[quote]But I did want to address two points you made.
First, the idea that 2/3rds of the economy is consumer spending. At this point, it appears that it's the tail (the 1/3rd that is otherwise) that is wagging the dog.
Second, you mentioned that spend much more of their incomes. Now here's the problem - with so many Americans continuing to lose their jobs, they have no income. So how can they spend their income when they don't have one?
I personally hope that you are right, the economy recovers, I get a good job again (and not have to rely on my wits and trade for my daily bread, it's so much easier and MUCH less stressful doing it with money you don't need to use), who knows, maybe my Alaskan job offer might somehow come back to life and I can fulfill my dream of living and working there! That's what my heart wants, but my head looks at the figures and at this point, I can't tell whether the light at the end of the tunnel really is a light, or whether it's a speeding train. I think at this point it's way too soon for anyone to call a recovery, and if the mainstream media thinks it's going to happen soon, then it's scary because one thing I've learned as a trader is, the majority is almost always wrong. Hopefully this will be one of the few times they "pull a Homer". <hr></blockquote>
1) I'm not sure about the tail wagging the dog for the "other" portions of the economy. I understand the concept, but it was also my understanding that consumer spending, while down, was good enough to help keep us out of a deep recession.
2) Americans/incomes: Well, I agree. But I still think that on the whole, the more consumers buy, the better our economy (in general does). We also need to keep in mind that while there have been some signifcant layoffs, particularly in semiconductors and new economy businesses, the majority of folks are still working. I also understand the travel industry is down the crapper! But, it doesn't seem that things are at the point they were in 1991...when we were at about 7% unemployment.
I think that, again, this slowdown was due to some relatively simple reasons:
1) Hugely high energy prices
2) Raising interest rates (a move which despite my layperson status I still didn't agree with)
3) Overvalued tech companies (and others) with no real assets! This created an "everyone is getting rich" psychology and a "nothing will ever go wrong" philosophy. Will people never learn? Does anyone remember junk bonds? I think when we boil it down the techie revolution on the markets and junk bonds weren't/aren't that different.
4) Higher Taxes than any point in history. WHAT!!?? you say? Yes, high taxes. It, when combined with the above, was simply too much for the consumer and the economy to handle. What liberals do not understand is that when one cuts taxes (to a point), revenue goes UP, not down! (another argument I suppose). If you were to add up every penny you pay to government, you would find that 50% OR MORE is paid to a government institution. This includes income tax, gas tax, luxury tax, state tax, local tax, licenses (which are really just taxes), car registration, tolls, federal fees on your phone bill, tobacco tax, alcohol tax, etc.....It is insane. think about it...."they" take, for most people, 28% right off the top! Just like that! These taxes took awhile to take effect, and the economy tolerated them for awhile. But, when the other indicators started to tank, those taxes hurt bigtime.
What, in my opinion is going to cause a recovery:
1) Lower Energy Prices
2) Gradually Lowered Taxes (though they will not be lowered fast enough IMO.
3) Consumers are returning to stores. Yes, I know it is the holidays.
4) War often causes rallies.
There is more. But, I think that for all the government indicators, the analysts, the experts, etc.....if one just looks around one will see the signs. Once again, and at the risk of being pompous, I willmention that I correctly predicted the slowdown 6 months or more beofre it happened. I just don't understand why the "experts" and mainstream meadi didn't see this coming. Given what we had at the time (see above post) how could it NOT happen?
In any case, good luck with your job and good luck trading in the interim. Alasksa....brrrrrrr!
[ 12-23-2001: Message edited by: SDW2001 ]
[ 12-23-2001: Message edited by: SDW2001 ]</p>
To save time, assume I know everything.
To save time, assume I know everything.