mt99
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DOW Close To 10,000

Wed Oct 14, 2009 2:54 pm

The all powerful, all knowing, perfectly rational economic indicator is close to 10,000 again. (9,962 @ 9:53 -20mins)

Should we get the Champagne out?
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kc135topboom
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RE: DOW Close To 10,000

Wed Oct 14, 2009 3:13 pm



Quoting Mt99 (Thread starter):
Should we get the Champagne out?

Not yet.

The movement of the DOW, S&P 500, and NASDEC does not make any economic sense. I have stayed out of the markey for now, except for the few stocks I want to keep (BA, F). I have a feeling it will drop sharply in the next 1-2 years. There is no money really being traded and few are making money in stocks right now. To me it all seems to be just paper trading.
 
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RE: DOW Close To 10,000

Wed Oct 14, 2009 4:05 pm



Quoting Mt99 (Thread starter):
Should we get the Champagne out?

Much about nothing here. The market is a confidence indicator and it's not a secret that people are confident we have begin to climb out of the hole we were in. We do have a long way to go however and I don't think we will see a real boom until after the mid term elections. If we can get the Dems to stop pushing this terrible health care bill and spending and taxes down our throats and the GOP wins back some seats we will see confidence grow even more but right now everyone is cautious.
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flanker
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RE: DOW Close To 10,000

Wed Oct 14, 2009 4:06 pm



Quoting Mt99 (Thread starter):
Should we get the Champagne out?

Nope. Wait till the wonderful inflation hits from the tons of wasted money in the last year.
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mt99
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RE: DOW Close To 10,000

Wed Oct 14, 2009 4:07 pm

Quoting KC135TopBoom (Reply 1):
There is no money really being traded and few are making money in stocks right now. To me it all seems to be just paper trading.



Quoting Flanker (Reply 3):


Nope. Wait till the wonderful inflation hits from the tons of wasted money in the last year.

Well people hit the Champagne during 2006/2007 and it was well know that it was all a house of cards...

In fact, it is often quoted as one of Bush's successes

[Edited 2009-10-14 09:08:40 by mt99]
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flanker
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RE: DOW Close To 10,000

Wed Oct 14, 2009 4:14 pm



Quoting Mt99 (Reply 4):


In fact, it is often quoted as one of Bush's successes

Bush is out of the picture so get over it already. Market confidence at present has to do with the current administration and plans of action.
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mt99
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RE: DOW Close To 10,000

Wed Oct 14, 2009 4:19 pm



Quoting Flanker (Reply 5):
Market confidence at present has to do with the current administration and plans of action.

So I guess people have confidence in Obama - just as they did with Bush..
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Mir
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RE: DOW Close To 10,000

Wed Oct 14, 2009 4:35 pm



Quoting Mt99 (Thread starter):
Should we get the Champagne out?

No, but it is a sign that investor confidence is coming back, so it's reason to be cautiously optimistic.

Quoting Mt99 (Reply 6):
So I guess people have confidence in Obama - just as they did with Bush..

If that's the metric that's going to be used, sure.

-Mir
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futurepilot16
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RE: DOW Close To 10,000

Wed Oct 14, 2009 4:38 pm

YAYYYY OBAMA DOES IT AGAIN.
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mt99
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RE: DOW Close To 10,000

Wed Oct 14, 2009 4:39 pm



Quoting Mir (Reply 7):
If that's the metric that's going to be used, sure.

My point is that that metric WAS used in 2006/2007. So its only fair to use it now.
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NIKV69
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RE: DOW Close To 10,000

Wed Oct 14, 2009 5:45 pm



Quoting Mt99 (Reply 6):
So I guess people have confidence in Obama - just as they did with Bush..

Actually I think it is the opposite. Wall St does not like Obama and I think you are seeing confidence that the Dems will not be successful in turning us into Sweden. I think starting the NJ election next month in which a Republican is giving the Democrat a lot of trouble u may see it carry into the mid term stuff in 2010'.
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casinterest
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RE: DOW Close To 10,000

Wed Oct 14, 2009 5:48 pm

Well it crossed 10,000
for the Xth time since April 1999. Yep that's right. in April of 1999 it hit 10,000 for the first time.

It is a sign of confidence in certain markets creaping back in. Arguably the Stock Market will do much better as more and more folks abandon the dollar and home purchasing to go back into Domestic and Foreign investment in riskier assets.

The market may tred for awhile while job growth lags, but once there is a sign in the positive realm on jobs growth , the market will rocket.
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fr8mech
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RE: DOW Close To 10,000

Wed Oct 14, 2009 6:13 pm

I don't know. Unemployment is still up. A lot of people are still hurting. Contrarian data keeps poping up in the darndest sectors.

I hope it's all over, but what happens when inflation begins to creep up and then spikes? We are spending money like we can print it without consequence.

Quoting FuturePilot16 (Reply 8):
YAYYYY OBAMA DOES IT AGAIN.

Did he give another speech? Did he win another award? Did he vote 'present' again?

Please.
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ArmitageShanks
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RE: DOW Close To 10,000

Wed Oct 14, 2009 6:27 pm



Quoting KC135TopBoom (Reply 1):
There is no money
really being traded and few are making money in stocks right now. To me it all seems to be just paper trading
.

That's ridiculous. My portfolio has increased this year, as it did last year.
 
fr8mech
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RE: DOW Close To 10,000

Wed Oct 14, 2009 8:13 pm



Quoting ArmitageShanks (Reply 13):
That's ridiculous. My portfolio has increased this year, as it did last year.

MIne has also increased/ I'm concerned that it's not sustainable. I'm slowly selling off what I have.

I hope I'm wrong, but I'm thinking the Dow will see 7000 again within the next 18 months. The spending is unsustainable and, though the economy is expanding, the jobless rate is still up and government actions and intents are going to curtail further growth.
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casinterest
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RE: DOW Close To 10,000

Wed Oct 14, 2009 8:40 pm



Quoting Fr8Mech (Reply 14):
MIne has also increased/ I'm concerned that it's not sustainable. I'm slowly selling off what I have.

I hope I'm wrong, but I'm thinking the Dow will see 7000 again within the next 18 months. The spending is unsustainable and, though the economy is expanding, the jobless rate is still up and government actions and intents are going to curtail further growth.

Nah, you are missing the point.

The Market is going to go up. The Dollar will tumble, but the market will still rise, even during inflation as jobs return to the US due to the Dollar's tumble.

The key to this will of course be the continued rise of the Euro/Yen/Pound, and hopefully the rise of the Yuan.

There will be some inflation, but at this point, I would argue deflation is much more dangerous.
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kc135topboom
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RE: DOW Close To 10,000

Wed Oct 14, 2009 8:56 pm

Quoting Flanker (Reply 3):
Nope. Wait till the wonderful inflation hits from the tons of wasted money in the last year.

Don't forget the truck loads of money Obama has printed this year.

Quoting Mt99 (Reply 4):
Well people hit the Champagne during 2006/2007 and it was well know that it was all a house of cards...

They did it in 1999, and that bubble (dot com) burst too. This market is all about the big government bailout money handed out this year.

Quoting Mt99 (Reply 6):
Quoting Flanker (Reply 5):
Market confidence at present has to do with the current administration and plans of action.

So I guess people have confidence in Obama - just as they did with Bush..

We should have learned in 2000 under Bush, but we didn't. We should have learned in 1999 under Clinton, but we didn't. Now we have a guy who not only doesn't understand the stock market, or money, or ever run anything, and you guys expect everything to be well?

Quoting FuturePilot16 (Reply 8):
YAYYYY OBAMA DOES IT AGAIN.

Obama has done nothing to move this stock market. I got out of it before loosing boat loads of money. Obama has only sold our's, our children's, and our grandchildren's future.

Quoting Mt99 (Reply 9):
Quoting Mir (Reply 7):
If that's the metric that's going to be used, sure.


My point is that that metric WAS used in 2006/2007. So its only fair to use it now.

I agree, we didn't learn anything in 2006, or 1999.

Quoting CasInterest (Reply 11):
Well it crossed 10,000
for the Xth time since April 1999. Yep that's right. in April of 1999 it hit 10,000 for the first time.

That is correct. As it turned out, it was meaningless in 1999, it was menaingless in 2002, it was meaningless in 2006, and it is meaningless now in 2009.

Quoting ArmitageShanks (Reply 13):
That's ridiculous. My portfolio has increased this year, as it did last year.

Congradualtions. Some people WILL make money in this stock market, more than 90% will LOOSE money.

Quoting Fr8Mech (Reply 14):
I hope I'm wrong, but I'm thinking the Dow will see 7000 again within the next 18 months. The spending is unsustainable and, though the economy is expanding, the jobless rate is still up and government actions and intents are going to curtail further growth.

I think you are right, but I see the dow below 5000 in 18-24 months. This spending is unsustainable, printing money is unsustainable, the jobless rate is still climbing in the US, and will not peak until very late 2010 or early 2011, in the 11%-12% range, just in time for the second shoe to drop on the economy.

This economy is like an airplane that entered a full stall when Bush was the pilot. Obama is now at the controls flying this airplane and all he has done is kick in full left rudder, and pushed the throttles into the firewall, putting our stall into a full out of control tail spin. All any of us can do now is crash and burn, because the "G" forces are to great to punch out.

That crash and burn coming to us will be out of control INFLATION, and it will be global.

[Edited 2009-10-14 13:59:30]
 
mt99
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RE: DOW Close To 10,000

Wed Oct 14, 2009 9:09 pm



Quoting KC135TopBoom (Reply 16):
. Now we have a guy who not only doesn't understand the stock market, or money, or ever run anything, and you guys expect everything to be well?

Who understand the market? I agree with 80% of your post.. but the issue of whether a "rational market" really exists is an interesting one.

Do traders do? Do CEOs? Does Warren Buffet? Does Leaham Bros (RIP)?
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casinterest
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RE: DOW Close To 10,000

Wed Oct 14, 2009 9:17 pm

http://www.theglobeandmail.com/repor...in-global-fortunes/article1322552/

The above article explains why a weaker dollar is a good thing

Quoting KC135TopBoom (Reply 16):
think you are right, but I see the dow below 5000 in 18-24 months. This spending is unsustainable, printing money is unsustainable, the jobless rate is still climbing in the US, and will not peak until very late 2010 or early 2011, in the 11%-12% range, just in time for the second shoe to drop on the economy.

I would argue the opposite. With a weaker dollar, jobs will return. More importantly, with a weaker dollar US exporters, and Internationally exposed Companies will record record profits.

It's time to get into the market. Inflation will not only raise the price of gas and food, but it will raise the baseline of the Market as well.

Sitting on the sideline will cost you dearly,especially if Inflation goes rampant.
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flanker
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RE: DOW Close To 10,000

Wed Oct 14, 2009 9:56 pm



Quoting KC135TopBoom (Reply 16):
Don't forget the truck loads of money Obama has printed this year.

Oh i know, i was just referring from today, counting 1 year back. ^_^
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kc135topboom
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RE: DOW Close To 10,000

Wed Oct 14, 2009 10:45 pm



Quoting CasInterest (Reply 18):
The above article explains why a weaker dollar is a good thing

I didn't want to sign up for another news service. What does it say?

There are advantages to a weak dollar, for US exports, vs, imports. However, there gets to be a point of demishing returns if the dollar is allowed to grow to weak. Printing excessive dollars is the worst thing you can do when you have a weak dollar as it devalues it faster, than it would if just allowed to compete against other moneies.

Right now, the US dollar is too weak, and other countries are talking about replacing it. You can blaim thios dorectly on a President who prints money, but will not shore up the dollar.

Quoting CasInterest (Reply 18):
I would argue the opposite. With a weaker dollar, jobs will return. More importantly, with a weaker dollar US exporters, and Internationally exposed Companies will record record profits.

It does, to a point. Beyond that, the advantages are lost.
 
Arrow
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RE: DOW Close To 10,000

Wed Oct 14, 2009 10:53 pm



Quoting NIKV69 (Reply 10):
Wall St does not like Obama and I think you are seeing confidence that the Dems will not be successful in turning us into Sweden.

You might want to do a little research before slagging another country. Sweden's deficit is 2.2% of GDP this year. The US deficit is 12% of GDP. You might do well to emulate Sweden, at least in fiscal management.
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RE: DOW Close To 10,000

Wed Oct 14, 2009 10:59 pm



Quoting KC135TopBoom (Reply 20):
Right now, the US dollar is too weak, and other countries are talking about replacing it.

That's the elephant in the room. How long will the rest of the world (e.g. China) keep feeding an out-of-control giant in a spending frenzy? Right now, they keep buying because it's in their own interests to do so. But there will come a time when those lenders conclude that they are now throwing good money after bad. That's when the real s**t hits the fan.
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RE: DOW Close To 10,000

Wed Oct 14, 2009 11:09 pm

By re-investing my trust account since late March I've done very well by investing in C (still have a large stake which I'm holding long), AXP, BAC, FFACX, and LVS.

Still it bothers me that blue collar jobs are disappearing left and right. We'll need skilled tradespeople in the near future if we are to truly succeed and not just become a nation of paper pushers.
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Pyrex
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RE: DOW Close To 10,000

Wed Oct 14, 2009 11:48 pm



Quoting CasInterest (Reply 18):
Sitting on the sideline will cost you dearly,especially if Inflation goes rampant.

I heard the other day someone say that the amount of money lost in long-term bonds in the next two years because of rising inflation (increases in inflation and interest rates decrease the price of bonds) will dwarf any wealth destroyed during the housing crisis. I am not sure how accurate that is but even for those who think that the stock market is going to crash, long-term bonds aren't a great option.

There have been periods where the stock market in Zimbabwe has risen 18,000% in a week. The funny thing is, even in those weeks average investors lost money due to inflation (although less than they would have if they had just kept the money in cash).
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NIKV69
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RE: DOW Close To 10,000

Thu Oct 15, 2009 12:36 am



Quoting Arrow (Reply 21):
You might want to do a little research before slagging another country. Sweden's deficit is 2.2% of GDP this year. The US deficit is 12% of GDP. You might do well to emulate Sweden, at least in fiscal management

Yea and the people that work in the trenches get half their pay taken from them with that great tax wedge you have. No thanks.
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casinterest
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RE: DOW Close To 10,000

Thu Oct 15, 2009 2:29 pm



Quoting KC135TopBoom (Reply 16):
That is correct. As it turned out, it was meaningless in 1999, it was menaingless in 2002, it was meaningless in 2006, and it is meaningless now in 2009.

It isn't meaningless. It is an index that has been crossed before. Who knows, by next year we may be talking about dow 20,000

Quoting KC135TopBoom (Reply 20):
didn't want to sign up for another news service. What does it say?

I didn't have to sign up . Wonder what happened to you.

The summary is basically that
"In the search for post-crisis economic stability, a weaker greenback is widely thought to be a key component
"

Quoting KC135TopBoom (Reply 20):
It does, to a point. Beyond that, the advantages are lost.

We are in a search for equilibrium, and the US is way beyond the tilt. A strong dollar no matter how much called for by policy is actually not in the best interest of the United States or Free trade.

All the folks out there that want Free Trade to run rampent have to accept that all currencies must form a balanced equilibrium. Only in that manner will the best poeple for the job be able to be employed in the job they are best suited for. Otherwise jobs are going to continue to leave the US too cheaper, but not necessarily better work forces.

Free Trade also ignores political and social differences in populations around the world. Remember Economics always views goverment and government polices as a hinderance to the true free movement of goods and services.

So to satisfy free trade, the US dollar has to go down, because otherwise the US workforce can't compete with the lax labor, and environmental laws in many countries around the world.

Quoting Pyrex (Reply 24):



Quoting Pyrex (Reply 24):
I heard the other day someone say that the amount of money lost in long-term bonds in the next two years because of rising inflation (increases in inflation and interest rates decrease the price of bonds) will dwarf any wealth destroyed during the housing crisis.

Doubtful.
As much as I know the US dollar must fall. I know it can't fall fast. The rest of the world will still buy US debt. Especially since some of the swings that have to take place in world production and consumption will still send folks running back to the dollar at times.

Just keep watching as the Euro and Pound rise against the dollar. Within a few months you will have Airbus screaming again about inequalites as they were doing so about a year ago prior to the rise of the dollar. The changing currency rates will force changes in production and business as certain regions gain and lose real and comparative advantages to the currency swings.


China, if they continue to Peg to the dollar, will suffer issues as their inflation rate will rise with the United States, and possibly force them off the peg in order to import certain items that they need to continue their production.
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Arrow
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RE: DOW Close To 10,000

Thu Oct 15, 2009 3:10 pm



Quoting NIKV69 (Reply 25):
Yea and the people that work in the trenches get half their pay taken from them with that great tax wedge you have. No thanks.

Well, I've got news for you; you're going down this road whether you like it or not. The US has a massive debt that is projected to grow by a trillion or so annually for a while, and your options for getting that under control are pretty limited: cut spending drastically or raise taxes drastically. My bet is, given the current administration, that you'll raise taxes. When the US has faced this kind of problem on a smaller scale in the past it has been able to grow its way out of the problem -- that's not going to happen this time.

So, get ready to embrace Sweden. Your cumulative tax rates are already inching higher than that great socialist cesspool to the north, and your health care costs are already the highest per capita on the planet, with the baby-boom demographic just beginning to bite. In spite of all that, your politicians just can't seem to break the porkbarreling habit -- it's like crack cocaine to them.

I don't envy you. It's not hopeless, but it's going to be a very rough ride for a decade or more.
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seb146
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RE: DOW Close To 10,000

Thu Oct 15, 2009 3:35 pm



Quoting Mt99 (Reply 4):
Well people hit the Champagne during 2006/2007 and it was well know that it was all a house of cards...

In fact, it is often quoted as one of Bush's successes



Quoting Flanker (Reply 5):
Bush is out of the picture so get over it already. Market confidence at present has to do with the current administration and plans of action.

Amazing. Simply amazing. The markets inflate under one president and we all are supposed to cheer and go wild. The rebound under a different president of a different party and we are supposed to be silent. Come again? How does that work again? Tell me EXACTLY what did the president, ANY president, have to do with the markets?
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Aaron747
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RE: DOW Close To 10,000

Thu Oct 15, 2009 3:59 pm



Quoting ArmitageShanks (Reply 13):

That's ridiculous. My portfolio has increased this year, as it did last year.

As did mine - but I historically count on failures rather than successes. They're easy to find and make money on if you know where to look.

Quoting KC135TopBoom (Reply 16):

That crash and burn coming to us will be out of control INFLATION, and it will be global.

That remains to be seen - Japan is currently spiraling into a deflationary cycle. It all depends on where you fall in the currency game - some countries will experience inflation, others not.

Quoting KC135TopBoom (Reply 20):
You can blaim thios dorectly on a President who prints money, but will not shore up the dollar.

That's nonsense - how can anyone shore up the dollar with nearly 40% of debt held overseas? This has nothing to do with the President - it's the net effect of 25+ years of idiotic Fed decisionmaking.

Quoting Seb146 (Reply 28):
The rebound under a different president of a different party and we are supposed to be silent.

I wouldn't say silent just that there are a lot of reasons not to be celebrating now - namely a jobless paper recovery that serves no one but board members and large percentage shareholders.

Quoting Seb146 (Reply 28):
Tell me EXACTLY what did the president, ANY president, have to do with the markets?

Mostly nothing. It's a coincidence game.
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kc135topboom
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RE: DOW Close To 10,000

Thu Oct 15, 2009 4:03 pm



Quoting Arrow (Reply 21):
You might want to do a little research before slagging another country. Sweden's deficit is 2.2% of GDP this year. The US deficit is 12% of GDP. You might do well to emulate Sweden, at least in fiscal management.



Quoting NIKV69 (Reply 25):
Yea and the people that work in the trenches get half their pay taken from them with that great tax wedge you have. No thanks.

We can only partially learn from Sweden, the part of the deficit. BTW, the annual deficiet is actually a meaningless number. The real number is the national debt. The tax rate of Sweden is something we should never copy.

Quoting Arrow (Reply 22):
Quoting KC135TopBoom (Reply 20):
Right now, the US dollar is too weak, and other countries are talking about replacing it.

That's the elephant in the room. How long will the rest of the world (e.g. China) keep feeding an out-of-control giant in a spending frenzy? Right now, they keep buying because it's in their own interests to do so. But there will come a time when those lenders conclude that they are now throwing good money after bad. That's when the real s**t hits the fan.

That is correct. At some point in time, China, Japan, nor anyone else will lend money to the US. At that point, the Democrats will increase the overtime work on the money printing presses we have today. That will put us in tail spin inflation and the same place as germany in the 1930s and Argentina in the 1980s.

Quoting CasInterest (Reply 26):
Quoting KC135TopBoom (Reply 16):
That is correct. As it turned out, it was meaningless in 1999, it was menaingless in 2002, it was meaningless in 2006, and it is meaningless now in 2009.

It isn't meaningless. It is an index that has been crossed before. Who knows, by next year we may be talking about dow 20,000

We could, but I really doubt it. A year from now I think the Dow will be at 8,000 and dropping like a rock.

Quoting CasInterest (Reply 26):
Quoting KC135TopBoom (Reply 20):
It does, to a point. Beyond that, the advantages are lost.

We are in a search for equilibrium, and the US is way beyond the tilt. A strong dollar no matter how much called for by policy is actually not in the best interest of the United States or Free trade.

True to a certyain extent. We are well below that now. The Dollar needs to regain some of its lost value. The best way I can see that is by going back onto the gold standard. Then we will have gold backing up the value of the dollar, instead of ink and paper we now have.

Quoting Arrow (Reply 27):
Quoting NIKV69 (Reply 25):
Yea and the people that work in the trenches get half their pay taken from them with that great tax wedge you have. No thanks.

Well, I've got news for you; you're going down this road whether you like it or not. The US has a massive debt that is projected to grow by a trillion or so annually for a while, and your options for getting that under control are pretty limited: cut spending drastically or raise taxes drastically. My bet is, given the current administration, that you'll raise taxes. When the US has faced this kind of problem on a smaller scale in the past it has been able to grow its way out of the problem -- that's not going to happen this time.

In the past, the US Government has actually INCREASED revenues by REDUCING taxes. If we do that, along with massive spending cyts in social programs, we will come out of this economic problem, and lead the world out of it, too.

But with the Dems in the WH and Congress, I just don't see that happening.

Quoting Seb146 (Reply 28):
Quoting Mt99 (Reply 4):
Well people hit the Champagne during 2006/2007 and it was well know that it was all a house of cards...

In fact, it is often quoted as one of Bush's successes



Quoting Flanker (Reply 5):
Bush is out of the picture so get over it already. Market confidence at present has to do with the current administration and plans of action.

Amazing. Simply amazing. The markets inflate under one president and we all are supposed to cheer and go wild. The rebound under a different president of a different party and we are supposed to be silent. Come again? How does that work again? Tell me EXACTLY what did the president, ANY president, have to do with the markets?

I agree with you there, Seb146. The President has no influence on the stock market.
 
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RE: DOW Close To 10,000

Thu Oct 15, 2009 4:25 pm



Quoting Arrow (Reply 27):
Well, I've got news for you; you're going down this road whether you like it or not

No sir we are not. If Obama continues along this path he will get trounced in 2012' and in 2010' the do nothing congress will be sent packing which is becoming more and more likely. Have you see the outcry so far? If they push the far left agenda it will get worse and the GOP will be back in power. This country will never turn into what you embrace as much as you want us to. I know you hate the fact we are free and get to keep more of what we make and have the chance to prosper but doesn't mean you have to believe we will turn into what you have. Trust me, ain't happening.

Quoting Arrow (Reply 27):
My bet is, given the current administration,

Here in lies your error, they will be gone.

Quoting Arrow (Reply 27):
Your cumulative tax rates are already inching higher than that great socialist cesspool to the north, and your health care costs are already the highest per capita on the planet, with the baby-boom demographic just beginning to bite. In spite of all that, your politicians just can't seem to break the porkbarreling habit -- it's like crack cocaine to them.

I don't envy you. It's not hopeless, but it's going to be a very rough ride for a decade or more

Once we get the scare mongering DNC out of the picture we will be fine. Won't take a decade either. 5 years. Once we get someone in the white house and congress without their heads up their butts things will improve drastically.

Quoting KC135TopBoom (Reply 30):
The tax rate of Sweden is something we should never copy.

Well you saw the reaction so far so I am not worried. We will never even come close thank God.
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casinterest
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RE: DOW Close To 10,000

Thu Oct 15, 2009 4:39 pm



Quoting KC135TopBoom (Reply 30):
now. The Dollar needs to regain some of its lost value. The best way I can see that is by going back onto the gold standard. Then we will have gold backing up the value of the dollar, instead of ink and paper we now have.

There isn't enough gold. That was the problem in the first place.
The US dollar has become the defacto Gold Standard for far too many countries.

A lot of folks keep complaining that the US prints to much money. But it doesn't matter. The US can print what ever it wants. It is the percieved value of the money as it is backed by the US government that matters.

The big elephant in the room, is that far too many countries depended on the US to purchase what they produced. It created years of trade imbalances. The US has to print more money and put more money into circulation to increase spending in order to recover the economy. That is where we are at. By rule it should lower the value of the dollar and cause inflation, which then leads to a recession... The Economy is cyclical

China and other countries have exploited their cheap labor to produce goods and bring in captial (US Dollars) that can be spend elsewhere. In order to keep their labor cheap though, they have pegged the Yuan to the US dollar by buying the US debt. This allows the US to have 0% interest rates even while dumping more money into the economy. Only when China and other countries reduce their holding of US debt will the US economy recover from the problem. A strong US dollar does nothing to benefit the productivity of the US economy. It only helps with the US consumption. If all the US is ever expected to do is Consume, then the rest of the world can fund our debt, the treasury can print dollars and all of the US citizens can live on welfare.
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DocLightning
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RE: DOW Close To 10,000

Thu Oct 15, 2009 4:46 pm



Quoting NIKV69 (Reply 10):
Wall St does not like Obama

Really? You spoke to Wall St.? I've never met Wall St. Walked down it a whole bunch of times when I lived in NYC, but it's really just some pavement without much opinion on politics.  Wink

"Wall St." doesn't like changes. It didn't like Bush when he showed up and I don't think it likes any new administrations at all. But if Wall St. didn't like Obama, we wouldn't be back over 10,000. So, while I'm not claiming Wall St. loves Obama, it doesn't seem to hate him.
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Arrow
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RE: DOW Close To 10,000

Thu Oct 15, 2009 7:55 pm



Quoting NIKV69 (Reply 31):
I know you hate the fact we are free and get to keep more of what we make and have the chance to prosper but doesn't mean you have to believe we will turn into what you have. Trust me, ain't happening.

That's the problem: you're not free. You've put yourselves in hock up to your eyeballs and in doing so turned control of your economic future over to the folks who hold all your debt. The only thing keeping you afloat is China's need to keep your market robust enough to buy all their stuff while they figure out where the next markets are going to be.

Quoting NIKV69 (Reply 31):
Here in lies your error, they will be gone.

Really? By the end of next week? or the year? I thought you elected a president for 4 years. If you're talking about House/Senate seats -- it won't matter who you elect next year or which party controls the House or Senate, they'll still be facing the same brick wall. And they'll still have to consider extremely unpalatable options. It's rock and a hard place territory.

Quoting CasInterest (Reply 32):
The big elephant in the room, is that far too many countries depended on the US to purchase what they produced. It created years of trade imbalances.

 checkmark  You're right, and we're guiltier than most because 80% of our exports go to the US. That's why there are two pipeline proposals in the works to get more Canadian crude (some is already moving through Vancouver) to the west coast so it can move to Asia, and why there's an LNG export terminal about to be built, also on the west coast, so natural gas can also go to Asia. We need to diversify our markets big time, and fairly quickly too.

Quoting CasInterest (Reply 32):
A strong US dollar does nothing to benefit the productivity of the US economy. It only helps with the US consumption.

Well a declining US dollar might help your export performance -- and that would be a good thing. But given your continued reliance on imported energy, you'll be paying through the nose. And if the dollar sinks too low, you'll find it increasingly hard to sell debt to anyone outside the country without a very lucrative interest rate to mitigate against the rather high risk attached to US debt instruments. Further, a low dollar will force the rest of the world to look for another currency -- or perhaps a basket of currencies -- to replace the greenback as a reserve currency. None of that is very good for the US.
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casinterest
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RE: DOW Close To 10,000

Thu Oct 15, 2009 9:05 pm



Quoting Arrow (Reply 34):
And if the dollar sinks too low, you'll find it increasingly hard to sell debt to anyone outside the country without a very lucrative interest rate to mitigate against the rather high risk attached to US debt instruments

Ahh but when the dollar sinks "too" low, then the US worker will probably have an inflow of dollars to work with, which will make the US Government Solvent, and the debt more attractive, especially with higher rates.

Quoting Arrow (Reply 34):
Further, a low dollar will force the rest of the world to look for another currency -- or perhaps a basket of currencies -- to replace the greenback as a reserve currency. None of that is very good for the US.

The US dollar didn't become the reserve overnight, and it will not be replaced overnight.
All these other countries out there that are grandstanding about it, are still purchasing the debt. Namely China and the Middle east. These countries are hardly the bastion of stability and fairness.

The Euro is about the only competing currency that I could forsee.

Either way loosing "reserve" status shouldn't matter in a perfect Free Trade world. As all currencies would be weighed on their productvivy, rather than percieved stability.

When it comes down to it, the US is still has one of the most productive, intelligent and efficient workforces on the planet. With a lower dollar the US factories will be more competitive with the rest of the world.
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mt99
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RE: DOW Close To 10,000

Thu Oct 15, 2009 9:13 pm



Quoting CasInterest (Reply 35):
The Euro is about the only competing currency that I could forsee.

How old is the Euro? 10 years?
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NIKV69
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RE: DOW Close To 10,000

Thu Oct 15, 2009 9:14 pm



Quoting Arrow (Reply 34):
That's the problem: you're not free. You've put yourselves in hock up to your eyeballs and in doing so turned control of your economic future over to the folks who hold all your debt. The only thing keeping you afloat is China's need to keep your market robust enough to buy all their stuff while they figure out where the next markets are going to be.

Who can provide that market beside us? Stop the propaganda, China needs us much more than you care to admit.

Quoting Arrow (Reply 34):
Really? By the end of next week? or the year? I thought you elected a president for 4 years. If you're talking about House/Senate seats -- it won't matter who you elect next year or which party controls the House or Senate, they'll still be facing the same brick wall. And they'll still have to consider extremely unpalatable options. It's rock and a hard place territory.

More scare mongering? Come on, it will take is some time but the rate the current congress is going we will be fine in 5 years. No need to start jumping out of windows pal.

Quoting Arrow (Reply 34):
You're right, and we're guiltier than most because 80% of our exports go to the US

Would you rather we didn't buy your products? Boy why do you hate the US so much?
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casinterest
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RE: DOW Close To 10,000

Thu Oct 15, 2009 9:18 pm



Quoting Mt99 (Reply 36):
How old is the Euro? 10 years?

Something like that, but the underlying coalition of countries have more stability and sound political actions than anything other than the dollar.
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Aaron747
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RE: DOW Close To 10,000

Thu Oct 15, 2009 10:34 pm



Quoting NIKV69 (Reply 37):
Who can provide that market beside us? Stop the propaganda, China needs us much more than you care to admit.

Fundamentally wrong. The worst mistake possible to make now is overestimating Chinese need for a US market. Domestic demand is keeping their economy alive at the moment, and it will only become stronger with time as it matures. With consumption at only 35% of GDP, just watch what kind of numbers their economy turn out once that goes up another 15 points in coming years.



http://www.economist.com/specialrepo...displaystory.cfm?story_id=14530077
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seb146
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RE: DOW Close To 10,000

Thu Oct 15, 2009 10:40 pm



Quoting Aaron747 (Reply 29):
namely a jobless paper recovery that serves no one but board members and large percentage shareholders.

I am not asking this to you, specifically, Aaron, but to anyone studied in Reaganomics: Isn't that the whole point of his administrations "trickle down" theory? That if the wealthy corporate elite have scads of money, they will start hiring and that will pump more money into the economy and the government through taxes and such? So, isn't that a good thing?
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geekydude
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RE: DOW Close To 10,000

Thu Oct 15, 2009 10:54 pm



Quoting Aaron747 (Reply 39):
Fundamentally wrong. The worst mistake possible to make now is overestimating Chinese need for a US market.

Agreed. Also another bad mistake is to fall for the media fear-mongering and overestimate the effect China could have in the unlikely event of "calling in the debt". Check the numbers, and you will find out China holds less than 7% of the total US public debt. It is highly dubious that a 7% can lead to catastrophic consequences under the worst case scenario where China "dumped it all". Just use common sense.
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Aaron747
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RE: DOW Close To 10,000

Thu Oct 15, 2009 10:58 pm



Quoting Geekydude (Reply 41):
It is highly dubious that a 7% can lead to catastrophic consequences under the worst case scenario where China "dumped it all". Just use common sense.

7% is more than enough, however, for a so-called run on the dollar. Though in practical terms, such action would be more akin to "calling the dollar" for its lack of worth. In any case, people should be more concerned about a gradual transactional transition to RMB over USD.
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geekydude
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RE: DOW Close To 10,000

Thu Oct 15, 2009 11:04 pm



Quoting Aaron747 (Reply 42):
7% is more than enough, however, for a so-called run on the dollar. Though in practical terms, such action would be more akin to "calling the dollar" for its lack of worth. In any case, people should be more concerned about a gradual transactional transition to RMB over USD.

7% is a stoke of the pen by the Fed if they want to. But losing that 7% for the sake of putting on a run on the dollar would mean China losing years of its savings. It'd cause a lot more damage to China than to the US. If anything, US should feel more at ease than China in this regard.
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casinterest
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RE: DOW Close To 10,000

Thu Oct 15, 2009 11:45 pm



Quoting Seb146 (Reply 40):

I am not asking this to you, specifically, Aaron, but to anyone studied in Reaganomics: Isn't that the whole point of his administrations "trickle down" theory? That if the wealthy corporate elite have scads of money, they will start hiring and that will pump more money into the economy and the government through taxes and such? So, isn't that a good thing?

That is the theory of "trickle down" .

However in this age of Free Trade: Offshoring and Outsourcing. The investment may go overseas prior to returning home. Companies in the US are going to reap the reward of the declining dollar without a need to increase productivity while the dollar falls. Workers in the US may actually benefit from forerign investment as the dollar falls. IE Wipro, Huawei, Airbus, Embraer, BP, and other Multinational countries that will seek the expertise of American workers.

This is in theory how free trade would work. Companies would hire local workers with the expertise they need to help the company.
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