Ask Me in Forty Years!

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Don't ask me about the stock market!

Just don't. I don't know anything more than you do about the recent volatility. I'm not clever enough to time markets, and I'm not foolish enough to trust my money to people who claim they can.

Anyway, I have a very small portfolio at this point, and I don't follow the day to day swings in particular stocks or stock indices. My mutual fund investments have been declining in value lately -- that is, if I, like everyone tells me to, value them at spot prices. But since I probably won't be retiring until 2048, spot prices just don't mean very much to me.

So ask me again in forty years!

3 Comments

Historians will look upon the late 1990's and early 21st Century economic debacle to be the province of one man---Alan Greenspan. He created a whole new class of individuals who can be called, "Bubble People". A bubble person can be defined as a special kind of speculator who promotes, creates and exploits bubbles using internet tools. Their specialty is to create and exploit the rising limb of bubbles and then bail before the bubble peaks, and inevitably collapses.

Greenspan warned of "irrational exuberance" when the market hit 6700 in 1996. In constant dollars, when it hit 14,000, that was comparable to 8000 in 1996. Greenspan presided over the equities bubble, and then stood by and watched the dot.com bubble. The smart equities bubble people shifted their money to the dot.com on the rising limb, and then bailed before it peaked. Then they parked their money until Greenspan opened the spigots to cheap money to avoid a recession, and the bubble people promptly bubbled the housing market by creating and exploiting a feeding frenzy. Many bailed by 2004-2005 and looked for something else to bubble. They bubbled oil and bailed when the price hit $100-120/barrel. They can spot the rising limb of a bubble, but not the top. The next major bubble in the 2-3 years from now will be metals such as gold, silver and other oommodities once hyper inflation sets in. Do you really think we can print money indefinitely without there being an adverse impact on inflation? China is already losing $1 billion/week to inflation. We are just like any third world country i.e. we are using inflation to pay off foreign debts. The Chinese will be forced to bail on the dollar and invest in cheap American companies during this economic downturn and also snatch whatever commoditities that aren't nailed down.

Look for the following phrases in the future: 1)Borrowing from future spending, 2)Spending future taxes, 3)Negative multiplier effect. With credit cards, we borrow from future spending by bringing into the present purchases we should really buy in the future. This borrowing from future purchases also brings into the present taxes that should be collected in the future. When the future arrives there will be no purchases and no revenues from taxes. When we save, we are doing the opposite of consumerism. If Keynesian economics predicts a positive multiplier effect when we infuse money into the economy, do savings result in a negative multiplier effect?

The entire economy over the past 30 years is a snare and a delusion. The supposed wonder years during the Clinton Administration when the budget was balanced was an utter fraud. It was based on consumerism, the Financial Services Sector, and the dot.com bubble. When all these are removed from consideration as they relate to the economy, what's left? How many manufacturing jobs, with the exception of high tech, did Clinton bring to America as opposed to how many low paying service sector jobs did he bring to America? Would anyone care to make the case that Wal-Mart has been good to America by sending hundreds of billions of dollars to China to buy their cheap goods? Is it really in America's interest to have a massive balance of trade deficit?

The FFS is a cancer growing on the economic body of the world. It's sole purpose is to shift wealth to the upper 1% at the expense of Main Street. What on one is talking about is this: Without credit card debt, the average family of four might have discretionary funds for consumerism with an income of $30,000/year. With an average credit card debt for a family of four of $12,000, the average family of four is paying at least $1000/year in interest on that credit card debt i.e. they have $1000 less to spend on discretionary items. Thie means that the average family of four saddled with credit card debt has to have an income of $50,000/year to have any discretionary income. Now do you see why credit card debt is so destructive?

This so called attempt to avoid financial collapse is, without question, a bail our of Wall Street, not Main Street. Our bailout is going to cost John Q. Public trillions of dollars of lost purchasing power due to inflation. Look for over 10 million Americans to be driven into poverty over the next two years because of inflation.

What we are seeing in Africa today is the second wave of Neo-Colonialism. The first wave was Bechtel, Charles T. Main and Halliburton. Now it is VISA, Master Card, HSBC and others. The FSS is attempting to subjugate Africa by saddling them with consumer debt, just the way they have done it in America.

We have schizophrenic financial advisers. As a nation we are told, "Spend! Spend! Spend!" to promote consumerism. Yet, the individual is told, "Save! Save! Save!" to plan for a rainy day. We are a savingless society. If the average American paid down credit card debt to the tune of $500/year, we would have a major depression in two years.

Is there a way out? For openers, we should label every item sold in America showing the percent of raw materials from America, the percent of American labor that has gone into the item, and other information that might be pertinent. Maybe if the average American was aware where each item was manufactured and how much of the product is from America, maybe the average consumer might be willing to pay a little more for American made goods.

We must float a $5 trillion infrastructure bond issue for a project called, "Invest in America". These would be high yield bonds and every American could invest up to 50% of their 401K money to buy these bonds. Only American companies headquartered in America could invest in these bonds. Prior to the issuance of one check, at least $100,000,000 should be spent on developing the most intricate computer programs to spot waste, fraud and mismanagement. The program will then be sold to the IRS to pay for its cost.

The goal of IIA will be to create at least 1 million new blue collar jobs paying at least $25-50/hour every year for 10 years. This money, when cycled through the economy, should yield up to $12.5 trillion dollars in wealth.

Hey, nice blog. I stumbled on it while looking at random economics blogs.
Well, I don't get the stock market either, but the best article I have read recently on the subject of the economic crisis is Forbes's new article:
http://www.forbes.com/hcome/forbes/2008/1110/018.html
He explains how this economic crisis, like the Great Depression and the massive inflation of the 1970s, was actually caused by too much poor governmental regulation as opposed to too little (as the media and politicians claim). I wont go into all the details of the article, but I enjoyed it and wanted to pass it on to you.

Hey, nice blog. I stumbled on it while looking at random economics blogs.
Well, I don't get the stock market either, but the best article I have read recently on the subject of the economic crisis is Forbes's new article:
http://www.forbes.com/hcome/forbes/2008/1110/018.html
He explains how this economic crisis, like the Great Depression and the massive inflation of the 1970s, was actually caused by too much poor governmental regulation as opposed to too little (as the media and politicians claim). I wont go into all the details of the article, but I enjoyed it and wanted to pass it on to you.

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This page contains a single entry by Kevin published on October 15, 2008 7:49 AM.

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