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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: JRI who wrote (46606)	2/11/1999 3:45:00 PM
From: Knighty Tin	Read Replies (4) \| Respond to of 132070

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

To: JRI who wrote (46606)	2/11/1999 4:35:00 PM
From: Earlie	Read Replies (2) \| Respond to of 132070

John: Wow! Good thing you're not prone to arrogance. "Trending in the right direction',.....have you looked at treasuries outstanding, (never mind the heavy selling of same going on), current account deficit, trade imbalance, liquidity piling up at the doors, Freddie and Fannie, and the already significant "U.S.A. borrowing premium" of 1 3/4% ? Please cite stats that suggest this "right direction" trend. I'm all ears. World's largest debtor nation,...."Relevant trend is extremely positive going forward" and "the important thing is the relevant trend". About the only way I can fathom this argument, is on the basis that many other nations are falling down the deflationary toilet bowl at a faster rate (Russia for instance). Love to hear more on this as sovereign defaults have been known to create a bit of a bother for banks. What are the odds of even a tiny fraction of the general public converting market-derived "savings" into cash? Savings implies liquidity. When they need or want it, the phones are off the hook. I'm glad to learn that "the odds (of a 50% correction) are next to nil". Phew! What a relief. I had some foolish worries about PEs being just a tad high. Last year was a "bear market"? They have been known in the past to last a bit longer than a few weeks. With respect to employee options, dig a bit into the whole situation. I'd recommend MSFT as a good place to start the educational process. Shareholders who are paying attention seem to be worried about the disappearance of shareholder equity. Others worry about "hedge fund type activities" where they thought they owned a chip company or a software enterprise. Better marshal some arguments about productivity when you come back to the topic. There has been a bit of info around that suggests the opposite. Good to have someone like yourself providing well reasoned, fully backed comments, as opposed to those "limited truths" found here on occasion. Best, Earlie

To: JRI who wrote (46606)	2/11/1999 4:42:00 PM
From: yard_man	Respond to of 132070

>>you know as well as I do that the "savings is negative" data does not include capital gains from stocks...therefore, the data is wrong and skewed...Even the Economist is writing articles based on your pt. #2 (agreeing with you!)...This is a loony argument.....Savings are up<< This is downright silly, IMO. No offense, but it assumes that the paper gains are the same as interest credited to your account. C'mon, you know it isn't the same thing. What if just 5% or 10% want to realize those paper gains and put them into some property or consume them? They are illusory and you know it ...

To: JRI who wrote (46606)	2/11/1999 7:49:00 PM
From: Lucretius	Read Replies (2) \| Respond to of 132070

Johnny, I see you are causin trouble here too... -g- ho ho ho 1. we are the largest debtor in the world.. period. The fat guy that eats alot still eats alot. Being fat is no excuse. 2. the savings rate has been calculated the same way for the last 80 years. They didn't include stock holdings in the 20's when interest rates were dirt low (sound familiar?) or in the late 60's when interest rates were low and the stock mkt was booming. IT WAS CALCULATED THE SAME WAY and yet still we have hit new lows in savings. what does that say about today? ... come on use your brain., you can do it -g- this one made me fall out of my chair... <<<I do agree with you that a permanent (lasting at least for a couple years), at least 40-50% correction in the markets would have a dramatic impact on this dynamic..But, the odds of this occuring are next to nil....Even the so-called bear market last year has had little impact on the psychology of consumer spending or long-term investing...>>> ROFLOL... you're in for a real shock over the next few months. :) (you skipped 3 and 4 -g-) 5. dividends will come back in vogue when you can't give stocks away. Again, it is an indicator of how far we have come to the level of silliness. Your reason of preferred capital gains is a valid one, but consider why you have the ability to get such great cap gains? a booming stock mkt. After a mkt bust, nobody wants stocks... dividends will be raised to entice buyers... That's why high dividend yields are indicative of bottoms and not tops. 6. <<<Employess used to pay salaries, now options..HUH? If we are talking about management here, how can you (as a shareholder) prefer that they are paid SALARY over options...With options, their interests are much more aligned with yours... If you are talking about lower management or line employees, on a % basis (to overall salaries) the % is probably so small to be irrelevant..even so, I fail to see where this is less preferable to salary.>> ho ho this is a keeper. their interests are NOT aligned w/ yours unless you are a traader. If you are a L-T investor, the L-T can be made much worse by mgt seeking short term pops in the stock while sacrificing the L-T. ex.- taking on huge debt to buy back stock.. what happens during the down cycle when they need that cash? splitting a stock at 50 for a pop and when it declines under $10, funds are forced to sell. many others.... a huge percentage of salary is paid in stock at most tech co's.. there's no debating this. It is a scam that will end when the bear comes calling. Earnings will be that much worse and make the decline worse becuase of the drag on earnings that salary increases will cause due to nobody wanting worthless options. 7. <<<No productivity growth now. Wrong! >> ther has been some but not enought to explain the melt-up of the last 4 years. Sorry, try again. You appear to be a fairly typical DELL head... thinking things always go up... LOL!!!