. More focused on pharmaceuticals and healthcare, this was a group that was enamored of defensive, late-cycle ideas. It was almost as if it was time to play the downside of an economic recovery -- a recovery, of course, which has barely begun.
Don’t get me wrong. This was not a group that was willing to endorse my bleak view of the world. There wasn’t an investor in the crowd who thought the US economy would grow by less than 3% next year. The case for deflation, which had blindsided this group just a few months ago, never even came up in the macro discussions. At the same time, few looked for a meaningful acceleration in inflation; instead they favored a scenario that depicted more of a gradual and relatively benign updrift in pricing (see Dick Berner’s dispatch in today’s Forum, “The Inflation Conundrum at Lyford Cay”). Reflecting that view, the group was on the fence insofar as Fed policy was concerned; however, of the 50% that were looking for a tightening next year, three-fourths thought any such action would be deferred to the second half. Nevertheless, the bond market was viewed as largely a one-way bet: By a margin of four to one, the consensus looked for yields on 10-year Treasuries to exceed 5% by the end of 2004. None of these are extreme views that threaten to derail financial markets. That didn’t surprise me. This is a group that is paid to be fully invested. As such, it invariably favors soft landings in downturns and soft takeoffs in an upswing.
As the house skeptic, with a seemingly chronic case of jetlag, maybe I’m guilty of selective recall. But as I attempted to back out the risks to the macro overlay from three days of discussions, I sensed far more concern than optimism. In the interest of full disclosure, I’ll be the first to admit that I’m reading between the lines in drawing that conclusion. But over the years, my experience has taught me that that’s exactly what you have to do to get the real message of Lyford Cay. The best economic scenario that emerged for the United States was a last-gasp surge in early 2004 driven by the second installment of the recently enacted fiscal stimulus. After then, even the growth bulls on the economy feared a sharp deceleration. At the same time, there was nearly unanimous sentiment that the dollar was headed lower. Byron Wien made an impassioned presentation of the bull case for the US currency, but there were no takers. The general sense of the group was that America’s gaping current-account deficit had left the dollar in the early stages of a multi-year downtrend. Against that backdrop and in the context of the potential perils of competitive devaluation that a weak dollar might trigger, there was considerable interest in gold -- more so than I have seen at any year in this conference.
Perhaps the most surprising commentary came from one of the perma-bulls. As a long-time attendee at the conference, he has repeatedly stressed the inherent resilience of the US economy and its financial markets. He was one of the first to grasp the powerful implications of 20 years of disinflation and the extraordinary ability of Corporate America to take advantage of that trend -- initially by lowering its cost of capital and eventually by riding the wave of accelerated productivity growth. His optimism is now gone. He is deeply concerned about an America that has lost its way. The excesses of debt and the shortfall of saving are at the top of his list. But he also waxed eloquently on the perils of massive trade deficits and the job losses they spawned. He found the erosion of America’s manufacturing base especially disturbing. He was also convinced that Washington had gone past the point of no return in creating a fiscal train wreck. This was a minority view, to be sure. But it came from one of the savviest investors I know. And he swears he doesn’t read my research.
Those troubling views were expressed in the very first session of the conference. But they didn’t really resonate with the group at large as the debate unfolded over the next few days. That was certainly the message from the macro conclusions described above. But the bearish view resurfaced with a vengeance in the final session of the conference -- our Saturday night rump-session at Lyford Cay. With the roundtable completed at midday, we had set aside some time before the final dinner to reflect on our collective discussions. About half the group remained at that point. The converted perma-bull had left for home. But the group picked up where he left off. With an emotional intensity that I have rarely seen at this conference, there was a deep sense of concern expressed about America’s future.
The elephant that had been in the conference room the whole time finally stomped out into the open. There was widespread fear that many of the most important icons of the American system were at risk of crumbling in this post-bubble climate of vindictiveness. It wasn’t just the Wall Street scandals. It was also the Enron-led accounting scandals and the damaged credibility of the New York Stock Exchange. The litany of a seemingly open-ended crisis in corporate governance and the political backlash it has spawned deeply troubled these investors. So, too, did America’s mis-adventures in Iraq, the latent fear of another terrorist attack, and the ominous rumblings of protectionism -- especially America’s politically-inspired imposition of steel tariffs and the more recent outbreak of China bashing. I will confess to playing the role as something of a provocateur in that part of the discussion. But it didn’t take much to open the floodgates of angst. There was also a philosophical discussion of the deep flaws of America’s debt-driven culture. Related concerns were expressed over the post-bubble response of the Fed -- interest rates that are far too low to inhibit the appetite for excess leverage. Another investor stressed that the American consumer -- long the mainstay of a US-centric global economy -- was literally living on borrowed time. With the last of America’s five home mortgage refinancing cycles behind us, he suggested there’s good reason to worry about the staying power of increasingly wealth-driven American consumers.
That unleashed a torrent of counter-attacks in defense of the American way. The most passionate case seemed to borrow a page right out of “The End of History and the Last Man” by Francis Fukiyama (Free Press, 1992). With the demise of communism, the triumph of market-based capitalism was argued to be the functional equivalent of permanent support for the US-centric growth model of the global economy. US current account deficits were depicted as being only symptomatic of how feeble the rest of the growth-impaired world really is. Even if it takes more debt for America to continue to pull the rest of the world along for the ride, so be it. After all, claim the optimists, the one thing non-US economies can do is fund America’s external imbalances and keep US interest rates down. If that’s the case, never mind the so-called excesses of the American consumer. As one investor quipped, “We can always be counted on to go down to the mall and support the global economy.” In the end, it turned out that by a thin margin, even the sentiment in the rump session was skewed toward a US economy that continues to finesse its ever-mounting twin deficits.
Maybe I’m making too much out of all this. But over the years, my experience has taught me to pay much greater attention to the body language of the most passionate investors than to the results of the various polls we conduct in an effort to glean insights into consensus thinking. Of course, it’s always easy to “game” the consensus at this conference. The now infamous “Curse of Lyford Cay” suggests that the consensus is invariably wrong on the big views in which there is most agreement. To the extent the curse is alive and well, that points to two possibilities -- a sharp further upside move in world equity markets or an equally sharp downside breakout. I know where I’m leaning. END>>
My take on mr. roach's tilt is toward the dark side of the spectrum. maybe the stock market is just fine ignoring the real things that are going on around the world and within our own country. some seem on the surface to reflect the freedoms and joys of living in a free and democratic society. too much of a good thing may not be good for the U.S. or us.
have a grateful day!
larry
As a perma-bear on most things economic these days, i seek out others with similar thoughts of doom and gloom. as there is a distinct minority of us pessimists, i always like to share my more mainstream findings. Morgan Stanley has a conference each year that brings together its clients, analysts, fund managers and others to discuss the state of the world economy and forces that may be important in the upcoming year. Stephen Roach wrote the following piece after the conference. i found it heartening to my thought process and intresting in its comments about the nervousness out there regarding the more macro decline of the U.S. and its world dominance financially and militarily. i have read it and i am equally as nervous as the people at the conference.
Global: Macro Passion
Stephen Roach (New York)
Our annual global investment conference in Lyford Cay has become an important milestone in my own macro journey. Client sentiment at this gathering provides those of us at Morgan Stanley with invaluable insights into the markets and offers a unique sounding board for our own views. But this isn’t just any conference. After 19 years, it has taken on a special character. Most of the attendees are repeat participants. And with that repetition comes familiarity -- almost like family. The feedback is fair and direct -- and often intense. Over the years, the dialog at Lyford Cay has become the marker by which I have learned to set my personal macro compass for the year ahead.
The mood this year was cautious, risk-averse, and introspective. Largely an equity crowd, you would have thought that the surge in global stock markets over the past eight months would have put the group in a giddy mood. That was not the case. Yes, by a margin of two to one, the group thought 2004 would be an up year in equity markets. But it was largely envisioned as a dull year of single-digit returns. I’ll leave it to our market strategists to comment on the specifics of the recommendations that came out of the round-table at the end of this event. But from my perch, there was nothing “early-cycle” about the collective insights of this seasoned crowd; in particular, there was little interest in consumer durables and capital equipment. More focused on pharmaceuticals and healthcare, this was a group that was enamored of defensive, late-cycle ideas. It was almost as if it was time to play the downside of an economic recovery -- a recovery, of course, which has barely begun.
Don’t get me wrong. This was not a group that was willing to endorse my bleak view of the world. There wasn’t an investor in the crowd who thought the US economy would grow by less than 3% next year. The case for deflation, which had blindsided this group just a few months ago, never even came up in the macro discussions. At the same time, few looked for a meaningful acceleration in inflation; instead they favored a scenario that depicted more of a gradual and relatively benign updrift in pricing (see Dick Berner’s dispatch in today’s Forum, “The Inflation Conundrum at Lyford Cay”). Reflecting that view, the group was on the fence insofar as Fed policy was concerned; however, of the 50% that were looking for a tightening next year, three-fourths thought any such action would be deferred to the second half. Nevertheless, the bond market was viewed as largely a one-way bet: By a margin of four to one, the consensus looked for yields on 10-year Treasuries to exceed 5% by the end of 2004. None of these are extreme views that threaten to derail financial markets. That didn’t surprise me. This is a group that is paid to be fully invested. As such, it invariably favors soft landings in downturns and soft takeoffs in an upswing.
As the house skeptic, with a seemingly chronic case of jetlag, maybe I’m guilty of selective recall. But as I attempted to back out the risks to the macro overlay from three days of discussions, I sensed far more concern than optimism. In the interest of full disclosure, I’ll be the first to admit that I’m reading between the lines in drawing that conclusion. But over the years, my experience has taught me that that’s exactly what you have to do to get the real message of Lyford Cay. The best economic scenario that emerged for the United States was a last-gasp surge in early 2004 driven by the second installment of the recently enacted fiscal stimulus. After then, even the growth bulls on the economy feared a sharp deceleration. At the same time, there was nearly unanimous sentiment that the dollar was headed lower. Byron Wien made an impassioned presentation of the bull case for the US currency, but there were no takers. The general sense of the group was that America’s gaping current-account deficit had left the dollar in the early stages of a multi-year downtrend. Against that backdrop and in the context of the potential perils of competitive devaluation that a weak dollar might trigger, there was considerable interest in gold -- more so than I have seen at any year in this conference.
Perhaps the most surprising commentary came from one of the perma-bulls. As a long-time attendee at the conference, he has repeatedly stressed the inherent resilience of the US economy and its financial markets. He was one of the first to grasp the powerful implications of 20 years of disinflation and the extraordinary ability of Corporate America to take advantage of that trend -- initially by lowering its cost of capital and eventually by riding the wave of accelerated productivity growth. His optimism is now gone. He is deeply concerned about an America that has lost its way. The excesses of debt and the shortfall of saving are at the top of his list. But he also waxed eloquently on the perils of massive trade deficits and the job losses they spawned. He found the erosion of America’s manufacturing base especially disturbing. He was also convinced that Washington had gone past the point of no return in creating a fiscal train wreck. This was a minority view, to be sure. But it came from one of the savviest investors I know. And he swears he doesn’t read my research.
Those troubling views were expressed in the very first session of the conference. But they didn’t really resonate with the group at large as the debate unfolded over the next few days. That was certainly the message from the macro conclusions described above. But the bearish view resurfaced with a vengeance in the final session of the conference -- our Saturday night rump-session at Lyford Cay. With the roundtable completed at midday, we had set aside some time before the final dinner to reflect on our collective discussions. About half the group remained at that point. The converted perma-bull had left for home. But the group picked up where he left off. With an emotional intensity that I have rarely seen at this conference, there was a deep sense of concern expressed about America’s future.
The elephant that had been in the conference room the whole time finally stomped out into the open. There was widespread fear that many of the most important icons of the American system were at risk of crumbling in this post-bubble climate of vindictiveness. It wasn’t just the Wall Street scandals. It was also the Enron-led accounting scandals and the damaged credibility of the New York Stock Exchange. The litany of a seemingly open-ended crisis in corporate governance and the political backlash it has spawned deeply troubled these investors. So, too, did America’s mis-adventures in Iraq, the latent fear of another terrorist attack, and the ominous rumblings of protectionism -- especially America’s politically-inspired imposition of steel tariffs and the more recent outbreak of China bashing. I will confess to playing the role as something of a provocateur in that part of the discussion. But it didn’t take much to open the floodgates of angst. There was also a philosophical discussion of the deep flaws of America’s debt-driven culture. Related concerns were expressed over the post-bubble response of the Fed -- interest rates that are far too low to inhibit the appetite for excess leverage. Another investor stressed that the American consumer -- long the mainstay of a US-centric global economy -- was literally living on borrowed time. With the last of America’s five home mortgage refinancing cycles behind us, he suggested there’s good reason to worry about the staying power of increasingly wealth-driven American consumers.
That unleashed a torrent of counter-attacks in defense of the American way. The most passionate case seemed to borrow a page right out of “The End of History and the Last Man” by Francis Fukiyama (Free Press, 1992). With the demise of communism, the triumph of market-based capitalism was argued to be the functional equivalent of permanent support for the US-centric growth model of the global economy. US current account deficits were depicted as being only symptomatic of how feeble the rest of the growth-impaired world really is. Even if it takes more debt for America to continue to pull the rest of the world along for the ride, so be it. After all, claim the optimists, the one thing non-US economies can do is fund America’s external imbalances and keep US interest rates down. If that’s the case, never mind the so-called excesses of the American consumer. As one investor quipped, “We can always be counted on to go down to the mall and support the global economy.” In the end, it turned out that by a thin margin, even the sentiment in the rump session was skewed toward a US economy that continues to finesse its ever-mounting twin deficits.
Maybe I’m making too much out of all this. But over the years, my experience has taught me to pay much greater attention to the body language of the most passionate investors than to the results of the various polls we conduct in an effort to glean insights into consensus thinking. Of course, it’s always easy to “game” the consensus at this conference. The now infamous “Curse of Lyford Cay” suggests that the consensus is invariably wrong on the big views in which there is most agreement. To the extent the curse is alive and well, that points to two possibilities -- a sharp further upside move in world equity markets or an equally sharp downside breakout. I know where I’m leaning. END>>
My take on mr. roach's tilt is toward the dark side of the spectrum. maybe the stock market is just fine ignoring the real things that are going on around the world and within our own country. some seem on the surface to reflect the freedoms and joys of living in a free and democratic society. too much of a good thing may not be good for the U.S. or us.
have a grateful day!
larry
Tuesday, November 11, 2003
MISSION JUST BEGUN
iraq will be a democratic nation and will be a model for other countries in the "Global Democratic Revolution"!
Last week, in the midst of the worst attacks on coalition forces since the war began, president bush was questioned by reporters about the 'mission accomplished' banner that was on the deck of the ship he made the speech from stating that the "major combat" was over. the president, backed up by the white house spokespeople, stated that neither had anything to do with the banner. the now infamous banner, was the idea of the commander of the warship, and it was a statement of the ships mission being accomplished and not a statement about the war. hard as it is to believe that the white house didnt call for that banner to be there, after this weeks major speech by the president calling for democracy in the middle east, its probably true. since now it is clear that iraq was only meant to be a so called beachfront stronghold in the ultimate quest for peace, freedom, & democracy in the entire middle east region. so clearly, president bush could not have thought or wanted to project that the mission was accomplished. far from it.
currently, the only free and democratic country in the middle east is israel. and being that israel is not a very big place, i'd say its fair to say that the middle east has no democratic governments. monarchies with radical islamic support systems, dating back much further than our wonderful democracy, and further bolstered by the developed world governments in order to keep the oil flowing, is what the order and rule is in the region. the populations are not represented by the leadership and the wealth is disproportionately distributed. power is tightly held by the kings and they control the wealth and the oil.
now far be it from me to stand in the way of a good plan, but it seems to me that president bush needs to think long and hard about what he is about to do, or has already started to do, in order to bring democracy to the middle east. if i'm not mistaken, this has been tried before, and it didnt end pretty. i am young enough, or for that matter old enough to remember beirut and the news reports about the bombing of the marine barracks. as i remember it, we were there to help facilitate the peace process in the middle east, yet we were not very welcome and ultimately withdrew our troops. president bush feels much more confident and committed in our efforts this time and is telling the world that our mission is vital to the safety and security of the U.S. and world peace.
here is the link to the speech...it is worth reading as it may be important to the future of the U.S. and the world.
http://www.nytimes.com/2003/11/06/politics/06TEXT-BUSH.html
i agree that our efforts to democratize the middle east are vital to the safety and security to the U.S., yet i disagree that a military solution will be successful, especially if led by the U.S.
have a grateful day!
larry
iraq will be a democratic nation and will be a model for other countries in the "Global Democratic Revolution"!
Last week, in the midst of the worst attacks on coalition forces since the war began, president bush was questioned by reporters about the 'mission accomplished' banner that was on the deck of the ship he made the speech from stating that the "major combat" was over. the president, backed up by the white house spokespeople, stated that neither had anything to do with the banner. the now infamous banner, was the idea of the commander of the warship, and it was a statement of the ships mission being accomplished and not a statement about the war. hard as it is to believe that the white house didnt call for that banner to be there, after this weeks major speech by the president calling for democracy in the middle east, its probably true. since now it is clear that iraq was only meant to be a so called beachfront stronghold in the ultimate quest for peace, freedom, & democracy in the entire middle east region. so clearly, president bush could not have thought or wanted to project that the mission was accomplished. far from it.
currently, the only free and democratic country in the middle east is israel. and being that israel is not a very big place, i'd say its fair to say that the middle east has no democratic governments. monarchies with radical islamic support systems, dating back much further than our wonderful democracy, and further bolstered by the developed world governments in order to keep the oil flowing, is what the order and rule is in the region. the populations are not represented by the leadership and the wealth is disproportionately distributed. power is tightly held by the kings and they control the wealth and the oil.
now far be it from me to stand in the way of a good plan, but it seems to me that president bush needs to think long and hard about what he is about to do, or has already started to do, in order to bring democracy to the middle east. if i'm not mistaken, this has been tried before, and it didnt end pretty. i am young enough, or for that matter old enough to remember beirut and the news reports about the bombing of the marine barracks. as i remember it, we were there to help facilitate the peace process in the middle east, yet we were not very welcome and ultimately withdrew our troops. president bush feels much more confident and committed in our efforts this time and is telling the world that our mission is vital to the safety and security of the U.S. and world peace.
here is the link to the speech...it is worth reading as it may be important to the future of the U.S. and the world.
http://www.nytimes.com/2003/11/06/politics/06TEXT-BUSH.html
i agree that our efforts to democratize the middle east are vital to the safety and security to the U.S., yet i disagree that a military solution will be successful, especially if led by the U.S.
have a grateful day!
larry
Wednesday, November 05, 2003
EMPLOYMENT & GROWTH DISCONNECT
GDP grows!...JOBS shrink?
ECONOMY GROWING with LESS JOBS
How can the economy grow while businesses are cutting jobs? How can fewer employees produce more goods & services? How can the government crow about 7.2% GDP growth while the unemployed stay that way for longer periods of time and have less opportunities for employment going forward? How can we be doing better when so much is doing worse? why is there such an obvious disconnect between the prosperity and the problems?
I am not sure who is going to be happy about the recent news that the economy grew at its fastest pace in 20 years when the labor market continues to cut jobs. the presidents economic dreamteam, led by the elaine choa and john snow, cheered on by the media bulls, are so full of themselves for calling the bottom and encouraging investors to believe, that they have failed to see, or acknowledge, some very obvious problems with the extraordinary surge in GDP growth just reported. how can the economy be growing so fast? how can the stimulus that created the growth continue? what will happen when the stimulus is taken away? have any of the structural problems in the economy been fixed? what will we do about continued job cuts? what is REALLY going on and how can it be continued?
lots of questions with very few GOOD answers. the FED seems to see that things are tenuous, or else rates would have been raised to reflect the robust growth. greenspan and co. have stated on numerous occasions, any occasion they can, that rates will stay where they are for a "considerable period of time" in order to support the economic recovery, with no worries about inflation. How can that be??? 7.2% growth with no inflationary pressure? best growth in 20 years with no job creation? has that ever happened before? have we ever had record home sales coming out of a recession? have we ever had record auto sales coming out of a recession? have we ever pulled forward so many sales in so many areas without a severe falloff in demand? have any of the things happening in todays economy ever happened before? so why is this all happening now? one answer is the cost of money.
the "fuel" for all the growth has been FREE money. 0% financing on all durable goods. lowest home mortgage rates ever, along with low or no down payments and easier credit approval criteria(low income borrowers can now add aunts, uncles, brothers, sisters, cousins, etc. to mortgage applications in order to get approved). creative financing for businesses to finance the purchase of new technology so they can produce and sell more...with fewer employees! easier lending guidelines so banks, brokerages and any other quasi-banking company can easily lend to sub-prime credits, in order to put more money in the hands of less qualified borrowers so they can keep consuming.
needless to say its worked. and being that the 2nd qtr saw record borrowing and 3rd qtr saw record growth, all is well in bush-land. the home of the free and the debt burdened. US government debt is at an all-time high. consumer credit is at all time highs. mortgage borrowing is at all-time highs. mortgage to assets, home equity and income is also at all-time highs. other things at all-time highs would be personal bankruptcies, mortgage defaults, credit card charge-offs, and some other credit stats. spending by consumers coming out of a recession is also at an all-time high. How can this be? what is the consequence of all this stimulation?
footnote to GDP report
10:00am 11/04/03
U.S. October layoffs surge 125%, Challenger says By Rex Nutting
WASHINGTON (CBS.MW) -- Layoff announcements from U.S. companies more than doubled in October to 171,874, the highest in a year, according to the monthly tally released Tuesday by outplacement firm Challenger Gray & Christmas. October is typically the largest month for layoff notices, as companies slash costs at the end of the fiscal year. The Challenger survey is not adjusted for seasonal factors. Layoff announcements had fallen for three months in a row before October's 125 percent increase. In October, the auto industry sacked 28,363 workers, followed by 21,169 in the retail sector. Telecommunications companies cut 21,030. So far in 2003, 1.04 million job reductions have been announced.
Can someone please explain how the economy is growing so fast while jobs continue to be cut? Oh yeah, its that great productivity.
GDP grows!...JOBS shrink?
ECONOMY GROWING with LESS JOBS
How can the economy grow while businesses are cutting jobs? How can fewer employees produce more goods & services? How can the government crow about 7.2% GDP growth while the unemployed stay that way for longer periods of time and have less opportunities for employment going forward? How can we be doing better when so much is doing worse? why is there such an obvious disconnect between the prosperity and the problems?
I am not sure who is going to be happy about the recent news that the economy grew at its fastest pace in 20 years when the labor market continues to cut jobs. the presidents economic dreamteam, led by the elaine choa and john snow, cheered on by the media bulls, are so full of themselves for calling the bottom and encouraging investors to believe, that they have failed to see, or acknowledge, some very obvious problems with the extraordinary surge in GDP growth just reported. how can the economy be growing so fast? how can the stimulus that created the growth continue? what will happen when the stimulus is taken away? have any of the structural problems in the economy been fixed? what will we do about continued job cuts? what is REALLY going on and how can it be continued?
lots of questions with very few GOOD answers. the FED seems to see that things are tenuous, or else rates would have been raised to reflect the robust growth. greenspan and co. have stated on numerous occasions, any occasion they can, that rates will stay where they are for a "considerable period of time" in order to support the economic recovery, with no worries about inflation. How can that be??? 7.2% growth with no inflationary pressure? best growth in 20 years with no job creation? has that ever happened before? have we ever had record home sales coming out of a recession? have we ever had record auto sales coming out of a recession? have we ever pulled forward so many sales in so many areas without a severe falloff in demand? have any of the things happening in todays economy ever happened before? so why is this all happening now? one answer is the cost of money.
the "fuel" for all the growth has been FREE money. 0% financing on all durable goods. lowest home mortgage rates ever, along with low or no down payments and easier credit approval criteria(low income borrowers can now add aunts, uncles, brothers, sisters, cousins, etc. to mortgage applications in order to get approved). creative financing for businesses to finance the purchase of new technology so they can produce and sell more...with fewer employees! easier lending guidelines so banks, brokerages and any other quasi-banking company can easily lend to sub-prime credits, in order to put more money in the hands of less qualified borrowers so they can keep consuming.
needless to say its worked. and being that the 2nd qtr saw record borrowing and 3rd qtr saw record growth, all is well in bush-land. the home of the free and the debt burdened. US government debt is at an all-time high. consumer credit is at all time highs. mortgage borrowing is at all-time highs. mortgage to assets, home equity and income is also at all-time highs. other things at all-time highs would be personal bankruptcies, mortgage defaults, credit card charge-offs, and some other credit stats. spending by consumers coming out of a recession is also at an all-time high. How can this be? what is the consequence of all this stimulation?
footnote to GDP report
10:00am 11/04/03
U.S. October layoffs surge 125%, Challenger says By Rex Nutting
WASHINGTON (CBS.MW) -- Layoff announcements from U.S. companies more than doubled in October to 171,874, the highest in a year, according to the monthly tally released Tuesday by outplacement firm Challenger Gray & Christmas. October is typically the largest month for layoff notices, as companies slash costs at the end of the fiscal year. The Challenger survey is not adjusted for seasonal factors. Layoff announcements had fallen for three months in a row before October's 125 percent increase. In October, the auto industry sacked 28,363 workers, followed by 21,169 in the retail sector. Telecommunications companies cut 21,030. So far in 2003, 1.04 million job reductions have been announced.
Can someone please explain how the economy is growing so fast while jobs continue to be cut? Oh yeah, its that great productivity.