Interesting perspective on the stock market dive....

From a CEO, not a pundit...

http://www.huffingtonpost.com/michael-k ... 21313.html

The stock market fell because last Tuesday night Congress approved, and President Obama signed, an agreement to cut public expenditures by $2.5 trillion over the next decade. That is the only significant change in the real world.

Those expenditures, which would have been financed entirely by borrowing money, would have put money in the pockets of defense contractors, road builders, home health care providers, school districts, and thousands of other companies, nonprofits, and individuals.

Those expenditures would have boosted the economy, expanded GNP, and, most importantly from the point of view of the stock market, expanded profits. Now they will not, and the process works in reverse. Now the economy will be smaller and profits will be less.

Money can neither be created nor destroyed.

People don't hoarde money - they put it to use.

Federal borrowing sweeps investor funds into government coffers, instead of corporate bonds and small business loans. ("Crowding out effect.") Now, those funds will be available for alternative - and likely more productive use.

Those loans can now go into corporate and small business ventures, which will boost the economy, expand the GDP , and will generate return on investment (profits). Frankly, since businesses and individuals have historically generated better ROI than government, the economy will be better off without 2.5 trillion in federal borrowing.

I'm wondering how the heck you get to be a CEO (or a Huhvud PhD) without a basic economics course.

This isn't tea party speak --- it's basic economics.

bailey bud wrote: Money can neither be created nor destroyed.

Tell that to the Fed, please.

bailey bud wrote: Money can neither be created nor destroyed.

You sure about that? I think you're talking about energy (from physics.) How did we get so much money if it can't be created?

AspenValley wrote:

bailey bud wrote: Money can neither be created nor destroyed.

Tell that to the Fed, please.

rofllol Have to agree.

I am seeing this more as a market correction. Too many companies were overvalued. Apple still trades at an outrageous ROE.

I had wanted to get in a couple months ago but those returns on equity were out of whack.

And I have to disagree with BB. People & businesses do hoard money. Right now people are essentially hoarding it by buying US treasuries, fairly safe, little risk, little return, but if they thought they could earn 5% safely by going into the market, they would.
US Treasuries are just a big money vaccuum.

SS109 wrote:

AspenValley wrote:

bailey bud wrote: Money can neither be created nor destroyed.

Tell that to the Fed, please.

rofllol Have to agree.

I am seeing this more as a market correction. Too many companies were overvalued. Apple still trades at an outrageous ROE.

I had wanted to get in a couple months ago but those returns on equity were out of whack.

And I have to disagree with BB. People & businesses do hoard money. Right now people are essentially hoarding it by buying US treasuries, fairly safe, little risk, little return, but if they thought they could earn 5% safely by going into the market, they would.
US Treasuries are just a big money vaccuum.

I agree....not only are people buying treasuries, they are lowering their credit card debt and starting to actually save money again. Good for them, not so good for the economy which is consumer driven.

http://www.collegehumor.com/video/64772 ... everything

Watch it while you can --- will likely get yanked soon.

AspenValley wrote: From a CEO, not a pundit...

http://www.huffingtonpost.com/michael-k ... 21313.html

The stock market fell because last Tuesday night Congress approved, and President Obama signed, an agreement to cut public expenditures by $2.5 trillion over the next decade. That is the only significant change in the real world.

Those expenditures, which would have been financed entirely by borrowing money, would have put money in the pockets of defense contractors, road builders, home health care providers, school districts, and thousands of other companies, nonprofits, and individuals.

Those expenditures would have boosted the economy, expanded GNP, and, most importantly from the point of view of the stock market, expanded profits. Now they will not, and the process works in reverse. Now the economy will be smaller and profits will be less.

First off it is a President, not CEO. There is a difference. And second it is a Liberal phone company from San Fransisco giving an opinon that we should give away more money. What a surprise.

AspenValley wrote: From a CEO, not a pundit...

http://www.huffingtonpost.com/michael-k ... 21313.html

The stock market fell because last Tuesday night Congress approved, and President Obama signed, an agreement to cut public expenditures by $2.5 trillion over the next decade. That is the only significant change in the real world.

Those expenditures, which would have been financed entirely by borrowing money, would have put money in the pockets of defense contractors, road builders, home health care providers, school districts, and thousands of other companies, nonprofits, and individuals.

Those expenditures would have boosted the economy, expanded GNP, and, most importantly from the point of view of the stock market, expanded profits. Now they will not, and the process works in reverse. Now the economy will be smaller and profits will be less.

Well that and once again, despite clear warnings from the credit rating agencies, DC decided not to enter rehab to address their spending addiction.........