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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (2190)	7/15/2002 11:58:09 PM
From: Jim Willie CB	Respond to of 89467

wealth effect is asymmetric, despite what press/media says we all heard about the wealth effect in 1999 as stocks soared mutual funds and 401ks grew, and so did our spending consumer spending was believed to be tied to personal financial fortunes and of course salary and other base incomes now that is debated somewhat, somewhat dismissed I think personal income is the most important factor a Stanford professor researched the wealth effect 30 yrs ago he found the "loss aversion" to be much much more powerful spending was sharply reduced as savings were depleted spending was not materially affected when "house gains" were lost but when base capital is lost, spending was reduced noticeably he called his result "the asymmetric wealth effect" right now, just today I heard Haines on CNBC talk of the falsity of the wealth effect (now that it has become relevant again) he claimed it was not a strong factor on the way up, and probably is not gonna be a strong factor on the way down (his theory was pure hope, utter bullshit) beware, consumer spending will soon be reduced the most conservative of people are seeing their savings and pension funds reduced tonight I spoke with another college roommate by phone we discussed our common Ohio buddy who was fired Friday he mentioned that his 401k is down 30% since January he is upset but undeterred he will ride out the coming storm over the next few years "it always comes back" smart guy, very typical, losses assured imho beware the asymmetric wealth effect I remember in spring 2000, I stopped almost all all all discretionary spending I spent like a miser rent, food, movies, and not much else hardly any entertainment, an occasional movie I even "snuck in" to see a couple movies !!! waited outside the exit door in the evening crowds, entered this wealth effect will be the latest in press/media bullshit their reporting is based upon hope, not historical data the Stanford professor research was done in realistic settings under controlled environment / jim