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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Terry Whitman who wrote (3469)	3/15/2001 9:52:25 AM
From: Hawkmoon	Respond to of 33421

Well, I think part of the equation lies in the very points that Bush is bringing to light. Although there is high employment, for too long the government has taken more than an equitable share of worker's paychecks, from all of their miscellaneous taxes, but especially the FICA tax. It might not matter if that tax was being spent paying out the current liabilties of the SS program on a pay as you go basis, or if the surplus were being used to focus on much-needed infrastructure projects that would increase or sustain economic growth in areas where there exist private market failure. However, as it currently stands, the government is taking these surpluses, it would seem, and spending them on more entitlements that must be funded long-term, and a variety of pork-barrel projects with no real economic direction or result. That suggests that the present tax revenue surplus is actually a drain on the economy and reducing the amount of available cash available to taxpayers to maintain their cost of living. Were even 2% of the FICA tax being placed in hard asset corporate bonds, or even in a money market account, it would drastically release available banking reserves that could be loaned out to the private sector. The answer lies in Bush's proposals... a tax cut to a top-rate of 33-35%, tightening up government's budget, and semi-privatizing SS to transition from governmental liabilities to personally owned hard assets which represent actual investment in the economy and not some form of future tax on our descendants. That should, imo, taughten the string and restore the equilibrium between consumers and producers. The next step has to be taking strong steps towards assisting (insisting) our trading partners get their economic act together. Part of the "pushing on a string" you're referring to is caused by the flooding of cheap foreign produced goods onto our markets, beyond our ability to consume them, and I would believe that US companies are forced to compete by increasing volume production at lower profit margins in order to retain market share. But again... we're primarily talking about technology here, I believe. The Nasdaq is primarily a tech-heavy index and thus cyclical. We may have seen a super-cycle high in the Nasdaq, but I hardly believe that applies to NYSE and DOW stocks, which stand to benefit from the efficiencies created by purchasing and integrating that technology. As for energy... I'm with you and I think there may be some great opportunities for finally dealing with the national security implications of importing 58% of our daily oil usage. I'm a big fan of nuclear energy (16% of California's power is generated by 2 power plants). I just hope Bush's administration has the intestinal fortitude to do what is necessary to make us more energy independent, as well as pursuing alternatives. Energy conservation is great, but if it comes at a cost of economic growth, I'd rather not have it, and would prefer infrastructure projects aimed at increasing the building of standardized Nukes and reprocessing facilities to decrease fuel wastage (and resulting disposal). But all this is for another thread: Subject 50614 <VBG> In sum, I think we're looking towards more investment in the energy sector over the next year as companies feel more comforable with the supply/demand curve. China alone is vying to be a potent competitor with the US for mid-east oil. And that will drastically alter the political balance of power in that region. Regards, Ron

To: Terry Whitman who wrote (3469)	3/15/2001 10:12:41 AM
From: Yorikke	Read Replies (1) \| Respond to of 33421

<<As long as employment remains high, debt will continue to increase, and deflation is no threat.>> Terry, This is an assumption that is stated so often it seems to have become the eleventh commandment. On that basis alone I find it suspect. The combined effects of debt saturation and asymmetrical wealth response can go into play even while the average person is in relatively good shape. People who feel they have lost something as the market drops, and who already have mortgaged their futures are likely to step lightly, even in the face of reduced interest rates. If the average consumer pulls back, who is going to go to the table to eat more pie? Not the government at the moment. And many businesses are getting knocked around in the first stages of a slowdown. Belt tightening is not the time for more pie. My feeling is that the market is trying to ignore its source. Still trying to claim it IS the economy, and all the bad news is just for the folks who drive to work in the morning. The players, the real economic movers, can ignore that mundane day to day stuff. I do not know how many times they can ramp up the curve, or how many rumors of Big Al and his committees pending action can be floated, or how many more times real bad news can be bought into. But its like the guy on the beach in Lanikai Hawaii. After fighting the surf erosion for years, he finally knocked down his home and abandoned the million dollar property. The ocean finally won, it generally does.