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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (65303)	3/20/2004 3:10:36 PM
From: RetiredNow	Read Replies (2) \| Respond to of 77397

Well, first off, I think you are mixing up stock market fluctuations with economic cycle fundamentals. The stock market and the economy don't always move in lockstep. They are correlated, of course, but there have been plenty of times when the stock market goes no where for years and yet the economy is relatively sound. So when you say this feels like a bear, you are talking about the stock market. I don't agree that we are in a bear market. What we are seeing is a natural and expected pullback or correction following a fabulous run in 2003 and early 2004. As far as the economy goes, all the indicators tell us the economy is on VERY solid footing. Companies are more profitable than ever and their balance sheets are much more sound than they were even in early 2000. New jobs to offset the recession losses of American jobs aren't here yet, but that's in large part because companies are burning through their slack. Or as you put it, they are squeezing all the productivity they can out of their existing workers. More and more companies are taking advantage of process re-engineering and automation to accomplish this. Many others are offshoring where feasible to pay 25% of the wage costs of an equivalent American worker. One other thing. There is something called the household survey which usually tracks VERY closely with the jobs survey. Interestingly enough the household survey is showing a good deal of job creation, even though the gov't jobs survey shows little to no job creation. Many economist speculate that this dichotomy is because many overeducated and overexperienced people are turning to self-employment after having given up on looking for a job. That also jibes with the fact that consumer spending has remained very strong throughout the last few years. So it is understandable how the ordinary American might think that the economy is sucking wind, because of the job survey saying that there are new jobs. But they are just plain wrong. By the way, there is a simple equation economists use to figure out what GDP is and that's Business Spending + Consumer Spending + Government spending - Taxes. Of course, there is a multiplier effect, but we'll ignore that for now. That is why we've had the perfect anti-recession medicine coming from Bush and Greenspan. Low taxes, high government spending, and low interest rates which spur consumer and business spending...all of those lead to increases in GDP, which is the widest used measure of the health of our economy. Don't let the Democrats fool you. They will bitch and moan about how bad the economy is and how ruinous Bush's policies have been, but that's malarchy. As long as the Bush team can close the spending gap on our deficit within the next 5 years, the lower taxes will actually act to spur a virtuous cycle, because Government spending although good in the short term to spur economies, they are bad in the long term because they crowd out private sector spending and investment.