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Talking up the economy

post #1 of 15
Thread Starter 
Here we go again. This is the beginning of 'talking up of the economy'. This will be very similar to the 'talking down of the economy' in December of 2000.

<a href="http://money.cnn.com/2002/01/24/economy/greenspan/index.htm" target="_blank">http://money.cnn.com/2002/01/24/economy/greenspan/index.htm</a>

Of course, the recovery won't happen overnight. It will take most of the year for people to bounce back. Look for the economy to recover in September in October.
post #2 of 15
Exuberance IS rational after all.
post #3 of 15
[quote]Originally posted by Fran441:

<strong>Here we go again. This is the beginning of 'talking up of the economy'. This will be very similar to the 'talking down of the economy' in December of 2000.
</strong><hr></blockquote>

For crying out loud, Fran. How is that you believe such crap?
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post #4 of 15
Thread Starter 
The economy is heavily based on perception. If people that are in higher up places tell them to 'brace for a recession', they might start saving more money (less spending), impose a 'hiring freeze', and its harder to get creditors and investors (causing more businesses to shut down).

On the flip side, if people tell them that things are getting better, they might spend a little more freely, hire more people, and it is easier to get creditors and investors to put money into the market (causing businesses to grow).

It just strikes me as very odd that despite the airlines being in huge trouble, a major retailer like K-Mart filing for bankruptcy, and a major corporation like Enron filing for bankruptcy, along with unemployment still rising, we are all of a sudden told that things are getting better.
post #5 of 15
[quote]Originally posted by Fran441:
<strong>The economy is heavily based on perception...</strong><hr></blockquote>

Right. Things like investment, debt loads, venture capital activity, capital costs, etc. all are just minor factors.

[quote]<strong>If people that are in higher up places tell them to 'brace for a recession',...</strong><hr></blockquote>

I hate to break it to you but the economy had already cooled considerably by December of 2000.

[quote]<strong>they might start saving more money (less spending)...</strong><hr></blockquote>

Except that didn't happen. Consumer spending didn't drop very much at all. Housing stayed fairly strong.

[quote]<strong>It just strikes me as very odd that despite the airlines being in huge trouble, a major retailer like K-Mart filing for bankruptcy, and a major corporation like Enron filing for bankruptcy...</strong><hr></blockquote>

Recessions weed out failing companies. What's so odd about that?

[quote]<strong>... along with unemployment still rising...</strong><hr></blockquote>

Employment is a lagging indicator. It won't pick up until the recovery is well underway.

[quote]<strong>... we are all of a sudden told that things are getting better.</strong><hr></blockquote>

Greenspan has been slashing interest rates for a year now. I would hope (and clearly he does too) that would begin to have an effect sooner or later.

[ 01-25-2002: Message edited by: roger_ramjet ]</p>
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post #6 of 15
Thread Starter 
[quote]Except that didn't happen. Consumer spending didn't drop very much at all. Housing stayed fairly strong.<hr></blockquote>

Yes, but corporate spending dropped off tremendously.

[ 01-25-2002: Message edited by: Fran441 ]</p>
post #7 of 15
[quote]Originally posted by Fran441:
<strong>
Yes, but corporate spending dropped off tremendously.</strong><hr></blockquote>

Well yes. Most of the bloodshed in this recession has been on Wall Street. Some $5 trillion in market capitalization has been lost since March of 2000. That's a pretty serious hit. There was no way that corporate earnings would turn this situation around quickly. Corporate profits never did justify such high valuations in the first place. Instead, share prices were painfully adjusted to reflect the real world. Most companies, hoping to regain their footing, turned first to an obvious remedy - cutting costs and deferring spending. But that only gets you so far. Now they'll have to seek new opportunities to increase market share which means new spending.
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post #8 of 15
All of this is still a gross over simplification but all that noise about "talking down the economy" is just nonsense. Nobody this side of God has that kind of power.
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post #9 of 15
Actually the recovery has begun already,In the last month the number of people out at bars and clubs has suddenly jumped up,in fact more than I have ever seen at the beach in the middle of January.I've been going to open mike night at a local bar,normally this time of year there would only be 20 or so people there this time of year,but the last few weeks there have been more than 100.Also,it isn't a case of one bar becoming popular,everywhere I go is filled with people,even places that have never been popular.In three to six months the recovery will start to show up in economic statistics.
post #10 of 15
Public drunkenness is always a leading indicator.
post #11 of 15
Absolutely,a very dependable one.
post #12 of 15
Thread Starter 
Look at this. The economy grew last quarter.

<a href="http://money.cnn.com/2002/01/30/economy/economy/" target="_blank">http://money.cnn.com/2002/01/30/economy/economy/</a>
post #13 of 15
[quote]Originally posted by Fran441:
<strong>Look at this. The economy grew last quarter.

<a href="http://money.cnn.com/2002/01/30/economy/economy/" target="_blank">http://money.cnn.com/2002/01/30/economy/economy/</a></strong><hr></blockquote>

Yea and it's all because of Bush's trickery. Damn him!
post #14 of 15
Thread Starter 
No, my point is that it isn't as bad as we all thought. Why need economic stimulus now?
post #15 of 15
Well I've been arguing against it all the time. It's pork. IMO they could extend unemployment yadda yadda yadda and then both sides could tell the people how great they are and please vote out the other side.
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