John, 1. The trend, of course, is not positive. Our trade deficits are soaring at the highest levels and rates ever. And as far as debt goes, I am not just talking about Fed govt. debt. We have indebted municipalities, states, corporations, and individuals, in much greater % than in the 1920s. We are trending up at a scary rate. After all, it is panicked individuals who cause depressions, not governments.
2. John, the simple question on savings rates is, are we saving some of our income? The answer is not much no matter what you include. It doesn't matter where you save it, in investments or stocks or commodities. However, if you want to add capital gains back into the picture, and I hope you mean realized gains, because unrealized will disappear soon, you still get a downslope to the savings rate that looks like Greg Louganis jumping off the high board.
Last summer/fall was not a bear market. 1974 was a bear market. 1929 was a bear market. Last year was a stumble. We are heading for a bear market. And the suckers who are buying stock on credit will be the first to beg for govt. bailouts.
3. Dividends are not taxed at all in IRAs and 401-k plans. You have too much faith in the criminal class known as corporate executives. A growing dividend is the only real sign of growth at a co. Everything else is subject to accounting tricks. If you prefer a co. buy overpriced stock at the top instead of paying you a share of the profits, something is haywire. And the cos. aren't even retiring the shares they buy. The cabal at the top is basically reissuing shares to themselves through options scams. In other words, they are using corporate cash flow, of which you should but are not getting a share, and enriching themselves at your expense.
4. I prefer employees to be paid real money to grow the co. longer term. I dislike the idea of paying them with stock options so their number one incentive is to pull out all the sharp pencils to make the next quarter so they can get their bonuses and cash in.
5. The productivity numbers are horrible, though they are greatly overstated due to folks not knowing how to measure tech co output.
Basically, all we have here is a Fed cranking out credit at a reckless rate. That causes cheaper interest (and it is not yet near 20th century avg. rates because fixed income traders know a fake out when they see one), which discourages savings and encourages spending. That spending can temporarily boost economic numbers until the consumer is totally tapped out and then they keel over. Greenspan realizes that is part of what happened in the 1920s, but he is so interested in being Dr. Feelgood to the new pair of dimes scamsters that he can't control his own actions.
Your comments about returns is interesting, since the argument of most "buy them cause they are going up yesterday" folks is that anyone with common sense has performed poorly. Well, my performance has been fantastic for several decades, thank you, in much lower risk trades than those who buy the bubble crap. But your returns and my returns are in the past. It is a bogus argument for either you or I to make. The question is, what is going to happen in the future. I can tell you the past. Bet the TRifecta at Tampa Bay Downs that payed $101,000 on a $2 ticket. Such a bet does not make the better a genius and it gives us zero insight into the future, but that argument is used over and over. You are doing fine arguing the economic points, so why go for the nonsensical argument?
MB |
