Now I have no idea what you are saying - I just told you, I did not say that stocks, houses, and labor were not better investments over that period of time, what more do you want me to say ?
Correct. In a statement where it looked like you were trying to make a statement that cash in the pocket was a good thing you went on to say these other things were better. I reacted wrong - sorry.
Quote:
Originally Posted by wind_magic
last week was a great time to own cash.
Is this supposed to be funny? Last week the S&P 500 grew by 1.44%, the DOW grew by 0.44% and the NASDAQ grew by 1.34%.
Now if you said last Thursday was a good time to own cash then I would have agreed.
Then you say the USD has declined by 30% in 2 years. Yes - the USD is declining - bad for those cruisers who are out there and didn't plan for this. But 30%? Really?
Probably a good comparison is the EUR which a currency for a major block of countries. In the last two years the dollar has declined against the Euro by about 12%. In exactly the same time period the S&P went up by 17%. So if Monsieur le Peu-peu converted his Euros to USD excactly 2 years ago, bought into the S&P and sold today, he wouldn't be too upset. When he realizes that EUR savings rates are less than 3% this would have been a smart move. Furthermore, the 2 year window is a particularly bad one as the S&P was on a local bump exactly 2 years ago and the dollar had some temporary strengthening. Choose 2.5 years for your analysis and Monsieur would have been very pleased with himself.
But this does raise an interesting point which is relevant to Sailnet. If you're setting off for 5-10 years based on your savings and are going to be living in many different countries, you are taking on significant exchange rate risk if all your savings are in USD. It might go up but it might go down. If your kitty is the right size, you might want to consider spreading it across a few currencies before you leave so your trip is not cut short. Course you'd feel bummed if the dollar strengthened.
If one is worried about the economy on a long term basis, it isn't the housing "bubble" that should concern you. What you should be paying attention to is politics. With things like Oxley-Sorbanes already in place and similar, being discussed. The continued expression by the Dem presidental canidates of raising taxes, and placing further onerous "enviormental" regulation on business. That is where things look grim.
The market will take care of itself, as long as it isn't overly hindered by the government. Things such as tax policy, regulation, tarrifs, entitlements, and other legislation is far more difficult to overcome than market forces.
__________________
John
Ontario 32 - Aria
Free, is the heart, that lives not, in fear.
Full, is the spirit, that thinks not, of falling.
True, is the soul, that hesitates not, to give.
Alive, is the one, that believes, in love. JCP
Steve-
"They are competing in an aggressive economy that doesn't favour the weak. They are being forced to innovate, be more productive or die. "
You speak of corporations as if they were scentient entities. They aren't. They are tools, playthings, arenas for competition among the people who are trying to build, bilk, or dismantle them. There are some corporations like Beretta which are thousand year old family businesses. And others like LLBean (not so old, but tightly held) that have the same goals of a thousand years of proftiable employment to come.
But that's the old school, the "mercantile" or the general store of the 1800's run by Mom and Pop perhaps. That's not business in the US, or the world, today. Does a CEO want to "build" his company today? Often not. He may want to conquer the world, or prove his manhood is bigger than the next CEOs, or count coup by buying out more businesses and plowing them under. Or, he may simply want to run the stock options up so he can leave fast with big bucks. Does he really give a damn about the business itself, or whether it survives his reign or plunder? Most often, not.
Small businesses, niche businesses, and a short list of vendors we've all dealt with aside...Look at GE, claiming to be proudly be the "Eco-Imagination" leader, after negotiating a deal to leave the Hudson River contaminated with toxic PCBs for hundreds? thousands? or years to come.
That's not pride, that's profit. Like the many corporations that have declared bankruptcy and reorganized, paying out billions to the higher management while neatly asking the courts to terminate the retirement and medical-for-life promises that they made to their employees. Those promises were binding--if I were the court, I'd say they get paid first, and the high-priced saviors who want to make eight figures "saving" the corporation? They get fired first. If that means the corporations close--but the obligations are met--that's fine too.
Is this supposed to be funny? Last week the S&P 500 grew by 1.44%, the DOW grew by 0.44% and the NASDAQ grew by 1.34%.
Now if you said last Thursday was a good time to own cash then I would have agreed.
What are you, a lawyer or something ?
If you're going to be like that it's going to be hard for us to talk. Last week was a fine time to own cash, lots of people wish they had been in cash, and there are other great times to have cash in your pocket too, I vote we move on ...
Quote:
Originally Posted by SteveSouthwood
Then you say the USD has declined by 30% in 2 years. Yes - the USD is declining - bad for those cruisers who are out there and didn't plan for this. But 30%? Really?
Probably a good comparison is the EUR which a currency for a major block of countries. In the last two years the dollar has declined against the Euro by about 12%. In exactly the same time period the S&P went up by 17%. So if Monsieur le Peu-peu converted his Euros to USD excactly 2 years ago, bought into the S&P and sold today, he wouldn't be too upset. When he realizes that EUR savings rates are less than 3% this would have been a smart move. Furthermore, the 2 year window is a particularly bad one as the S&P was on a local bump exactly 2 years ago and the dollar had some temporary strengthening. Choose 2.5 years for your analysis and Monsieur would have been very pleased with himself.
Yep, 30%. And you're doing it again. You know as well as I do that the Euro has been falling in value too. And to skip right on through this whole discussion without beating it to death - no, the CPI isn't a good measure because it takes years for systemic inflation to catch up, yes, a basket of goods is a good measure so long as it isn't weighted against raw materials because it takes months to years for inflation to work it's way through the supply chain (depending on the chain), no, gold alone isn't a perfect measure because it's too manipluated but it's really good, no, housing isn't a good measure because it is a bubble, no, you can't just compare against other fiat currencies during a global consolidation, and yes, 30% is still a good ballpark of how much the $us has lost value. Please I beg you not to make me prove it in detail, but here are a few graphs just for fun.
And I apologize all these charts don't run through 2007, I didn't make them.
And if you want to post some graphs to show how I'm a moron and have no idea what I am talking about, might I suggest wheat through 2007, domestic milk prices, lumber, or possibly zinc. Lumber in particular probably has a really ugly graph, and it might even look like the $us has gained a lot of value since domestic home building is down.
Quote:
Originally Posted by SteveSouthwood
But this does raise an interesting point which is relevant to Sailnet. If you're setting off for 5-10 years based on your savings and are going to be living in many different countries, you are taking on significant exchange rate risk if all your savings are in USD. It might go up but it might go down. If your kitty is the right size, you might want to consider spreading it across a few currencies before you leave so your trip is not cut short. Course you'd feel bummed if the dollar strengthened.
Last edited by wind_magic : 08-12-2007 at 01:49 PM.
"Small businesses, niche businesses, and a short list of vendors we've all dealt with aside...Look at GE, claiming to be proudly be the "Eco-Imagination" leader, after negotiating a deal to leave the Hudson River contaminated with toxic PCBs for hundreds? thousands? or years to come.
That's not pride, that's profit. Like the many corporations that have declared bankruptcy and reorganized, paying out billions to the higher management while neatly asking the courts to terminate the retirement and medical-for-life promises that they made to their employees. Those promises were binding--if I were the court, I'd say they get paid first, and the high-priced saviors who want to make eight figures "saving" the corporation? They get fired first. If that means the corporations close--but the obligations are met--that's fine too."
Therein lies the rub.
First an foremost, Corporations have as their primary responsibilty profits to their stockholders.. don't think so? find me a CEO thats lost money for more than a couple of years and Wall Street will me shouting for his head on a spit.
As far as the "deals" for lifetime medical care the automakers made with the unions, exactly who is at fault here? I suggest that BOTH parties are at equal fault. The unions hold the possibility of strikes and with that no production, the corps trying to maximise every profitabilty center.
I'm going to relate a family story.
I had a relative that worked for GE for decades. He could bank on taking his vacation the first 3 weeks in July. Why? Because thats when the contract was up and the IBEW would strike.
His Job? He was a floor waxer. note that i didn't say a floor sweeper, or a floor mopper, those tasks were completed by two other people. If the floor he was assigned wasn't mopped, so be it, he waxed it. If it wasn't swept oh well, it was waxed. That was his job. In the mid 70's, he was paid 19.85 per hour to wax floors. add in the 15% night shift differential, and the weekend shift differential of 20%, he was pulling in over 60k a year to wax a floor.
Then "Neutron Jack" came to power.
He told the union reps that if they went out on strike, there would be no negotiation, he would close the plant.
The union thought he was bluffing. He wasn't. While in negotiations, the contract ran out, the union went on strike, and Jack had security chain the gates. The plant was closed that day, never to reopen.
My relative was shocked! How could they do that? Oh my, now what... I suggested that he should cal his union steward and ask them.
When it becomes more profitable to ship finished goods half way around the world rather than make them within your own borders something is amiss.
Perhaps someone can comment as to why it cost GM 1500.00 PER CAR to provide health benefits to retired union employees and dependents for LIFE, when those "evil management" types get a gold watch and a pat on the head.
__________________
We are not primarily on earth to see through one another, but to see one another through
Some people are like slinkies: not really good for anything... but you can't help laughing when you push them down the stairs
Like many things, government tax policy made it much more attractive for business to provide more health care rather than more wages. Aside from the issue that business now does not want to pay the costs of current health care and the unions want no reduction of coverage or increased co-pays by employees or retirees; the entire premise of employer supplied health care is flawed.
The employer's health care goals are not the same as the employee's health care goals. One size does not fit all. For instance, a twenty year old employee is basically in need of an annual physical and an awareness of preventive medecine, ie...a healthy lifestyle. A fiftyfive year old employee has substantially different needs. Currently, they receive the same benefits/plan through an employer. It would make far more sense to either focus exclusively on catastophic coverage or to exponentially expand medical savings accounts. Both employer and employee could benefit from a system that allows the employee to stockpile his medical savings for when he really needs them, later in life.
The primary form of insurance likely to be used by the younger employee is likely to be auto insurance as that is where he is most likely to be injured. Reasonable premiums paid towards catastrophic coverage would benefit him later down the road. The employer's involvement leads to an inevitable desire for younger employees.
The current structure of insurance lends itself to those with full coverage paying little or no attention to the costs or amount of usage. If auto insurance was run this way, every twenty year old clunker would have full coverage and it's owner would expect it to be restored to like new condition after an accident. Silly. If health insurance was strictly in the hands of employees they would make market based decisions about what they carried. Part of the reason so many are "uninsured" in this country is that many of them are young, on the low end of the earning scale, and it makes no economic sense to carry catastrophic insurance coverage when the most likely catastrophy is to be auto related and they're already covered. They are simply voting their pocketbook. If the system were changed, where there was a tremendous economic benefit to building a good sized medical savings account, they would opt for the premiums.
Health care costs are going to continue to spiral out of control until the individual consumer of health care feels that it is their money being spent.
__________________
“Scientists are people who build the Brooklyn Bridge and then buy it.” Wm. F. Buckley, Jr.
Sailaway21, I'm really curious. May I ask who pays for your health coverage?
I pay for my own and have changed providers and reduced benefits because of financial considerations. Despite this, I consider myself fortunate to have insurance. You've seen the figures about how many Americans do not.
In the mid '80's I was a good little republican and wanted all of our unions gone asap. I was wrong...
I'm older and wiser now. Any system must have checks and balances in order for it to work properly. As union membership decreased this balance was upset. The scales tipped too far in benefiting large multinational corporations. The economic environment we all share today is not as good as it was 20 years ago in this country by any standard of measurement. Whether it's health care, wages, disposable income... pick your chart or graph. We are not better off today.
As I mentioned earlier, I'm older and wiser these days and I may add an unaffiliated voter. The disparity between rich and poor is squeezing the middleclass out of existance. I'm a member of this demographic so I take exception to this trend. There have been a couple of articles on this subject and you might benefit by reading them. There have also been some whispers that "Republican's aren't done until all of FDR's programs are undone"
We live in a democratic system of government and people can change what they don't like at the poll. However, have you noticed that politicians regardless of political party always take care of their campaign contributors and the Pac's always get their man. Very little legislation is passed these days that actually improves the lives of the middle class.
When a system doesn't work any longer we have to change it. It's just common sense and in this election cycle there are only two guys that seem to grasp the problem, coincidently one from each party. Neither has any chance of winning their party's nomination because neither is accepting PAC money.
What all this boils down to is that our lives can't improve until election reform truly is realized or PAC's banned. Our country was founded on the basis of one man, one vote for a government for the people by the people. Although this is the law of the land, I would argue that what's happening today is very different.
Just my humble opinion.
Last edited by Rickm505 : 08-13-2007 at 12:22 AM.
Reason: fixing more typos..(it's old age...sigh)
Rick,
My health coverage is provided by my employer. It is basic catastrophic coverage, with ample sized co-pays. We seem to switch carriers annually in search of better deals. The company is small. The whole system is so screwy that, with the latest carrier, it took less than a day for my wife to find a better policy for herself alone, at a lower rate, than for me to pay to have her on my policy at work. This strikes me passing odd.
It also strikes me passing odd that you would think that things were better twenty years ago than today. You must either have a different measuring stick or be on the metric system. Twenty years ago, Reagan's tax cuts were finally having their desired effect and people were finally putting the nightmare of "stagflation" out of their minds once and for all. In truth, we continue in the Reagan recovery with the "misery index" a foreign phrase to most.
The nature of our culture and economy has changed. The days of union featherbedding are pretty much over, with the exception of government employee unions. (a battle we'll be fighting soon enough) You may lament the loss of union power, I do not. I was a member of two maritime unions and they did all they could, legally and illegally, to shake me down. And that's after they beat up the companies. The days of not sailing a ship because she did not have Lifebuoy soap on board are over. The unions made it economically imperative that the companies automate even faster than might have been wise. It's just simple economics that when you can get a machine to do something cheaper over the long haul than you can pay labor, you mechanize. In the eighties you saw the manning on ships go from 45 men per ship down to 19-21 men.
A market based economy will never ensure jobs for life. One of the fundamental changes over the last twenty years is that it has become very rare for one to stay with the same company, or even career, for their entire life. For better, or worse, that is unlikely to change. Many workers actually found it to be a good thing in that it got them out of a job they'd really grown tired of, with many starting their own businesses.
If the middle class is shrinking, I'd expect that no small factor is that many are moving up. But, I suspect, that your real concern is that one cannot make as good a living as one could previously with low level skills or educational deficiencies. Bemoaning the loss of those types of jobs is one thing; advocating a return to the rewarding of inadequate education and low skill levels quite another. Rewarding failure is not a long term recipe for a vibrant national economy.
You decry the situation while typing on a form of communication that did not even exist twenty years ago. What do you expect the number of people is that are employed just so that we can type tonight? Would you rather that those employed by the computer and internet industries still be employed pumping gas? In a mature economy, the need for unions is much less as the hazards of most jobs are much less. When Social Security was enacted, approximately the same time as the start of the meteoric rise of unions, 1936, the average life expectency of the American male was 63 years. 50% were expected never to collect. One of the reasons life expectency was so much lower was that men made their livings by the hard sweat of their brow. I currently work in a field that requires equal parts physical labor and mental acquity. I do not knock holes through basement walls with a star chisel and a sledge hammer as they did twenty short years ago. I now use a hammer drill and, as a result, will have a much longer working career and probably a longer life. Somebody probably wasn't needed in the well drilling field when we all bought hammer drills. But somebody had to build those drills and, better yet, design better ones.
Today you can buy a Subaru that will blow the doors off your 1985 Pontiac Trans Am, and get double the mileage doing it. In real dollars the car even costs less! And it took 25% of the labor to produce. If your 1985 Pontiac made 100,000 miles you figured you got a good one, and you certainly babied it to get there. Today, the worst car you can name is almost assured of reaching 100k. And every car owner in America is the beneficiary of that fact.
I would challenge you to do some reading, as well. If you investigate the lists of the "rich" you will find that it is not a static list. People move in and out of that category. It was not that long ago that the secretary who invented Liquid Paper, for typing corrections, became a multi-millionaire. Today the Liquid Paper empire lies in tatters. Her heirs, rather than being bequethed a life of wealth, have probably had to use their inheritence for educational purposes. Should we subsidize the Liquid Paper union employees so that they can all retire off of the Liquid Paper production line?
Quality education, in today's America, is essential. And, yes, one of the roadblocks we face to providing that product are the teacher's unions. Don't sing the glories of the unions to me. I was in the maritime unions and I live in the heart of the auto industry. In my opinion, the companies that really need unions are those small companies, such as meat packers, who having successfully resisted unionization previously, and now no longer able to hire and abuse Americans at the rates they wish to, now hire illegal aliens. The manufacturing union battles, which were important, were mostly over and done with during the 1960's. Why fight the battle when the war is over and won?
__________________
“Scientists are people who build the Brooklyn Bridge and then buy it.” Wm. F. Buckley, Jr.
The USD index is down from 120 in 03 to 80.?? in 07.
I had some difficulty accessing clear charts but http://stockcharts.com/def/servlet/SC.pnf?c=$USD,P.
The euro has increased by about 36% since Jan 03 or vv the USD has decreased by 29.8% rather more if one goes back a couple of years.
