Hiding Bear Posted August 23, 2004 Report Share Posted August 23, 2004 Welcome to another week of trading, humor, insights, served with political barbs and what-not at B4 the Bell! B4 has as its central theme short-term trading, lead by the astute technician Brain4. But it is also about what ever members think affects that - in a cordial atmosphere of a 24/7 international family lounge. The sum of all tax cuts - GWB plans to give the income tax code a death of a thousand cuts: Bundled within overlapping themes of tax reform and economic "ownership," they say, are initiatives that would, if enacted, move the country toward fundamentally different systems of taxation and social insurance. Wage income would be taxed at something close to a flat rate instead of today's graduated rates. Investment income would be largely tax-free. And individuals would shoulder more of the risk for their retirement, in return for potentially greater rewards. "What they're trying to do is a radical transformation of the tax code," said Peter Orszag, a former economic advisor to President Clinton and now a senior fellow at the centrist Brookings Institution. "They're trying to do it in little pieces rather than all at once. The sum of all those pieces would be a radical change." The administration's goal, he said, was to create a system in which only wage income is taxed. The benefits include potentially higher rates of savings and investment. But the tax code would become more regressive, taking a larger percentage of income from low-income groups, because recipients of inherited wealth would get a free ride. http://www.latimes.com/news/politics/2004/...-home-headlines Great and varied discussions this weak-end, tanks to all forum members for their insights. New members please fell free to add your comments. Good trading! Link to comment Share on other sites More sharing options...
Guest Posted August 23, 2004 Report Share Posted August 23, 2004 Bush Aides, in Shift, Say Oil a Drag on Economy Sun Aug 22, 2004 05:01 PM ET CRAWFORD, Texas (Reuters) - President Bush's economic advisers are warning that high energy prices have become a drag on the U.S. economy and not merely a threat to growth, chipping away at Bush's upbeat election-year projections and increasing pressure on him to act. Treasury Secretary John Snow warned on Friday that, "We're seeing some slowing in the United States directly attributable to high energy prices." Gregory Mankiw, chairman of Bush's Council of Economic Advisers, went farther on Sunday, warning in a letter published in The New York Times: "High energy prices are now a drag on the economy, as well as a strain on family budgets." The warnings appeared to be part of a concerted shift in tone by Bush's top economic advisers, who for months have sought to minimize the risk of an economic slowdown in the run-up to the November presidential election. http://reuters.com/newsArticle.jhtml?type=...storyID=6038032 Link to comment Share on other sites More sharing options...
Guest Posted August 23, 2004 Report Share Posted August 23, 2004 Auto Bubble? What's Driving the Auto Boom? The housing run-up is grabbing headlines, but the pace of car sales has been growing even more rapidly, maybe even bubbling over... All this buying raises the distressing possibility that the U.S. may be in the later stages of a stealth "auto bubble." While everyone has been worrying about the run-up in housing, little attention has been paid to the fact that Americans have been even more enthusiastic about building up their vehicular assets. According to the government's latest figures, from 1997 to 2002, the value, adjusted for inflation, of vehicles owned by households -- taking into account their size, age, and features -- rose by 42%. By contrast, over the same period, the stock of residential housing -- the number of homes, taking into account their size, quality, and amenities -- rose by only 15%. Unfortunately, several factors that sustained the auto bubble are coming to an end. Real wages haven't risen over the past year. Interest rates are starting their inexorable climb upward, which will make zero-interest loans a thing of the past. Auto insurance premiums are rising, according to the BLS. Higher oil and gas prices also make owning a vehicle more expensive -- plus there's the shock of paying $30 to $40 to fill up your tank. The end of an auto bubble would be painful in different ways than the popping of a housing bubble -- if one exists (see BW Online, 8/18/04, "Is It a Bubble If It Never Pops?"). The effects of a sharp drop in housing prices would ripple first through the financial markets, particularly the mortgage markets. By contrast, a slump in vehicle sales would hit growth and jobs first. http://www.businessweek.com/bwdaily/dnflas...040823_8696.htm Link to comment Share on other sites More sharing options...
Guest Posted August 23, 2004 Report Share Posted August 23, 2004 Real Estate Bubble The most important bubble in the economy is that of real estate. There has been a real estate cycle with a duration of 18 years since the early 1800s. Real estate booms have often become a bubble. It happened during the 1920s in the US, especially in Florida. It happened in Japan during the 1980s. And it is happening again now in the US. The last bottom of the real estate cycle in the US was in 1990, when there was a recession. Real estate prices have been rising since then, and were not at all deterred by the downturn of 2001. Real estate speculation has carried real estate prices in some parts of the US, such as California, to heights that cannot be sustained when interest rates rise as the Federal Reserve reverses its low-interest policy. Another crash is coming. Henry George, the American economist and social reformer of the latter 1800s, originated one of the first theories of business cycles. The basic cause, he said, was land speculation. During an economic boom, at first, a growing demand for real estate is met by reducing vacancies. But then new real estate is constructed, and rent and land values rise. Speculators notice this and buy land expecting to sell at higher prices later. This speculative demand, added to the demand for use, carries land prices so high that investments in enterprise become unprofitable. Land becomes priced for expected future uses, rather than present-day uses. The fall in new investments then reduces demands for labor and goods, which then reduces other demands, and the whole economy falls into a recession and then a depression. Faced with rising vacancies, real estate prices collapse, bankruptcies rise, loans default, banks fail, and then the cycle begins anew. This theory of the business cycle was original with George and not part of the previous classical school thought. Georgist theory, which I coined as 'geoclassical' for emphasizing land, was a major advance in classical thought. http://www.progress.org/2004/fold364.htm Link to comment Share on other sites More sharing options...
traderfromhell Posted August 23, 2004 Report Share Posted August 23, 2004 The difference this time is housing prices will most probably go below the last recessionary lows not hold above. Here in most parts of NJ the prices in 1990 only went down a bit. This time I think we crash. Link to comment Share on other sites More sharing options...
Guest Posted August 23, 2004 Report Share Posted August 23, 2004 "We have turned the corner." So President Bush continues to say. But in what direction? The answer rests on Stein's law: "When a trend cannot continue it will stop." (Herb Stein was chairman of the Council of Economic Advisors under President Nixon.) The fundamental trend has been the debt-financed expansion of consumer spending, propelled by the housing bubble, and supported by tax refunds, which are now finished. Have you seen what happened to mortgage rates since the Fed started raising rates? They first rose and then fell -- from 6.25 percent to as low as 5.5 percent for a 30-year fixed rate in the past few days. That means there aren't many takers anymore. The household debt engine kept the economy moving for four years after the Internet bust, but it seems it's now breaking down. It was, in fact, perfectly predictable that it would. I, for one, predicted it. We just didn't know when. If he wins, what will Bush do to spur growth and restore jobs? Clearly, he will do nothing. Bush by that point will have no interest in stronger economic growth. Indeed, the huge deficits sure to accompany deep stagnation will suit the Republican agenda perfectly. Bush will defend his past tax cuts by pointing out that no one raises taxes in a recession. Instead he will demand spending cuts and the privatization of Social Security, citing the budget deficits that he himself deliberately created. Greenspan, taking time from monetary mismanagement to launch trial balloons for Bush's future fiscal policy, is already making this completely illogical case. http://www.salon.com/opinion/feature/2004/08/10/jobs/ Link to comment Share on other sites More sharing options...
machinehead Posted August 23, 2004 Report Share Posted August 23, 2004 Was talking to a free-lance media guy yesterday, who sometimes pinch hits on news and talk shows for one of the networks. He said that all the terms used in political campaigns have been carefully tested with focus groups. "Global warming" proved to be a red flag to those who don't accept the theory, whereas "climate change" tends to be less polarizing. Similarly, "tax cuts" antagonizes one end of the political spectrum, whereas "tax relief" is a more neutral term that perhaps everyone can appreciate. What I found interesting is that he had been so carefully schooled in "acceptable" and "unacceptable" vocabulary ... so as to cover all issues using the authorized code words of the day. Clearly the media plays ball with the Depublicrat duopoly, catering to its marketing needs. Link to comment Share on other sites More sharing options...
Sphinxter Posted August 23, 2004 Report Share Posted August 23, 2004 HB, The tax stuff Bush is trying to ram through is simple, aggravated class warfare. Tax Labor but not capital. Since the bottom 50% don't have any capital, it's class warfare. He simply wants to accellerate the greatest gap in wealth disparity in American history to new extremes. Lovely. The only mystery is why folks in trailers still support the Shrub. Further, given his accelleration of Gubmint spending, why would coservatives support him either? In fact, that anybody (who cares about the USA) supports the guy is a total mystery to me. Link to comment Share on other sites More sharing options...
Sphinxter Posted August 23, 2004 Report Share Posted August 23, 2004 Oh yeah! I just gotta get me some of those US dollars while they're so cheap. I gotta get some right away! Link to comment Share on other sites More sharing options...
machinehead Posted August 23, 2004 Report Share Posted August 23, 2004 From Reuters news: Greenspan is due to speak Friday at a Federal Reserve Bank of Kansas City event in Wyoming. The second estimate of second-quarter growth figures and a final reading of the August University of Michigan consumer sentiment index are due on Friday. A mere coincidence Obviously, it's time for some urgent bullhorning to rationalize away some substandard economic stats. Must phone Fukui ... Link to comment Share on other sites More sharing options...
beardrech Posted August 23, 2004 Report Share Posted August 23, 2004 Was talking to a free-lance media guy yesterday, who sometimes pinch hits on news and talk shows for one of the networks. He said that all the terms used in political campaigns have been carefully tested with focus groups. "Global warming" proved to be a red flag to those who don't accept the theory, whereas "climate change" tends to be less polarizing. Similarly, "tax cuts" antagonizes one end of the political spectrum, whereas "tax relief" is a more neutral term that perhaps everyone can appreciate. What I found interesting is that he had been so carefully schooled in "acceptable" and "unacceptable" vocabulary ... so as to cover all issues using the authorized code words of the day. Clearly the media plays ball with the Depublicrat duopoly, catering to its marketing needs. Mh Your citing these remarks is so important that it exceeds human comprehension Korzybski,Hayakawa,Witttgenstein linguistic heroes who were perpetually in a battle to prevent humankind from falling into rhetorical traps--- From the day we first heard our Mama saying,"Eatums porridge sweetums,yummy yummy goody for you" to the day when many of us will for the last time, on our deathbeds hear,"And may god have mercy on your soul" we will have been--in the in-between times-- tormented by the content-analytically sophisticated bull-sheissers of Madison avenue,Big government and Wall street,the unholy trinity that will make death as appealing as an aspirin tablet-- beardrech :cry: "Language speaks us"---- Link to comment Share on other sites More sharing options...
DrStool Posted August 23, 2004 Report Share Posted August 23, 2004 Good Morning! A few comments before I hit the road from Montreal to FL this morning. The articles posted by Plunger underscore the points I have been making in the Fed Releases and MogGauge reports for several weeks. The Fed reports the commercial banking data weekly with only a one week lag. The MoGauge is almost real time. The data shows that credit card borrowing is dead in the water, that cash out home equity borrowing is raging on at a bubble blowoff rate, and that Other (Auto, boats, RV`s etc.) loans, while below Spring peaks, have bounced up recently as car buying is subsidized by low interest financing. One thing the current data shows clearly is that the lowering of long term rates in recent weeks has not seen a commensurate increase in demand. As I have alluded to in these reports, this means that underlying demand is weak and not responding proportionately to the stimulus of lower rates. The demand pool at 10 year rates above 3.75% has been emptied. That is one of the reasons rates have dipped back down. Those who are expecting lower long term mortgage rates to spur a new mortgage boom, and a restart of the slowly deflating housing bubble, are going to be disappointed. The demand just isn`t there unless you drop rates another 100 basis points. The bond market will not support another 100 point drop. Aside from that, from a structural, long term standpoint rates would never have gotten this low had not foreign central banks have kept the bond market on life support. They are buying 50% of new Treasury issues. Where would yields be if they didn`t have us beggars on a subsidy? Most typical investors consider this stuff toxic waste as it approaches the 4% level. They may not start selling when it gets down that low. But at least they say, Hell I`m not touching this crap at this price. Which is why what looked like a runaway collapse in yields stopped dead last week. Nobody wants the paper at less than 4.20 any more. So unless the foreign cb`s start buying more than 50% of new Treasury issues, yields will start gradually ratcheting higher again. Anyway, there is a lot more interesting stuff in that report. It`s long, and I know that most of you do not read it. Some of you who have read it, have privatelyexpressed pleasant surprise to me at how much information and insight they gained from it. Starting with the Feed Report (No updates this week while I head back home), I ask you to take some time to read through it, the MoGauge, and the Fed Releases, then discuss the implications of what you see here on the boards. I will pop in here on the boards from time to time this week. The next Anals will be published Turdsday nite, if all goes according to plan. Many tanks to all for your continued support as Capitalstool.com heads for it`s fourth anniversary this October. Doc Link to comment Share on other sites More sharing options...
mjkst27 Posted August 23, 2004 Report Share Posted August 23, 2004 fantastic - what a fantastic capper to 25 years of neoliberalism - let the ill-gotten oligarchs live out their days tax-free, and then pass their pile to thier kids tax free, all the while letting the serfs shoulder the burden in exchange for the privilege of riding the rest of the bear market to non-retirement. Excellent. Link to comment Share on other sites More sharing options...
The brown one Posted August 23, 2004 Report Share Posted August 23, 2004 HB, The tax stuff Bush is trying to ram through is simple, aggravated class warfare. Tax Labor but not capital. Since the bottom 50% don't have any capital, it's class warfare. He simply wants to accellerate the greatest gap in wealth disparity in American history to new extremes. Lovely. The only mystery is why folks in trailers still support the Shrub. Further, given his accelleration of Gubmint spending, why would coservatives support him either? In fact, that anybody (who cares about the USA) supports the guy is a total mystery to me. By hook and by crook(mostly crook) the pluto's are going to force the ordinary working stiff to become the ultimate bagholder for them. Link to comment Share on other sites More sharing options...
Guest Posted August 23, 2004 Report Share Posted August 23, 2004 Good Morning! A few comments before I hit the road from Montreal to FL this morning. The articles posted by Plunger underscore the points I have been making in the Fed Releases and MogGauge reports for several weeks. The Fed reports the commercial banking data weekly with only a one week lag. The MoGauge is almost real time. The data shows that credit card borrowing is dead in the water, that cash out home equity borrowing is raging on at a bubble blowoff rate, and that Other (Auto, boats, RV`s etc.) loans, while below Spring peaks, have bounced up recently as car buying is subsidized by low interest financing. One thing the current data shows clearly is that the lowering of long term rates in recent weeks has not seen a commensurate increase in demand. As I have alluded to in these reports, this means that underlying demand is weak and not responding proportionately to the stimulus of lower rates. The demand pool at 10 year rates above 3.75% has been emptied. That is one of the reasons rates have dipped back down. Those who are expecting lower long term mortgage rates to spur a new mortgage boom, and a restart of the slowly deflating housing bubble, are going to be disappointed. The demand just isn`t there unless you drop rates another 100 basis points. The bond market will not support another 100 point drop. Aside from that, from a structural, long term standpoint rates would never have gotten this low had not foreign central banks have kept the bond market on life support. They are buying 50% of new Treasury issues. Where would yields be if they didn`t have us beggars on a subsidy? Most typical investors consider this stuff toxic waste as it approaches the 4% level. They may not start selling when it gets down that low. But at least they say, Hell I`m not touching this crap at this price. Which is why what looked like a runaway collapse in yields stopped dead last week. Nobody wants the paper at less than 4.20 any more. So unless the foreign cb`s start buying more than 50% of new Treasury issues, yields will start gradually ratcheting higher again. Anyway, there is a lot more interesting stuff in that report. It`s long, and I know that most of you do not read it. Some of you who have read it, have privatelyexpressed pleasant surprise to me at how much information and insight they gained from it. Starting with the Feed Report (No updates this week while I head back home), I ask you to take some time to read through it, the MoGauge, and the Fed Releases, then discuss the implications of what you see here on the boards. I will pop in here on the boards from time to time this week. The next Anals will be published Turdsday nite, if all goes according to plan. Many tanks to all for your continued support as Capitalstool.com heads for it`s fourth anniversary this October. Doc Safe Travels Doc! Call if you need bail money at the border! Link to comment Share on other sites More sharing options...
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