Post: #1

Link

So the government announced that new claims for jobless benefits are at a historic six-year low, levels not seen since before the Great Recession.

Ironically, the stock market plunged which would seem to be a perverse reaction. But stocks had been doing relatively well to begin with because of the Fed Reserve pumping $85 billion a month into the US economy in hopes to stimulate job growth. Now that the growth seems to be taking place, that Fed money might begin to scale back, worrying investors.

There's also weak sales reports from Walmart, Lowes, and Macy's, while Cisco has announced its plans to cut 4,000 jobs due to the concerns about the state of the global economy. This news will also negatively impact stocks.

Inflation seems to be rising as well.

Any thoughts or insights from our RVF econ guys?

Post: #2

The market's reaction is perverse. It's because people are worried that, if the employment situation gets better above a certain rate, the Fed will stop buying assets and that will cause asset prices to fall. It's a feedback loop. People don't want to be stuck holding assets once the price drops, so you get these periods of sell-offs. Like I said in another thread: the financial sector is becoming divorced from the real economy.

Post: #3

From what I hear, with absolutely nothing to back up, is that the job growth are low paying, part time low skilled jobs being filled by what used to be white collar workers. I think there are jobs, but they are rather worthless ones that are being filled.

The perfect storm (in a bad way) happens if tapering happens (market will tank)and interest rates rise (housing bubble pops).

The housing market is booming because people are trying to cash out before that market bursts as well. You have owners who are looking to cash out fast (the smart ones) and sellers wanting to buy before they are "priced out" or rates rise (the dumb ones).

The problem is people never let the bad systems fail the first time around, so they come back and the problem will be worse the second time around.

Post: #4

QE is coming to an end. Be ready.


Fear, greed, and herd mentality.

Post: #5

if QE ends, the Fed will stop buying $85Bill/month worth of bonds with money it created out of nothing.

isn't this a good thing ???

Post: #6

(08-15-2013 07:43 PM)GameTheory Wrote:  if QE ends, the Fed will stop buying $85Bill/month worth of bonds with money it created out of nothing.

isn't this a good thing ???

overall, yes. but the market will crash hard. it will basically erase all of the false "recovery" that has been touted around the past few years and then some.

Post: #7

(08-15-2013 07:46 PM)PartyonBro Wrote:  

(08-15-2013 07:43 PM)GameTheory Wrote:  if QE ends, the Fed will stop buying $85Bill/month worth of bonds with money it created out of nothing.

isn't this a good thing ???

overall, yes. but the market will crash hard. it will basically erase all of the false "recovery" that has been touted around the past few years and then some.

That's not going to happen.

Post: #8

The only reason for the dow rally the past few years is due to QE. When you take that away, investors are not going to continue on because there will be risk in the market.

Post: #9

QE is over, less inflation, more people buy stuff with a stronger dollar ??? isn't that possible ???

Post: #10

A bit off-topic, but I think it has some merit...

I've been trading for the better part of 8 years now, and there is only one certainty in regards to life/finance and that is:

You should never rely upon the market to bring you success.

It's a game whose rules are dictated by the house, played by the house, and in the event of extreme uncertainty/a black swan, (large transfers of wealth outside the inside circle) the rules are changed to accommodate the house to mitigate present and future losses.

Think about that....you're placing your financial/life outcomes on the private interests of Fed chiefs and bank-financed politicians who nominate them, who may or may not give any fucks about taking everything from you for their own self-betterment. After all, you tacitly expose yourself to this risk every time you accept and deposit dollar dominated payments into their banks.

We want to talk about permanent and lasting solutions to the economy, it needs to start with being truthful and discussing the merits of central banking. When you look at the essentials of what such a system entails, I cannot think of anything more antithetical to freedom than a group of people that manipulate the market for labor through legal tender laws. In regards to Gresham's Law, I think the real travesty is not that bad money has driven out good, but that good money is getting impossible to find and the incentives to hoard it continue to increase. At the same time, it is easier to control people if you can also control and seize transactions of good money.

Relevant: http://www.forbes.com/sites/kashmirhill/...t-bitcoin/

Expect news like that to continue until the integrity of the currency is compromised. (no anonymity/taxed by IRS/arguments for illegality/etc.)

TL;DR...If you cannot easily liquidate your assets and convert to assets with a fixed/less volatile store of value (essential goods/commodities), get ready to take this "taper" like a bitch.

Post: #11

The economy is a mess. Our govt. has been following the same failed big brother govt. can fix the economy plan for decades. And their solution continues to be more and more of the same failures. But it is the people who refuse to educate themselves on how an economy works on a macro scale and votes these same people into office.

We have more debt than our annual GDP, this is a HUGE problem. Many economists think when you reach this point, it is a point of no return.

The solution of more taxes almost never works. Fine, tax the rich people more money, they simply charge more for the same products and in the end the middle class pays for it all. That is what we have seen in the last 4 years, and now with Obamacare it will kick into over drive. More and more businesses cutting hours of their employees so they can pay the cheaper fine than to buy their employees healthcare.

Since 2007 the average house hold income is now down nearly $5,000 a year, despite the higher prices for everything, especially gas (which it takes gas to move goods).

The jobs recover is due to more and more part time jobs to cover for what used to be full time jobs, slashed due to Obamacare. This isn't a recovery, unless the middle and poor class getting poorer is a "good thing". Then again, Harry Reid admitted Obamacare was designed to fail so that we would be pushed into socialist healthcare.

Stocks are artificially inflated. With QE, all the risk off investments are not worth anything. In other words Savings Accounts (USD's), T-Bonds, Corp Bonds, Gold, are all not growing/returning anything meaningful. So investors invest in risk on investments (Stocks). As soon as the central bankers decide we have borrowed too much and find an excuse, they will stop QE and the stock market will crash. The stock market dropped strongly yesterday just due to the preparation for the end of QE.

Basically we are headed for some very tough times ahead, so I hope you have saved and bought canned goods.

Post: #12

As PartyBron said, the problem is that the vast majority of jobs created are part time. There was a good article on ZeroHedge about that:

ZeroHedge Article

Quote:In July we are sad to report that America's conversation to a part-time worker society is not "tapering": according to the Household Survey, of the 266K jobs created (note this number differs from the establishment survey), only 35% of jobs, or 92K, were full time

Meanwhile, the july equity rally added 1.1trn USD to US Stock market capitalisation, equivalent to 7% of GDP...

Post: #13

How to solve the economic crisis:

http://www.telegraph.co.uk/finance/comme...nkers.html

Separate the supply of money from the supply of credit.

Post: #14

I've always believed the economy is completely theoretical like philosophy.

The most militant right-wing economist could present a compelling argument as to how to fix the economy to the most left-wing economist. On paper, both will make sense and have good long term projections. Not to mention, there's so much money in "buffer" that's just sitting there for whatever wars or social programs they decide to fund next. There's always money to expand jails as well.

The ultra-rich compete to see who can horde the most money, and they will always control the vast majority of the money in the world.

Post: #15

(08-15-2013 07:20 PM)PartyonBro Wrote:  From what I hear, with absolutely nothing to back up, is that the job growth are low paying, part time low skilled jobs being filled by what used to be white collar workers. I think there are jobs, but they are rather worthless ones that are being filled.

I just heard about this, I think it was on NPR. The numbers look decent, but the real data is people aren't happy at all. People are doing jobs that paid 5-10k more just 5 years ago, but they'll take anything they can get. Nobody wants to be working a job because they HAVE to. It's not just the quantity of jobs, it's the quality. So in my mind those jobs do not have lasting power at all and you're going to see a high turnover rate. As another poster mentioned, Obamacare is going to wreak havoc on these numbers as well. It was HORRIBLE timing on his part to inflict this bullshit healthcare policy on American employers. Everyone has this image that every employer and business is this enterprise with a bunch of rich fat fucks at the top smoking a cigar and a tumbler of scotch. Sure! Stick it to the man! Make him pay for health insurance for all of his fulltime employees! He can afford it!

It's just going to make life much harder for small and medium sized business owners. Even in the hypothetical business like the scenario above, with upper management all clearing a mil a year, you think they're going to give up even .5% of their salary or lifestyle to make sure their employees are taken care of? Ha! Hence them getting around Obamacare by implementing part-time worker schedules.

Interesting to see how this will play out. It's reasons like these that I call my dad every few months to make sure he's got plenty of MREs, a stocked garden, and plenty of ammo. He's up in the woods in the middle of nowhere and that's the first place I'm going if the day ever comes when you see lines at the grocery store for a head of cabbage.

Post: #16

Meanwhile, oil workers in shitty towns and blue collar guys in Houston are never low on cash or hours. To bad so many guys look down on any type of rough work.

Post: #17

Because rough work is not for a nice guy (according to young women with "complex and creative personalities").

Post: #18

First question: do you believe ANY of the numbers published by the Feds?

Second and third questions: did you know that the US National Debt has been frozen for the past few months? Do you honestly believe we aren't spending tons of cash right now?

These numbers are manipulated beyond belief, to tell a story that make certain people look good. After all, we have a number of people who are not being reported at all since they have "left the market" completely. Yeah.....ok.....I almost believe you.

To those of you that think there will be no consequences to tapering, all Bernake had to do was mention QE tapering a couple weeks ago, and the market tumbled. Our market is being propped up by liars and thieves, and once that lifeline is reduced and cut, the market will crash hard.

If you have been following the market, company earnings reports and various economic slowdowns/disasters in the Eurozone, Japan, China and lately, there is something very wrong out there. The markets don't reflect reality, and I have a feeling the storm clouds will increase here.

Sorry...I don't buy any of the numbers, and even if I did, I am pulling back and saving cash. At some point, $17+ trillion in debt is going to hurt us badly.

Something wicked and rotten this way comes.

Post: #19

(08-17-2013 01:05 AM)greensteelhead Wrote:  First question: do you believe ANY of the numbers published by the Feds?

Second and third questions: did you know that the US National Debt has been frozen for the past few months? Do you honestly believe we aren't spending tons of cash right now?

These numbers are manipulated beyond belief, to tell a story that make certain people look good. After all, we have a number of people who are not being reported at all since they have "left the market" completely. Yeah.....ok.....I almost believe you.

To those of you that think there will be no consequences to tapering, all Bernake had to do was mention QE tapering a couple weeks ago, and the market tumbled. Our market is being propped up by liars and thieves, and once that lifeline is reduced and cut, the market will crash hard.

If you have been following the market, company earnings reports and various economic slowdowns/disasters in the Eurozone, Japan, China and lately, there is something very wrong out there. The markets don't reflect reality, and I have a feeling the storm clouds will increase here.

Sorry...I don't buy any of the numbers, and even if I did, I am pulling back and saving cash. At some point, $17+ trillion in debt is going to hurt us badly.

Something wicked and rotten this way comes.

aw man, that doesn't even bear thinking about, I don't think it's even possible to come back from a national debt that big.