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Leorocky
ParticipantShadowstats is not a reputable source.
ParticipantThe state Department of Finance projects that California will grow from about 39 million people now to more than 51 million by 2060. Though the state’s growth rate is relatively slow, the Public Policy Institute of California said in a brief in February that as the population expands, California will shoulder “increased demand in all areas of infrastructure and public services – including education, transportation, corrections, housing, water, health and welfare.”
But concern about growth runs counter to demographers’ greater worry: Not that California is growing too fast, but that its population is growing too slowly.
“It’s totally the wrong question,” said Dowell Myers, a University of Southern California demography professor. “Without immigrants, California would be dead as a doornail. We don’t have enough children right now as it is to replace the workforce and the tax base … when Californians retire.”Myers attributes fear of population growth to a mindset formed in the 1980s, when population grew rapidly. He said “a lot of people’s attitudes about immigration … stem from that period” and are now “behind the times.”
http://www.sacbee.com/news/politics-government/capitol-alert/article25672837.html
ParticipantWhere does you understanding come from? Because the actual data says differently
From the WSJ:
Hiring was strong across most industries. The leisure and hospitality sector added 66,000 jobs last month. Professional and business services added 51,000 jobs, even while a component of that category, temporary help services, declined.
Health care and social assistance added 32,800 jobs, retailers added 32,000 positions to payrolls and construction jobs increased by 29,000. The public sector added 7,000 jobs.
ParticipantFYI – this story will be on 20/20 this week as well as in the next issue of People.
Participantovervalued /= bubble
ParticipantAgain, the bolded statement is someone’s opinion. I fail to see how someone knows what “investors” as a whole are betting on.
If you had told me 2 hours ago that US equities valuations had deviated from that of other countries I would have said that would make sense. Emerging markets have been crap for several years now and the rest of the world ain’t so hot either (except for maybe China).
But our stock prices are still supported by strong fundamentals and valuations are not “off the rail”. Our economy is doing VERY well relative to the rest of the world.
For the record I feel as if the market is a little overvalued currently and that there is going to be a lot of volatility in the near future not related to fundamentals.
ParticipantYou’re mostly citing opinions. Searching out opinions that are consistent with your own views is a perfect example of an echo chamber.
Again, inflation and money supply/velocity are different things and are strictly defined. Inflation has been negligent despite and changes in the underlying money supply.
Please do some research on stock valuations. They correlate very strongly with things like corporate profit and cash flow. Those are both at record highs. In other words, the fundamentals support the valuation. That’s not the case in a bubble when the valuation goes off the rails.
Yes, the Fed relieved a credit crunch by, duh, providing credit. Exactly what they are supposed to do.
1. See above about fundamentals
2. Rates should not be set with the goal being to ensure a return for those that want it or require it. Nor should people have any expectation of such. To say something like “banks should always pay at least 3% so people with savings can earn interest” is highly ignorant (I actually hear/read this).
A true free market would be very bad for almost everyone. I personally believe our markets should be more “free” but nowhere near a true free market i.e. no rules. No one if forced to do anything by the Fed.
The Feds job is to manage employment and price stability which has been overwhelming determined to be an environment of moderate inflation. Interest rates are one of the main tools they use. I’m not going to go into detail but please look into the magnitude of the recent recession; it’s similarities to the Great Depression and the different responses by the Fed.
There were consecutive years of double digit GDP declines during the GD, that’s deflation; it’s really, really bad. And you are advocating for it.
3. Is there a reasonable expectation, again based on fundamentals of the return? Stocks average ~10% a year over the long term. Is it speculating to put my long term money in stocks? If Apple comes out with a new product that I think will be a hit so I buy some shares am I speculating? The price of oil has dropped and rebounded several times in this generation alone. I have every expectation that it will rise again.
4. Sure.
5. Fairly large in context to what? 300MM people? 7B people?
Participant“many investors are either required or expected to earn a yield above a certain percentage”
Are you implying that interest rates should be set at that % or that those investors should have any expectation of such? Rates are a function of the demand for money and fluctuate.
Yes – one reason the Fed might lower rates is to spur investment if everyone is just sitting on cash. This isn’t a manipulation. It’s the Fed’s job.
And again, you’re using the term inflation incorrectly.
“See the correlations between margin debt and stock market bubbles?”
Bubbles, as in plural? The stock market isn’t a bubble right now nor was it in ~2007. Dot com – sure. Investor sentiment will cause margin debt to increase and decrease and there appears to be a reasonable correlation between stock prices. That doesn’t mean everytime margin debt gets high and there’s a correction it was a bubble.
LBO – not a bubble, article clearly states “back to 2008 levels” which was the middle of a recession.
The Forbes article on junk bonds is from a “contributor”, i.e. some guy with an opinion. If you agree with it fine but it’s not fact. Sites like Seeking Alpha, the Oracle one you posted elsewhere and increasingly more mainstream media are allowing the contributor posts or are designed as community sites. They are akin to the Opinion pages in a newspaper.
Meanwhile, bonds continue to rally, mostly due to geopolitical events.
(BTW – it’s odd you’d use Forbes as a reference due to the political “lean” of Steve Forbes. I believe in other threads you’ve attacked “rightwingers” and such)
Yes – “speculators” may have suspected an oil price drop based on increased supply and bet accordingly, so what? Good for them. The same people will look at the history of oil prices and at some point bet that prices will go back up and they will very likely be right.
Buying houses with cash is not indicative of a bubble or speculation. The article is clear that the trend is declining as housing prices have gone up and it’s less of a value play. The fact that the rate of home price growth is declining shows the real estate market is normalizing after a large drop off and then a robust recovery (in certain areas).
Simlar to oil, making an investment based on fundamentals is not speculation. No matter who does it or how large the investment is or where the money came from.
“Yes, a LOT of people are doing this, especially the ones with all the money.”
And if we are to believe the narrative less and less people have any money these days and it’s a small group at the top “with all the money”.
So, no, a lot of people aren’t doing that.
Participant[quote=livinincali][quote=harvey]BTW, where can I borrow $100K at 2% ?[/quote]
You can’t, but big hedge funds buying into the stock market bubble can.[/quote]
What drives stock prices in your opinion? Sure, there can be many factors, but what would be the one primary factor in your opinion?
Participant[quote=livinincali][quote=Leorocky]Can anybody show me evidence of “massive asset price bubbles” and show me how the Fed (I’m assuming via QE) caused it.[/quote]
QE is a relatively new monetary policy it’s effects are yet to be seen. As for the Fed helping to create and encourage bubbles just look at internet bubble of 2000 or the housing bubble of 2004-2007. [/quote]
The dotcom bubble started a few years prior to 2000 and I don’t think the Fed had much to do with it
[/quote]In 1999-2000 the fed increased the money supply because of worries about y2K and bank runs. The banks took that money and invested it temporarily which helped fuel the tail end of the internet bubble. When the fed decided to pull that liquidity after the y2K scare was done we had the huge collapse. [/quote]
First I’ve heard of this theory. We had a minor recession in 2001. The market starting correcting big time in April 2000 IIRC. I’m not sure there was any huge collapse caused by the Fed.
[/quote] In the housing bubble the fed keep interest rates low for way too long which helped fuel the housing bubble. They felt they could keep rates low because there wasn’t much inflation in the CPI but CPI didn’t measure the excessive speculation in housing prices. Just like CPI is low now but it doesn’t account for the excessive speculation in shale oil, junk bonds, and stocks. The fed can make money cheap to borrow but it can’t determine what that money is used for. If it’s used for financial engineering and speculation rather than productive investment when the rates go up all that speculation has to be unwound because it no longer is profitable. [/quote]
I suggest you research what exactly is included in the CPI. Can you provide evidence that there has been some appreciable increase in “speculative” lending because of the Fed’s recent actions?
[/quote]If I borrow $100K at 2% and invest it in VZ stock to get a 3.5% dividend I’m making a small percentage but if my borrow rate goes up to 3 or 4% I’m immediately going to sell my stock because it’s no longer profitable to have that arbitrage play on.[/quote]
Do you really think lot’s of people do this?
ParticipantTo be clear on the banks and balance sheets –I think the intent of QE was to get more money into the economy, not just to have the money sit on deposit with the Fed. I’m fairly certain the Fed wants banks to lend out every penny they have right now and then some. Then we might get some real inflation. For a variety of reasons and depending on who you believe (no demand for loans, demand for loans from unqualified borrowers, risk aversion etc) that hasn’t happened.
Can anybody show me evidence of “massive asset price bubbles” and show me how the Fed (I’m assuming via QE) caused it.
ParticipantThere is one definition for inflation in this context. It’s linked in my post above. If someone chooses to subscribe to a different definition they are incorrect and their subsequent points are likely incorrect.
The money the Fed has “printed” has mostly gone to shore up the balance sheets of large banks. Using your simple economy example if the new money supply was buried in my backyard or in some other inaccessible location (such as a banks deposit account at the Fed) it has no effect on the price of the goods.
ParticipantInflation is the sustained increase in prices for consumer goods and services (to be brief). And not just one, or two, or three goods and services, it’s across the board.
http://www.federalreserve.gov/faqs/economy_14419.htm
You said “the effects of inflation (increased money supply)”. Inflation is not an increase in money supply. Inflation can certainly be a result of an increase in the money supply but is not defined by it.
Houses, stocks and bonds are capital assets; they are not consumer goods and services. Prices of these assets appreciate/depreciate typically due to factors other than and/or not related to inflation/deflation. It is incorrect to state than stocks, for example, have appreciated and to call it inflation.
By no measure that would pass muster with any credible economist has inflation been “massive” in the last several years.
ParticipantInflation is not defined as an increase in the money supply and we have not been experiencing “massive inflation” since the Great Recession.
Both of your statements are patently false.
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