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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (55275)	11/1/2004 2:53:06 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

Elroy, I don't understand the worry about people spending more than they earn. They have to borrow money from somebody else if they are spending money they don't own. The people they borrow it from have to forego spending it because they've loaned it to somebody else. The people who lend it get income from the interest payments of the borrowers, who have to go to work to earn money to pay their loans and interest on the "I owe, I owe, it's off to work we go ..." principle. Debt is a motivator. Lots of debt is a big motivator. If all of the USA is going into debt, they are borrowing it from Chinese or Japanese or me. Those lenders have got money from producing, and they are going on producing, lots, and lots and lots of stuff for said Americans to buy. So it all goes around and works out. Debt just tells us who is going to be continuing to work for a while yet. Those who are stacking up savings, investments and assets are the ones who will stop working. Those who are borrowing will keep working, or lose their assets they offered as security. If there aren't any secured assets, then the creditors will be going back to work as well as the indigent people they foolishly loaned to. The USA debt seems okay to me. Not that I'd like to have it, but if they all keep working flat out, they can pay their debts. Because of global competition, they will have to work for relatively less money than they are accustomed to, but beggars and debtors can't be choosers. Another change recently is oil tripling in price in a few years. That means Americans have to borrow to fund their gas-guzzling SUVs and that money [much of it] goes to the Saudis and other Islamists, who have been enjoying a huge boost to their income. Some of which is no doubt finding it's way back into Iraq and Afghanistan, where Islamic Jihad is "bringing it on" as requested. There's rich irony in all the money movements. Rich being the operative word! Americans are working to fund Islamic Jihad and going into debt to do it. That's nuts if you ask me. Mqurice PS: I shouldn't omit to mention our great and estimable idol, Alan Green$pan KBE, who keeps the orchestra in tune and time and playing nicely together, making beautiful music.

To: Elroy Jetson who wrote (55275)	11/1/2004 3:26:52 AM
From: energyplay	Read Replies (1) \| Respond to of 74559

Hi Elroy - A little nuance to the data - Personal income does not count capital gains - not stock , bond, real estate, collectibles, etc. bea.gov Stock sales for "insiders" 29 billion in 2003, and 49 billion in 2004. Most employees don't count as insiders. sfgate.com Net market gains for individuals were probably >>10 times insider sales. Dividends to individuals were about 376-410 Billion per year. In the past few years, capital gains have far exceeded dividends.... Total net "saving" is about 100 Billion a year. If capital gains run about 500 billion a year....then the saving rate is closer to 5%.... Many people own real estate, and gains on real estate just don't show up here in personal income. I would easily expect this to be at least 1/3 what individual dividends are. that would double the savings rate. Basic problem : Subtract one BIG number (spending) from another BIG number (income) to get a small number (savings). Any erorrs in the income number really affect the small number. There's other stuff that's missed also. WHo is borrowing money for big houses, buying sports cars, etc. ? People on the East and West coasts - they same areas with lots of stock options, day traders, high real estate prices. I wouldn't buy options on the sky falling for a while...