As the economic cycle that is being called stagflation plays itself out in the United States, Europe and elsewhere, the question that rises to the surface is: Are we being set up for a fall of mega-economic proportions?
A weakening on the "inflation" side of the "stagflation" has already begun to develop somewhat, but whether this is the actual turning point remains to be seen. The fact is, however, that as the global economies continue to decline, it is extremely likely that the downward forces will, at some point, overwhelm the inflationary pressures.
Then, like the Sirens of Greek mythology, the resulting lower prices will seduce us into a feeling of blissful relief while, behind our backs, the ship of state may actually be drawing dangerously close to a rocky coast.
According to the news reports leading up to the Great Depression, two of the more distinguishing characteristics of that era were an excess of speculative investing and a world-wide drop in the prices of many key goods.
A depression is, in fact, deflation, which is simply defined as an extended period of falling prices. Under such a scenario, consumers tend to defer purchases in anticipation of better deals in the future and businesses trim inventories that are losing value on the shelves. These developments cause jobs to be eliminated which further reduce consumer spending and the economy is off and running in a vicious, descending spiral that is difficult to break.
The risk that is faced today may be greater than that which was experienced during the stagflation of the seventies because the current economy appears to be weaker. The last period of stagflation ended with a skyrocketing rate of inflation that rose into double digits before the pressures finally eased.
Presently, despite the burden imposed by higher prices on selected items such as oil and many foods, the overall inflation rate is, by comparison, relatively modest, whereas the downward forces are much greater than heretofore. There would appear to be a slim but realistic chance, therefore, that the aggregate price structure could be dragged down into negative territory.
The data released this week has not been encouraging.
Yesterday afternoon, the government reported that the economy grew at a 1.9% rate in the second quarter, fueled by $100 billion in tax rebates and exports that were stimulated by the falling dollar.
That was the extent of the good news, however, and even that was generally characterized as disappointing, especially considering that without the boost from foreign trade, the economy would have contracted.
The New York Times reported yesterday afternoon that many economists now consider that we are in a recession that probably started in late 2007.
Today, the government reported that the economy shed more than 50,000 jobs last month, representing the seventh straight month of losses. Here, in California, the governor announced the layoffs of 10,000 state employees yesterday.
In other negative developments, the tax rebates are mostly paid out now, the trade numbers are expected to drop in the face of a declining global economy, retailers are curtailing purchases in anticipation of a poor holiday season, corporate earnings are down, businesses are purchasing less equipment, inventories are shrinking, job security is deteriorating and home values are plummeting.
In his remarks yesterday, President Bush attempted to put a positive spin on the situation and was critical of economists in general, who have overwhelmingly expressed a growing level of concern.
However, for the 448,000 people who found themselves filing their initial unemployment claims last week and the untold millions who are out of work or underemployed, and for the hundreds of thousands of families who are going through the traumatic experience of having their homes foreclosed and the millions who are struggling to meet their escalating debt service requirements for mortgages that in many, if not most cases, exceed the values of the underlying real estate - for all of the men, women and children in this rapidly expanding group of disillusioned Americans, there is no doubt where the economy is headed.
But the question remains - will today's extraordinary combination of deflationary forces end up winning the battle over inflation, and drag us down into an extended period of falling prices?
Dave McGill, News Correspondent
Dave's column, "The Contrarian," generally published every Friday, to Gather Essentials: News will sometimes present a contrary view to various aspects of the news, or an alternate take on the conventional wisdom of the day, and will occasionally appear on another day of the week
Dave has been a senior officer of an eastern insurance company, involved in economic projections and investment strategy, president of a Midwestern mortgage banking company, and a financial consultant in Southern California, serving clients in the field of commercial real estate development.
You can find all of Dave's "The Contrarian" columns at: http://gather.com/thecontrarian...... Keep up with Dave's other postings and Gather activity by joining his Gather network - just click here: http://atadaskew.gather.com........ You'll find Dave and other News Correspondents, plus celebrity content and plenty of other News experts at News.gather.com.
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Comments: 79
This would seem to contradict the statement that " many economists now consider that we are in a recession....".
With Exxon reporting a quarterly profit in excess of 11 billion dollars, it would seem that most of the alleged growth is concentrated in a narrow sector of the economy. The "overall inflation rate" as reported by the government is a red herring. My grocery bill has increased substantially more than the reported inflation rate. The loaf of store brand bread that used to cost $.99 is now $1.25, with many other staples showing similar increases.
Energy and food bills are not optional purchases and are sucking up huge amounts of what used to be discretionary income. For me and others like me, falling prices on items like TV's and computers and cameras simply have no effect and certainly do not offset the increases in necessary purchases. Demand for these items is bound to fall because there is simply no money left for these items. and it doesn't matter how cheap the price tag.
Incomes have been stagnant for most workers throughout the Bush years in spite of traditional indicators that suggest an expanding economy. While what is happening may not meet the historic definition of a recession, it certainly feels like one to far to many of us and it is nopt all in our heads.
The reaction to the second quarter growth was that it was largely artificial, fed by the tax rebates and a temporary boost in exports, and the vital signs point to much worse news down the road. It is largely irrelevant to most Americans whether a "recession" is designated and when, as you pointed out, but the process is always announced in arrears and, for what it's worth, it may eventually be determined that it started in late 2007.
I took the cheap approach and opted to use less words in presenting this topic.
U.S. Jobless Rate Increases 460,000 during first six months of 2008
Much of the Bush expansion was fueled by re-financing and second mortgages. That store of wealth is pretty much tapped out. With energy and food costs rising and incomes stagnant, the discretionary income that fuels the purchase of most consumer goods simply doesn't exist.
If decreasing demand outpaces a corresponding contraction of supply, prices must fall. This is capitalism 101 at its best and its worst.
For the most part I agree with your prognostication. What I disagree with is "consumers tend to defer purchases " expecting prices to fall further. Consumers are defering purchases because there is no more discretionary income.
It is entirely possible for energy and food prices to continue to rise through a few more quarters generating enough phantom growth to pervert the indicators that normally predict an economic downturn.
I call it phantom growth because it generates increasing revenue and profit with simultaneous declines in unit sales.
Now we see what some of us have been saying for years, that you can't keep the economy rolling by pulling the rug out from under the vast working classes or concentrating our massive investing power overseas.
Folks need jobs in order to pay bills and buy stuff.
The methods through which our rich have been getting richer are the very things that are tanking our economy. I wish these idiots would think things through and NOT act from only self interest.
We are headed for national Bankruptcy and that is just what Bush & Co. want. Step one in a Fascist take-over.
What bothers me is yes, we take action on the small scale. IT helps us. I work on trying to understand how to make our future more secure, for us and our families and our friends. It is not secure now. The job market is so bad now. And where are the companies? It seems that many countries no longer think of us at all. That is scary.
It is true American's are survivors, and we will make changes too make thru this. I agree with Judy. But how does this help down the road? Is this going to be permanent? Both natural gas and the electric giants here in Mo. have had the rate hikes approved. I cannot imagine what winter will be like for so many. What will bring back the job market, the consistent pricing we need, or respect from other countries again? And a paycheck our families can survive on. All of these things,are just the beginning results ,of all the errors in "thinking before acting" our Government has made. I still feel we are in trouble. And possibly some we are not yet aware of. Thanks for the article. Ellen B
We have gone through recessions, had the Great Depression, but we are so intelligent now. Hard to think about. Just like the War. Thanks for a great article. Ellen B
Dave I do have to admire you creativity in finding a new way to
monger the same old fear day after day. What is it with you
lately? You really think everything is going to fall apart? You
sound like you can't wait ... are you stockpiling toilet paper
or something? ;-)
I don't wish to excuse whatever errors the government has made but it is no fair to lay all the blame at their feet. The banks and multi-national corporations certainly should be called upon to shoulder their share of the blame. Nowhere is short-term thinking more prevalent than the corporate world. Let's just worry about the next quarter and the future be damned. This sort of short term thinking is responsible not just for our economic woes but much of our environmental woes as well.
great depression economists and business people know how to avoid
it of fix it, the only question is when, and how long they will keep the
working people's nuts in a vice. Maybe working people and the middle
class as so used to having their nuts in a vice that they do not feel
the increasing pressure but I think they will start howling and voting
pretty soon.
It is the government's job to think long term and then set up regulation. I agree that we cannot blame the government, but it is because they are just following orders. We can blame the puppet government, and get them the hell out.
Money, today, is largely in computer memories around the world. It is just bit patterns. Therefore, money is largely in our minds and it is not a real physical resource. That which distinguishes a metal disk or an engraved piece of paper as money from other disks and papers is in our minds.
Therefore, our economic problems are a problem of the way we think, not of the physical world out there.
But becuse money is so important to the way we think and act, the problems are just as real as if they had an acutal physical source. We will suffer from these needless and pointless problems just as if they were forced upon us.
The good news is that because they are a product of the way we are thinking (and every nation in history has thought) we can eliminate these problems very quickly and they need not ever return.
If you like thinking about gloom and doom and like expecting personal tragedy for yourself you can do nothing and achieve happiness or at least satisfaction. But if you would rather "take up arms against a sea of troubles and by opposing, end them" as Shakespear put it, then you should investigate how we could arrange money so that it would not do such damage. Please read the novel Invisible Hand.
Invisible Hand is already free so its price will not drop. On the other hand, you would probably value it more if I were to charge $50.00 a copy. People are funny about money that way.
"President Bush attempted to put a positive spin on the situation and was critical of economists in general" That is probably because they don't have all the information just like he had all the information about Iraq. Hmmmm.
In order to fix the economy its going to be painful and more likely than not, we the peasants are going to get hurt.
The only difference between Carter and Bush (both bad in their own ways), was that Carter realized that in order to right the economy he had to do some very unpopular things like jack interest rates (remember the 22% interest rates banks charged) ... that took alot of courage and also cost him the election. Bush on the other hand acts as if there is nothing wrong with the economy and is too chicken to enact the necessary and correct moves to begin curing the economy. Economic stimulus package is not the right move unless you work for the oil companies.
Great article! I read yesterday that over three million persons in the US are working part time only due to cut backs by their employer. With the actual rate of inflation as high as it is, including fuel, groceries and medical costs, it will be difficult for many to survive.
I've read only six chapters of your book but if that is the system you are promoting, good luck! People want possessions indicative of their wealth, assuming they have some wealth, and are not going to settle for "computer money."
By the way, if you'd write a shorter synopsis of your story, more people might read it. It requires a substantial investment in time as is.
This will make it much harder for the economy to escape the downward spiral.
Thanks for starting it. I hope you are enjoying what you have read.
Already the GDP for the third quarter was revised down to a very small negative number, and there is speculation that the forth quarter GDP for 2007 will also be revised down, therefore, if so, and it goes negative, we have been in a classically defined recession the last half of 2007.
The prices of the homes in the larger markets like California, Miami and Nevada are not expected to normalize till the last quarter of 2009. And because of the size of those markets they will be a drag on the financial system in the US.
Therefore, I’d look for Main Street financial problems till the last quarter of 2009.
> The Corporate World is simply acting according to its "charter"
> by the American people, who professedly champion us having
> a free enterprise system.
the problem is that to continue profits and the superficial image
of a strictly capitalistic economy our corprorations have had to
go way beyond anything that looks like a free market into all
kinds of deals and schemes that just screws over the average
investors and makes invseting look more and more like
gambling ... and gambling in a rigged game at that.
> Neither extreme capitalism nor extreme socialism is the
> answer, but a blend of something in between.
True that, the really productive area of investment at
this time in the world seems to be in people, and the
infrastructure that enables them to be productive,
then we can have a more free market when we have
transparenct and diversity of capital.
WM. H., I believe you misunderstood a passage in the article....Consumers are NOT deferring purchases today in anticipation of better deals down the road....How could they with prices rising? The paragraph that contained that particular comment referred to the circumstances that take place during a legitimate deflation when prices are falling.
And the banks and multi-national corporations contributed to the problem mainly because Congress did not provide the needed regulations, Wm H. And the reason Congress took a hands off approach, even after the problems became well recognized, is because it was paid well to do just that. Some time when you have a few moments, check out the Common Cause website.
You can talk about the hundred or so ways this economy got screwed but it all comes down to the money that greases the palms of our politicians. And this, the greatest problem in our nation, the rotten core of our apple, is greeted in the media with a thunderous roar of silence.
RECESSION: the state of the economy declines; a widespread decline in the GDP and employment and trade lasting from six months to a year.
for what it's worth
Saudi Arabia probably already owns 10% of the whole American economy thanks to the Bush family, and the lobbyists in Washington. The exact amount is a classified secret .... can you imagine that? Can you imagine why?
As Prescott Bush engaged in lucrative trade with the Nazis, even throughout WWII, the younger Bush's are doing the same with the newest enemies, but this time they will not get caught or prosecuted because they are doing it from inside.
So, what does it mean when one day the papers say, OK, the Saudis own most of corportate America? In the middle of the last century they used to control who American corporations could hire and fire ... meaning they excluded Jews from companies they had investments in. you think they will be any nicer to Christians when they get the chance? Or athiests?
We are all getting a nice long noose of dollar bills from someone else's debt wrapped around our necks in order to control us.
Take the energy crisis for example. Obama makes an idiotic proposal to "inflate our tires" to solve the energy crisis, and instead of making a fool out of him, as they would have with McCain, the media left actually tried to take this idiocy seriously, if reported at all.
So the end isn't near, have faith in our media.
because i watched a movie called "zeitgeist". -scared the crap out of me, but i knew in my bones that it was so...down to the very last pixel.
it's all been machinated (to reiterate), and a thousand conspiracy theorists are having bloody orgasms over the why of it.
i have a third child on the way, too.
speaking of orgasms.
wish i'd thought that one through a little more. (and that i could type "lol" after that last sentence...)
to wit: we are endangered. -any time a segment of the human population goes into progeny overdrive, it's probably because there's a threat--and maybe they just want the sex, it's a natural drug, why not, y'know?--but when We Know Better And Do It Anyhow, it's likely indicative of something...larger.
just a theory, lads an' lasses.
just a theory.
That was a rather fascinating comment.
James C. and Cheri-
Of COURSE Colly-foh-nyah is losing thousands of jobs...productive Companies can't get out of there fast enough, and you can thank Leftists and their punitive taxation, and environmental restrictions for that! Next time you see a Californian out of work, remind him to thank a Liberal.
And, yes, "Big Oil" showed an $11M profit. Outstanding! What you don't point out, is the fact that they are effectively TAXED at 47%. The actual profits after Taxes are HALF!!! Don't you Communists, Socialists, Marxists and Leftists ever stop to think how much they POUR into the Fed coffers??? Oil Companies are the Largest Corporations in America...but show some of the LOWEST profit margins, at 7%.
Come on...
I commiserate with you...I'm getting a headache, as well.
To wax pragmatic for a moment, the move by the California governor is a significant omen. Historically, I've noticed that two of the main weapons that have been employed to pull the country out of a recession have been government spending and a surge in real estate due to the normally low interest rates that have accompanied the downturns.
Now, because of the financial condition of most states and the federal government, stimulative programs will be severely limited and - as in the case of California - the government(s) may have to actually add to the problem.
And, as for the real estate sdector, it is definitely in the emergency room on life support, and - at least in California - we haven't begun to see the extent of the foreclosure problem.
So, in addition to all of the negative trends that seem to be coming together at the same time to make this what may become a historic downturn, two of the traditional life preservers are largely missing.
> Of COURSE Colly-foh-nyah is losing thousands of jobs...
> productive Companies can't get out of there fast enough,
Come on, does every think you say have to be more idiotic
than the last. I happen to live in CA, and this is one of the
only places where jobs are expanding, and salaries are rising
and real estate prices are still increasing.
The only reason some companies try moving away is to save
money, and when they do not they come back here. Lots
of companies tried moving to the Denver area, but costs are
still high there and talent is scarse, and employers are scarce
as well, meaning for everyone this area is the best place to
be.
MJ, do you give a damn about the truth, or just that check they
give you for posting this crap 24x7 that you do not understand?
If you want to make a difference, tell them to shove their check
and stand with Americans instead of the Saudis and the Bushs.
My heart bleeds for the oil companies! I have a little trouble mustering up tears when their profits are greater than the GDP of most countries! You must hold oil stock.
Their reported profits are a work of creative fiction in the first place. The government cannot monitor and foce them into legal compliance as all the regulators are ex oil men. No one else could possibly do the job and they are the equivalent of the fox guarding the hen house.
You also fail to address how much of the oil company profits are funneled off to the private piggy bank of the CEO and other high officers. Even the government has no idea!
I do hope you read what Bruce had to say about the situation in California. It lends perspective to your comments!
Dave, after 30 years of this kind of stuff, I don't know about you, but I figure, a giant staggering amount of money is controlled by the bad guys and there is no possible way to fix this without either finding the bad guys and taking the money back, or resetting some counters and in a way starting over.
Saudi Arabia probably already owns 10% of the whole American economy thanks to the Bush family, and the lobbyists in Washington. The exact amount is a classified secret .... can you imagine that? Can you imagine why?
As Prescott Bush engaged in lucrative trade with the Nazis, even throughout WWII, the younger Bush's are doing the same with the newest enemies, but this time they will not get caught or prosecuted because they are doing it from inside.
So, what does it mean when one day the papers say, OK, the Saudis own most of corportate America? In the middle of the last century they used to control who American corporations could hire and fire ... meaning they excluded Jews from companies they had investments in. you think they will be any nicer to Christians when they get the chance? Or athiests?
We are all getting a nice long noose of dollar bills from someone else's debt wrapped around our necks in order to control us.
Memories are short, however, and today, none of those safeguards have been in place as well as many more and in the grab bag we call our political system its every person for themselves and to hell with the rest of us.
After all, those that are neglecting their responsibilities, if you will, really don't have to worry about a depression because they'll be in the catbird seat with plenty of money and bargains galore to enhance their wealth even further...
Very good and thoughtful points.
Bruce-
I stand neither with Bush, the Saud, or you. All are fools.
As are those who would try to move their businesses to a state that has the SAME liberal taxes and environmental regulations, hence, the same problems that are encountered in Colly-foh-nyah. But, you wouldn't understand that, now WOULD you, Bruce.
James C.-
I've failed to address nothing, but you "twist a good word." No, I do not own Oil Stock, but I'll bet that you, and a vast number of Americans, DO. As a matter of fact, most with a 401, Mutual Funds, members of Unions, or several other types of investments, DO. That is because the MAJORITY of Brokerage and Asset-Management Companies are vested in Oil. That is a large number of "nest-eggs," and as the success of Oil Companies go, so goes the success of most average American "investors."
I find it sad so many want to ignore the facts, calling the messenger a Chicken Little. We have serious challenges ahead of us folks and it is vital that writers like McGill keep things like the economy in our faces.
My take on the problem is that I believe a huge source of our economic woes are due to too much wealth being bottle necked at the top. Ninety percent of America's wealth is controlled by one percent of it's population. That cannot be healthy people. Everyone keeps harping on GROWTH as the key to a healthy economy. That may have been the case in the past. But we live on a finite planet with finite resources. We simply cannot depend on growth alone to sustain our economy into the future. The often ignored factor of CIRCULATION of money has been a more significant engine driving the economy since the late 1930's when the 90% tax bracket was imposed on earnings over one hundred thousand dollars a year. This system of taxation was designed specifically to prevent the kind of mass accumulation of wealth that led to the Great Depression. It aslo set the stage for the single biggest increase of the size and income of the Middle Class of any country ever. The shift of wealth also brought the standard of living in the U.S. to a level unprecedented in the history of mankind.
The restructuring of the tax codes under Reagan put a stop to it though and we've been on a slippery slope of stagnant incomes for Middle Class workers with the cost of living going higher and higher every day.
" Take the energy crisis for example. Obama makes an idiotic proposal to "inflate our tires" to solve the energy crisis, and instead of making a fool out of him, as they would have with McCain, the media left actually tried to take this idiocy seriously, if reported at all. "
* Tires — Every 2 weeks, Americans wear out nearly 50 million pounds of rubber off their tires. This is enough rubber to manufacture 3 and a quarter million new tires from scratch! To help prevent this, you can inflate your tires well. This preserves the life of the tires and saves gas, which ultimately saves money.
It takes approximately 90 million gallons of oil to produce approximately 50 million pounds of rubber.
Seems you missed the BIG picture !
Sen Obama's suggestion was not directed toward the individual driver of a car saving enormous amounts of money simply by filling the tires properly. Although it would help increase the mileage, especially if you use the new technique of Nitrogen rather than air.
The Bush tax cuts accentuated the trend already in place, as you pointed out, and the alternative minimum tax is gradually eating into income levels for which it was never intended. It's interesting to note all the hand wringing in Washington over these developments, but no one, Republican or Democrat, seems serious about reversing the tax cuts for the rich or redefining the AMT.
Both could be accomplished in a manner that would be revenue neutral for the U.S. Treasury.
In addition, the wealthy have been further rewarded for their payoffs to the politicians with a myriad of regulations, handouts and special treatments that have further accentuated the gap.
Kay and Richard, I believe tire inflation is a big deal, as you pointed out, Richard. Manufacturers of cars and tires recommend inflation levels that are much too low. This helps wear the tires out faster, although it does provide a somewhat smoother ride.
Check the information that is imprinted on the tire. If the maximum pressure is - say - 44 PSI, I've found that a pressure in the high 30's provides the combination of a decent ride and significant savings, and this is well above the recommended levels.
By maintaining the pressures at 6 or 7 pounds below the max, I've gotten close to 100,000 miles out of tires, and that's a lot more than I would have gotten if I had followed the manufacturers' recommendations.
When I look at the history of scandals since WWII I see the significant ones always seem to have a Bush at the center. Starting from the "business plot" to overthrow Franklin Roosevelt that General Smedley Butler foiled by reporting to Congress, resulting in the McCormack-Dickstein committee, and a result where Congress did nothing to some of the richest most powerful people in the country who were guilty of plotting a coup against the Constitution. At this time Prescott Bush was trading with the Nazis and laundering their money in America. It was found he was doing this all throughout the war.
Enron, the Saudis, BCCI, the whole government and the rule of law seems to be an illusion allowed the public as long as they want to accept it or just whine about it. America has stood alone among the developed world, and it is not because we are smarter, it is because we are way more ruthless and clever at ruling over our people who seem to demand nothing but delusions of grandeur ... religion that says we get our reward in heaven, and to be on the winning team - America, the greatest country ever on the face of the Earth.
While we were at one time the greatest country on the face of the Earth, that does not mean much when we do not keep moving ahead. We were stopped from moving ahead by those who care more about their own power and abusing it than the system, similar the Julius Caesar and the death of the Republic in Rome.
My question has always been, besides whining, complaining, spining different interpretations of history, what can unite enough people in the US or the world in order to get them to overcome their differences and cooperate instead of always arguing?
There is no way one set of facts or ideas are going to mix together to lead to some conclusion that is inescapable and demands action from everyone. The only thing this leads to is the conclusion that the only thing left is manipulations, and governments and men have been traditionally relentlessly barbaric in exploiting any operations that will manipulate people, mostly into fear.
We just happen to have the extraordinarily successful mythology of the American Dream and Christianity mixed with a long enough history of prosperity that we will not question what is really happening in the country, and when we do we are still listening to the government explanations even as they get increastinly absurd.
The American people are like the old wives of a philandering husband who goes out and spends all the money on hookers and drugs and then comes in at 3am beat from "working late" denying any wrongdoing. Americans are not so stupid that they do not see the clues, they just do not want it to be true, and they just do not know what to do about it or what it means for the future to go it alone without those illusions.
YOU haven't answered MY assertions, because you cannot...truthfully.
Stagflation ??? There is no stagflation. Recession ??? There is no recession. DEPRESSION ??? GET A GRIP LOSERS ! ! ! ! !
You think just because YOU have a few insignificant little problems, the whole world is about to explode.
Simpletons.....
You are probably correct in that most mutual funds have at least some money in oil stocks. However, the fund owns that stock and the end holder owns a share of the fund. It gets a little confusing but I'll give you this one. However, if I own stock then I can vote on thins with the company. I cannot with my tiny 401K, in fact, I have no idea just what they are invested in beyond the mutual portfolio. That, I guess, is poor man's ownership.
You did not even try to address just how much oil money was funneled off into the private piggy banks of the upper management. Were the stockholders (and that does not include someone with a 401K as they can't vote) realistic they would keep a tighter control over executive money pots!
If "every word on this page is nonsense" then why are you wasting your time being a part of that nonsense? Rise up! Separate yourself from this miserable crowd! Don't let the deprecating denizens of despair pull you down!
Also, you may be correct about public "control" over the money-pots of Executives, but here we part ways...I never try to tell someone what they can or cannot earn.
And, just a "perspective" reminder...Again, Oil Companies are actually near the BOTTOM in profit earnings percentile, 7-9%. To make that more clear, Google has earned a whopping 25.7% profit last year. Obama has suggested a "windfall profits" Tax on Oil, with a cut-off of 10% profit. With that reasoning, Google, and he HIMSELF should be slapped with that Tax, given the fact that his "windfall profit" increased by nearly 90% in the last year, due to his book sales. I don't begrudge him his success, but he should include himself...or forget this Socialistic idea altogether. I opt for the latter.
I, like you, don't begrudge anyone their success if they have earned it rather than screwed someone else out of it. Perhaps all th eoil executives have been decent and earned what they have to an extent. I cannot accept that they are worth hundreds of times more than the president of the United States! I'm not proposing to cut their pay regardless how they arrived where they are. I just think that the stockholders should have a close scrutiny of what is going on as many companies, and I'm not referring to oil companies necessarily, the executives have operated with impunity and without regard to the stockholders.
'The head of Morrison Knudeson made millions and had a golden parachute when he drove the company into bankruptcy. That was the third company which he had ruined financially. Boise Cascade was another one. Boise Cascade pulled out of it after he left but MK had to sell and is now Washington Group and is again a profitable company. The Bankruptcy court removed a few million from his golden parachute and he was preparing to sue. We are talking millions of dollars here!
However, I'm not proposing cutting anyone's pay. Period. I just want to point out where the money goes And I understand that the oil company executives are getting in the billions of dollars. Therefore, when the company only makes the amount of most countries GDP, stockholders should be fully aware of where their money is going.
If Obama suggests 10% as the cut off to trigger windfall profits taxes, and the oil companies only make 7%, then the entire discussion is moot, is it not? I am firmly of the opinion that the oil company reported profits don't come close to what they actually get. However, no one alive, outside of them, can know what goes on internally. And I don't believe in hanging someone because I suspicion ill of them.
I have no problem with a little socialism. IN fact, it is necessary to have a civilized nation. Capitalism without it is barbarianism and is not civilized. Our constitution allows for social action and funding as it allows the people to function as the ultimate governing body. If that group wants to engage in some socialistic practices, then that is democracy at work as our forefathers planned. That said, I believe in the capitalistic system for the incentive needed for people to perform at their best. But it needs to be rigorously controlled and blended with certain socialistic programs.
We've had socialistic programs for many years. Of course, the first were directed at preserving the profits of companies but following FDR, some of the benefits were no longer reserved for only the monied class and distributed to the populace in general.
You're right, we diverge on quite a few things so I think to exchange our viewpoints is beneficial in understanding others who diverge. Your points are well made and understandable. My disagreeing with them in no way invalidates them, but I do disagree with many of your concepts.
"If Obama suggests 10% as the cut off to trigger windfall profits taxes, and the oil companies only make 7%, then the entire discussion is moot, is it not?"
No. His Tax is intended SOLELY for Oil Companies. No other enterprises would be involved. I apologise for not making that clear.
On your first and second pooints, certainly those who break the Law, should be prosecuted to the fullest extent of the Law. And, when caught, they are.
We agree on Capitalism, but I strongly disagree with you on the subject of Socialism. And that is fine, as you said.
There's nothing wrong with the natural order of cycles in, cycles out - It's how we use them to increase our heart consciousness that matters over all.
Like I said, just because your life is shit, doesn't mean the world is in the same shape....
*ROFL* this is the BEST line of lunacy on the whole page *ROFL*
James, it would be impossible for the jocular nature of the opinions stated on this page to "bring me down."
If I can't speak to condemn, I'd have nothing to say at gather, were so many fools pose as "insider experts." *ROFL*
Markie Johnnie john boy---- you've turned into a serious nutcase....
Thanks much.
It should also be noted that retail rents are also starting down due to the huge wave of store closures, including the prospect for fewer Mervyns' as a result of that company's recent bankruptcy filing.
But, again, as far as prices are concerned, be careful what you wish for.
Unlike jJack, Alan Greenspan, appearing on CNBC the other day, characterized the current downturn as a "once in a century crisis," and said falling home prices were "nowhere near the bottom."
Pink-0span--- not green---- this from the loser that brought us the "irrational exhuberance" commentary *ROFL*
Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past.
But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? [...] ”
"The Challenge of Central Banking in a Democratic Society", 1996-12-05
The presence of the short comment—not repeated by Greenspan since—within a rather dry and complex speech would not normally have been so memorable; however, it was followed by immediate slumps in stock markets worldwide, provoking a strong reaction in financial circles and making its way into colloquial speech. Greenspan's comment was well remembered, although few heeded the "warning."
The losses were quickly recouped and eclipsed by the accelerating stock market boom; as of mid-2007, stock prices have never again fallen to the levels seen following the warning.
The Fed should never have been put in place, and should today, BE ABOLISHED.
I don't trust a word that comes out of the Federal Reserve Board of marauders.
Home values in Southern California have fallen on average over $150,000 in the past 12 months. This means that most of the many high percentage loan-to-value mortgages made over the past few years are under water.
When this realization dawns on the borrowers who are struggling to meet payments that are rising under built-in escalation clauses the foreclosure flood gates will really open up, cascading a new wave of turbulence through the financial sector.
There is a lot of misery out there right now, and it is a l-o-n-g way from being over.
No he wasn't, as the aftermath of his ridiculous comments confirms.
he is very likely right today.
You are free to indulge in hinky crystal ball readings if you desire. There is nothing to indicate he is "right" --- NOTHING.
This means that most of the many high percentage loan-to-value mortgages made over the past few years are under water.
And those mortgages are the fault and problem of greedy individuals --- NOT an indication of our economy.
cascading a new wave of turbulence through the financial
Yet more ridiculous crystal ball readings. Pathetic.
There is a lot of misery out there right now
And it has ALL been self induced by assholes that either do not understand the financial system, or have refused to recognize the absolute rules of said system.
It demonstrates NOTHING systemic has a problem at all, and is merely a reflection of their own bad decisions.
So far the Federal government has avoided this with printing more money (an option CA does not have) and borrowing. Otherwise, CA is simply the US in the future. And neither party has anyone in control who will do anything about it but either borrow or tax more while increasing government meddling in every aspect of the economy.
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