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(former)FormerSanDiegan
Participantcsr_sd
Thanks for providing such enlightened insight on the situation and pointing out a way to help the children. I have to agree with you, but wouldn’t the world also be a better place if you spent your time volunteering for a charity or something instead of wasting it by spewing caustic stereotypes on this blog.
ParticipantI have a new business idea.
It’s called IPayTwo (TM)This approach would provide double the gross income that these losers generated. (And they thought 7-minute abs was a bad idea).
ParticipantWe all question the Federal govt’s numbers on inflation, GDP, and others as potentially cooked, but cannot see the flaws in the way savings rate is computed.
The official numbers have some deficiencies. They don’t count capital gains, and they don’t count contributions to retirement plans.
I have been saving about 25% of my salary (before taxes) to retirement accounts over the last decade. What a shame. I have been contributing the this nation’s decreasing savings rate problem. I apologize to all. To help out, I should probably eliminate my retirement contributions and take that money after tax and stuff it into a taxable account. At least that way the savings will “count”. Of course, that will cost me over $10K in additional taxes per year, but hey, that helps the budget deficit.
I think the government should sponsor an edumacation program that encourages after tax savings as opposed to the tax-deferred investment vehicles in which people are throwing away an opportunity to improve their savings rate. This would improve the nations savings rate.
Also, I think it’s entirely appropriate that the Government ignores Capital gains when computing the savings rate. That $3 Trillion in capital gains per year from the stock market really doesn’t matter, does it ? That’s only about a fourth of our country’s GDP, right ?
As for 401K balances being insignificant at an average of 50K … that comes to about $50 Billion per million accounts. If we assume that there are about 50 million 401K accounts that’s about $2.5 Trillion. Yeah, that’s small potatoes. I’m sure that nobody ever changes jobs and rolls their 401K into IRAs either. So lets ignore any IRA balances or even contributions as savings.
How much are you saving ?
ParticipantGood Point Concho – For the record I have $1.95 in my savings account and make $15K.
ParticipantNeetaT – I guess you don;t remember about 1980 when you could get 8% from your checking account. Problem was the price of things were increasing by more than that.
Everything you buy will become more expensive in nominal dollars. So you’re getting 10% on your CD, but gas prices go to $5. A gallon of milk costs $5.75 and the Toyota Prius you’ve been eyeing costs $43,500. A happy-days are here again meal at McDonalds is $7.85.
The good news is that exporters would be making more in dollar terms.
ParticipantWell, I happen to think the guy will ultimately be proven right.
The battery died on my clock, but I happen to think that the time it tells will ultimately be proven to be right.
ParticipantYeah, the guy is obviously an idiot. He didn’t make millions holding on to an overpriced asset. He’s like those morons that sold their Cisco stock in 1998. What a fool.
Borat – Great example. You proved Chris’ point.
On April 3, 1998 Cisco closed at 11.78.
Today it is at 26.That’s an annual return of over 9% per year during some of the worst years for the stock market out of the last 30 years.
ParticipantIt seems to me that most folks on this thread agree with the notion of comparing rent to own with perhaps some premium is the best fundamental measure. The only differences are in the details. The problem is that the assumptions for premium people are willing to pay vary by as much as 40%. Here’s my $0.02.have been true for sdrealtor’s areas, I don’t think a 20% premium to own versus rent is an accurate description of the previous bottom in most areas. For older bread-and-butter rental areas such as Clairemont this premium dropped to nearly zero or 5% (depending on down payment). Don’t know what will happen this time, but I’m guessing that rent vs own numbers will nearly come in line for older central SD neighborhoods.
ParticipantI am with Rotted Oak on this one. The difference is within the noise.
Too much is being made (on this board and in the media) about a 0.7% move in a measure that typically varies by about 1.2%.
I would consider this virtually no movement. If it were 0.7% in the opposite direction I would have the same opinion.
ParticipantAnother “genius call by this guy in Spring 2003, when the stock market began it’s 4-year ~50% run …
Basically the guy is a perma-bear. And like the perma-bulls is right as many times as he is wrong. I wouldn’t base any timing on this guys views.
“Can the economy rally too?
By Rex Nutting, CBS.MarketWatch.com
Last Update: 7:07 PM ET March 21, 2003WASHINGTON (CBS.MW) — Nothing moves as fast as money.
As the uncertainties about the Iraqi war faded one by one, money surged back into U.S. stocks and the dollar and out of the safe havens of gold, oil and bonds.
The rally in the financial markets over the past week was every bit as dramatic as the action on the ground in Iraq.
The market obviously believes the war is going well and that victory will be good for the U.S. economy. But economists aren’t so sure the economy can recover as rapidly as the markets did.
Lehman Brothers chief economist Ethan Harris is struck by the fact that “the Fed gazes into its crystal ball and sees nothing but fog, while the markets are quickly pricing in the ‘good war’ scenario.”
Are economists like Alan Greenspan lost? Maybe the better question is “whether markets are moving swiftly on the road to nowhere,” said Bob DiClemente, economist at Salomon Smith Barney.
Markets are designed to forecast the future, so it would be folly to ignore the bets millions of individual and institutional investors are making that the worst is over. “While it usually is profitable to be one step ahead of the market, being three steps ahead can be costly,” warns Jan Hatzius, economist at Goldman Sachs.
It can also be costly for investors to be three steps ahead of the economy.
“The Wall Street propaganda machine has managed to delude itself and the public into believing that the only forces restraining a new bull market are Saddam Hussein and the uncertainty surrounding his removal from power,” said Peter Schiff, president of Euro Pacific Capital. “But even before the dust settles in Iraq, investors will soon see that the outlook for the U.S. economy and corporate earnings remains bleak.”
Lower oil prices and a bull stock market will help the economy, but not immediately. Calling your broker takes a second; it takes time to plan and implement a business expansion plan, buy equipment and hire and train workers.Trying to predict the economy at this point can be hazardous, but investors don’t have the luxury of punting like Federal Reserve policymakers, who admitted in the past week that they don’t really know how to weigh the risks to the economy. If you have capital to invest, you must park it someplace safe or put it on the table to risk the next roll of the dice.
The economy on the brink of war was soft and getting softer. The trick for investors and policymakers alike will be to look through the incoming data that reflect pre-war nerves.
Economic data from February and March shouldn’t be totally discounted, but they should be examined in the light of the market’s rally and the early signs of success in Iraq.
Of the coming week’s data, markets would normally pay the most attention to the two consumer confidence surveys. But most of the responses to the Conference Board and University of Michigan surveys were pre-war.
Economists expect the Conference Board survey to sink further from a nine-year low of 64.0 in February to about 61.6 in March. The number is released on Tuesday.
The University of Michigan’s preliminary survey already incorporated much of the drop in consumer confidence early in the month, but the final survey may not fully reflect the likely bounce from the war’s early days and the market’s rally. The Michigan survey is expected to rise to 75.1 from 75.0, when it is released on Friday.
“I believe the bounce will be very significant,” said Scott Rasmussen, a pollster who tracks consumer and investor confidence on a daily basis. His consumer confidence gauge hit its year-to-date high on Friday, rising in one week from 88.3 to 103.4.
It might take a month for the war relief rally to show up in the monthly consumer surveys.
Consumers have more on their minds than Saddam Hussein, of course, including jobs, incomes and prices.
Consumer spending probably fell about 0.2 percent in nominal terms in February, which would be the first back-to-back declines in spending in more than decade.
Meanwhile, consumer incomes probably grew just 0.1 percent. The income and spending figures will be released on Friday.
“Many things have conspired to fatigue the consumer,” said Jill Thompson, senior economist at FleetBoston Financial. She points to huge job losses, high energy prices, high debt and buyer’s fatigue.
Jobs are probably at the top of that list. Businesses won’t hire until they are convinced that more Capital spending has been rising, “but we are not convinced that business was really stepping up to the plate,” Thompson said. A third of the gains in capital investment were merely an economic adjustment to Moore’s Law. “Nominal investment in computers actually fell,” she said.
Data on capital investment should capture some market attention on Wednesday with the release of the durable goods orders report. After an outsized 2.9 percent gain in January, economists are expecting orders to fall 1.3 percent.
As always, core capital goods orders, which exclude defense and aircraft orders, will be the crucial number. Core orders rose 4.5 percent in January, bringing year-over-year orders up 2.8 percent.
The home sales numbers are likely to get little attention. Housing is strong and has been propped up by low mortgage rates. Some softening is expected in the months ahead.
Sales of existing homes probably fell from the record 6.09 million annual pace in January to about 5.77 million in February. Sales of new homes probably rebounded from January’s 15 percent plunge to 914,000 to about 923,000.
Finally, the government will give its third estimate of fourth-quarter gross domestic product, which was estimated at 1.4 percent annualized growth. No change is expected in this revision.
Economists expect growth of 2 percent in the current quarter and 2.1 percent in the quarter than begins April 1.
“We are optimistic about war and peace and the fundamental underpinnings for recovery beyond that,” Salomon’s DiClemente said. Many other economists share his views.
Others, however, believe the true weaknesses of the economy have been hidden by the run-up to war. “There are still plenty of headwinds facing the economy,” said Lehman Brothers’ economist Joe Abate.
ParticipantYes, Matt he is pure genius.
Here is an article in which he is quoted in bold italics from a 2002 Article regarding the stock market when the Dow was about 48% below what it is today.
“September. 7, 2002
Jobless Dip Doesn’t Wow Analysts
Ken Moritsugu – Knight Ridder Newspapers
Orange County Register
An unexpected drop in the unemployment rate cheered Wall Street on Friday but did little to change expectations of a slow, jobless recovery from the current economic slump for the rest of the year.
The unemployment rate fell to 5.7 percent in August, down from 5.9 percent in the previous two months, the Labor Department reported Friday.
However, the economy had a net gain of only 39,000 nonfarm jobs. That’s far fewer than the 100,000 to 150,000 a month that are necessary to keep unemployment from rising over time. In short, the economy doesn’t appear to be sliding back into recession, but the recovery so far is tepid.
“The most important thing to look at is the manufacturing number,” said Peter Schiff of Euro Pacific Capital in Newport Beach . “That’s the real wealth-producing part of the economy, and we lost almost 70,000 jobs. Where did we gain? We gained in government. Government jobs don’t help the economy. They hurt the economy. That’s more people taxpayers have to support.”
Economic forecasters pay more attention to the change in the number of jobs than they do to the unemployment rate. The two figures don’t always coincide because the number of jobs is based on a survey of 300,000 employers and the unemployment rate on a survey of 60,000 households.
The good news is that the economy has added jobs for four consecutive months. The bad news is the average monthly gain has been just 40,500 jobs. By comparison, the economy added an average of 253,000 jobs a month in the first half of 2000.
Also, the number of people filing for unemployment benefits has edged up in the past month. Most forecasters expect the unemployment rate to rise to about 6 percent in coming months. They don’t see a marked improvement in the jobs outlook until next year.
“The numbers suggest the economy is experiencing a classic recovery, with slow growth in the labor market at the early stages of an upturn, as companies are reluctant to add to payrolls,” said Lynn Reaser, chief economist at Banc of America Capital Markets in St. Louis.
Stocks, which fell sharply earlier in the week, rebounded Friday. The Dow gained 143.50 points, or 1.7 percent, to finish at 8427.20. The tech-dominated Nasdaq composite index rose 44.29 points, or 3.5 percent, to 1295.29.
Schiff said Friday’s rally was a function of short-covering – not the beginning of a sustained rally.With the economy apparently growing slowly but steadily, most analysts don’t expect the Federal Reserve to lower interest rates when it meets later this month. But they think the Fed remains ready to cut rates later this year if the economy shows signs of deteriorating.
ParticipantI think Chris J’s point is that this guy will eventually be correct, but doesn’t really deserve credit since he made the call before the most recent doubling in prices.
Reminds me of Alan Greenspan’s famous quip “irrational exubberance” uttered sometime in 1996. He may have eventually been correct. But guess what ? Prices never dropped back down to the level they were at the point he made that speech.
ParticipantTwo choices:
A. Protest these fees to deaf earsB. Hit ’em where it counts … the pocketbook: Just live somewhere without these ridiculous fees/taxes.
Personally, I think B. is more effective.
ParticipantThe assumption that median priced homes and median incomes should line up in way that the median household income qualifies for the median priced home is flawed.
In Southern California the percentage of homeowners is historically between 50-60% and the price to median income at the bottom of the cycle exceeds the value I compute when I use median income and qualifying standards. Look at the charts in Rich’s primer.
Why is the ratio higher than what would be supported by median income at the bottom of the cycle ?
Remember that half the population makes more than the median income. The bottom 25% in income distribution are not likely home buyers (assuming lending standards are back in force) so the median income of home buyers will tend to be higher than the overall income median.
I prefer to use the approach that asianautica outlines when comparing rent to own. Comparing monthly carrying costs of mortgage to rent. When those are close to even for a broad category of people (not necessarily the median income) the bottom is near. This is what happened in the mid-late 90’s. The nice thing is that this is what a reasonable prospective home buyer would use to determine whether or not to purchase, and it inherently takes into account interest rates, inflation, etc.
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