Market crash: are we there yet ?

[Rickm505]

I won't disagree with most of what you typed except that the middle class is moving up... not down. If that were the case no one would be missing mortgage payments.

I think you're missing my point. Here....

Bill Goss of PIMCO stated in October 2004, "The CPI as calculated is definitely a con job foisted on an unwitting public by government officials. The government says that if the quality of a product got better over the last 12 months that it didn’t really go up in price and in fact it may have actually gone down! In 1998 the methodology was adopted for computers – surely the biggest step backward in realistic inflation calculations. Since then, the BLS has expanded the concept to include audio equipment, video equipment, washers/dryers, DVDs, refrigerators, and of all things, college textbooks! (see poor quality textbooks). Today no less than 46% of the weight of the U.S. CPI comes from products subject to hedonic adjustments. PIMCO calculates that without them, and similarly disinflating substitution biases, Greenspan’s favorite inflation measure, the PCE, would be between 0.5% and 1.1% higher each year since 1987. If the CPI is so low and therefore real wages in the black, tell me why U.S. consumers are resorting to hundreds of billions in home equity takeouts to keep consumption above the line." (see America's Total Debt Report for trend data graphics on exploding household debt ratio). "If real GDP growth is so high, tell me why this economy hasn’t created any jobs over the past four years. High productivity? Nonsense, in part – statistical, hedonically created nonsense." (see Productivity Report)."My sense is that the CPI is really 1% higher than official figures and that real GDP is 1% less than stated." 'Con Job' at http://www.pimco.com/LeftNav/Late+Br...O_Oct_2004.htm.

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Now a days, we don't hear that much about the CPI. We hear about the "core values" because they've stripped out food and energy costs. Food is 18% of the CPI and energy another 17%. Housing is 41% of the CPI.
_______________________________

example 1: a postage stamp in the 1950s cost 3 cents; today's cost is 41 cents - 1,266% inflation;
example 2: a gallon of 90 Octane full-service gasoline cost 18 cents before; today it is $3.05 for self-service - 1,870 % inflation;
example 3: a house in 1959 cost $14,100; today's median price is $213,000 - 1,400% inflation;
example 4: a dental crown used to cost $40; today it's $1,100 - 2,750% inflation;
example 5: an ice cream cone in 1950 cost 5 cents; today its $2.50 - 4,900% inflation;
example 6: monthly government Medicare insurance premiums paid by seniors was $5.30 in 1970; its now $93.50 - 1,664% inflation; (and up 70% past 5 years)

I'm not waxing nostalgically here. This post isn't meant to do anything more than explain my point of view. The facts are that real wages have not kept up with inflation during our lifetimes and is why the middle class is disappearing.

A question you might ask yourself is just who is benefiting?

[Rickm505]

I realized I presented 1/2 of my argument in my last post. I'll keep this one brief.

My health care provider uses a firm in India to read x-rays. Using the internet, x-rays are read in India and the results emailed back

My admiral is an IT manager. She's watched her industry also move to offshore IT management.... via the internet.

Software firms in East Europe are now offering programming products direct to US companies.... via the internet.

Circuit design ---- same thing

Architects... same thing...

Are you suggesting that these are all low skilled or uneducated positions??

Years ago when our experts mapped out a plan to move us from a manufacturing base to a service based economy they could not have foreseen the changes technology has brought to the table.

It is no longer unskilled, blue collar workers being affected. Unfortunately this isn't my opinion, this is what's happening.

We've been lead down a path that is developing into a dead end. Although some are awakening to the situation there is no one addressing it.

[hellosailor]

CPaul-
"Therein lies the rub.
First an foremost, Corporations have as their primary responsibilty profits to their stockholders.."
Ah, you mean publicly held corporations. Perhaps. Which might be one reason the neocons are so adamant that a "corporate entity" should not have the same rights as a real citizen. Or perhaps, corporate stocks and public investment needs to be reconsidered as a whole.
I would suggest to you (and the courts) that a corporation has a higher obligation to the people who contracted with it, and made life decisions in reliance on it, than it does to the stockholders. In most states "reliance" is a legal term and it creates binding obligations--which would predate and outweigh decisions about how the stockholders and CEOs should get their xmas presents next year. Only got a half billion left in the bank? Well, the folks you promised it to FIRST, should get the first piece of it. Not the last hired CEO who had no right to expect it, and jumped on board after it was committed and due elsewhere.

"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 were greedy. Not to mention (cough cough) has anyone heard the rumour "mobbed up" ? And the carmakers were equally greedy. The workers...were expected to be dumb about high finance, they often had hard and dirty jobs and were hired for their backs not their brains. But the corporations--who were SO good at accounting and extracting every penny from every car (save ten million pennies, one each from ten million cars, and you've got a nice bonus)--certainly could and should concede that their own accounting was faulty--if it was faulty. Maybe they didn't see the coming obligations for medical expenses and so on. Maybe. Or, more likely, someone said "But in thirty years this is gonna kill us!" and someone else said very clearly "Leave it off the balance sheets, in thirty years it will be someone else's problem." Someone is responsible--either by ineptness or intent, and it is someone at the companies who didn't put aside that money, as it should have been put aside, inviolate.

Kinda like the social security shenanigans (good name for a band of oldsters?) the gummint's been playing for how many years now? Or, last week's news about how bridges are falling down because we don't spend on infrastructure? Oh, wait, that was news in the early 70's too, and everyone promised they'd take care of it. Zzzzzzz....


"The union thought he was bluffing. He wasn't." Yeah. Neutron Jack and Bob Moses...Love 'em or hate 'em, they certainly got your attention though.

"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. "
Yeah. Could be (shuh!) the price of fuel is too cheap if it can allow for that kind of shipping. Could be the same problems the Brits had with their thirteen colonies 200-odd years ago, bringing radical chances to textile production and other "established" commerce.
I'm not sure something is WRONG rather than something has CHANGED and we've been blindsided by it. And then, compounding the problem, the only folks who are willing to look at it and deal with it--are the ones who are making megabucks by surfing that wave of change.

"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, "
The car industry, or at least all of Detroit, has always been a niche of its own. Someone back in Oldsmobile admitted that the then-new hot radical Toronado only cost them the same thing to build as the ordinary Cutlass. At that time, the Cutlass RETAILED for about $3000 list, loaded. The Toronado, I don't know, maybe $7-10k. And in the 60's, the dealers made a good profit (typically over 20-25%) on any retail sale if they could get it. So Detroit has always been very good at sucking money at out pockets. Heck, when you can make gobs of money that easily? $1500 per car is chump change. Remember, it wasn't 1500 back then, it was was less, and a fraction of the profits that could be sucked out.

The story isn't so different today, couple of years ago another company admitted their $45,000 high end SUVs and pickups cost them the same thing to build as their $20,000 midsize cars. They just generated an extra $20,000 in profit, so that's what they were busy building--while the Japanese finished stealing the market for the rest.

[hellosailor]

Rick-
"We live in a democratic system of government and people can change what they don't like at the poll."
SURELY you're not that naive. Even Al Gore (who I've never been fond of) openly came out about that on the Charlie Rose show some weeks ago. Charlie said something about the way surely everyone can't keep blaming "that man" (as Hillary & the Dems refer to Bush) for everything, and Gore up and openly committed political party suicide, he said something like "Charlie, let's all be frank about it, the problem is not that man and the problem is not that party, the problem is the whole system".
Vote at the poll? For who? These days, the onyl folks who run for office in any big way (i.e. federal) are folks who are owed enough favors--or have enough dollars--to bankroll a very expensive campaign. And every one of them has an agenda, all too often along the lines of "Vote for me and I'll set you free" (as the song goes) or better yet "Vote for me and I'll save you! From guns, terrorists, republicans, mexicans...." fill in the buzzword you choose to replace any of those.

Let's face it, the average voter can't do squat. To put someone in office--aside from a few flukes--you need corporate entities, lobbyists, bankrolls. And then, a candidate who can buck the system and still get anything done. Which might be impossible--the system is firmly entrenched and designed to grind troublemakers into the dirt. The voters don't want to be bothered by issues. They can't handle the math for budgets. And they are SO impressed by the promises that they will be SAVED if they vote for the right person. (Yeah, right.)

You know why Bush won, twice? Well, as a lot of the Democrats who voted for him said, "He was the best candidate the Democrats [sic] had to offer." Not because they wanted to vote for him--but because the other party could't put together a platform of any kind besides [as they actually said in the Democratic debate last time around] "it doesn't matter who you vote for as long as it is not that man". Some platform. Real impressive.

The system simply is not working, and has not worked in a long time. The folks who control it are quite happy about that. The voters? Are vaguely aware of it, but they figure if they vote for the right people, they'll be saved. Just like those people promised them, time and again. A democracy can't work that way. Neither can a Republic--which is what we are contracted to have.

[Sapperwhite]

Ok,
So, how many billion dollars does the Fed have to give out before the DJ, S&P 500, or Nasdaq can close on a positive??? How about $32B more, maybe that'll do it.

[Rickm505]

Hellosailor, I would agree that our system has become disfunctional. But I do have hope... Election reform is a good starting point, including getting rid of those reprogramable voting machines...

What a mess....

[Rickm505]

Sapper... they'll keep pumping it in because the alternative is unimaginable

[Sapperwhite]

Originally Posted by Rickm505

Sapper... they'll keep pumping it in because the alternative is unimaginable

yep....



Looks like the rest of the world is doing ok.....

http://newsvote.bbc.co.uk/2/shared/f...et/default.stm

[PBzeer]

Only one thing wrong with "election reform" Rick. It's a case of the foxes guarding the henhouse. Any "reform" will only be something that maintains the status quo. One only has to look at the contortions the pols have gone through to throw out VOTER mandated term limits to see that.

[SteveSouthwood]

Originally Posted by wind_magic

Please I beg you not to make me prove it in detail, but here are a few graphs just for fun.

No - I'm begging you not to prove it - not sure I could stand the fractured logic. But thanks for the fun graphs.

From them I have learned :
* Adjusted for inflation, gas is cheaper than in 1980
* Golds gone up (though you should take a look at the earlier history)
* Beef prices have gone up on average less than 2.3% per year since 1980
* The average American just can't buy as many British houses as they used to.

This last one must be a real blow to people.

What is funny is that you refer to the British housing market. Prices there have gone up through the roof. Property, like for like, is generally more expensive although there is less high end stuff. Did you know (well at least until the end of the 90s) there was no such thing as a long term fixed rate mortgage? You could fix for a couple of years at best then your mortgage would float relative to the lenders base rates. Hasn't hurt the property marker there too much.