Economy improving?

[master53yoda]

Fair enough, just trying to be clear.

In any case, your prediction has fairly dire implications. It means that S&P 500 earnings would have fallen to half their current levels. Given the to-the-bone cutbacks those companies have already made, a level of 500 on that index would necesitate severed limbs. Ouch.

JR

Yes I agree, but the a full correction has historically been a 61.8% retraction . the market from the 80s until present has had a continuous influx of money from the work force which i think tended to inflate the market and the expectations of the economy. which caused a major extension of the 3 rd wave which ran from 85 to 2000 the extension was from 95 to 2000 and the top in 05 was where our retrace appears to be viewed from look at a 61.8% retrace of the 85 to 05 move it ends up in the 4 to 500 level. I've found the 61.8 % retrace to happen over and over again in the market. Retraces typicall happen in 3 waves called abc I think the a. wave ended in march and we are currently in the b. wave which will probably go up some from where it is currently at.

this could get real pretty deep so i'll stop here

[cgallery]

Yes I agree, but the a full correction has historically been a 61.8% retraction...

Any concern that these prices will be supported by rapid increases in global money supplies?

[cgallery]

I see another bounce coming in the next year or so and then a final drop to the 500 level in about 2013 to 15 and then the start of another true bull market.

Was just driving back from a support call and turned on the radio. The talk radio show host (a conservative) was talking about unemployment rates when he got a surprise call.

An economist from the UoC (University of Chicago). The Economist (can't remember name but they apparently vetted him after the call and he is legit) was talking about the 10.2 unemployment rate, and said the real number is about 11.5%, but that they are now cooking the books to make the #'s smaller. He said the REAL rate is now around 15% (I think, I'm trying to remember this) _and_ the gov't # will go to 13.2% next year, the actual # will be over 14%, and the REAL # will be in the 17's.

BTW, the distinction he was making was that if you compute the gov't # as they're supposed to, it would be about a point higher. So there is the gov't #, the actual # (the # the gov't should be arriving at), and then the actual # (where you add-in those that are underemployed or that have given up).

And then he dropped a bombshell. He agrees w/ you, Art except for one point: Timing. This UoC economist says the drop is coming early next year.

[master53yoda]

I have 2 counts running on the elliot waves the short count could start the dip next year and finish in 2011. that count would need this cycle to form a flat starting about now which is possible but doesn't bring this cycle high enough to meet Fibonacci's numbers.

[Charlie]

Deleted by me.

[master53yoda]

Isn't speculateing part of what got us in this mess ? Plus over extended credit, plus the bussiness owners that can't seem to understand that shareing the wealth is good for everyone, includeing themselves.

What I have tried to bring up is that the mess we are in is a Natural Market Cycle within the capitalistic world economy. the feds messing around etc. really doesn't have a lot of effect on the markets beyond the very short term (2 to 3 years). The fact that business has shared the wealth is obvious by the ability of the people to live at a level that far exceeds any level in the past.

The term Elliot wave count refers to the cycles of up and down that are measurable and mostly predictable in the market. Elliot waves are based on the "golden ratio" number that appears in all natural mathematical and organic functions. This Number is known as Fibonacci's number.

The biggest problem is that we just look at the short term and feel the pain of participating in the economy without sufficient personal protections, as in savings and insurance. If we operated basically debt free and with sufficient reserves these cycles would not effect us so much.

[Charlie]

Deleted by me.

[master53yoda]

Are massive job losses, an irresponsible stock market, corporate greed and corruption part of your so called Natural Market Cycle ?

The things you mentioned are there as part of the psychology of the people in the economy, but the greed of the consumer had as much to do with the late 90s spike as much as the other items, but they only effect things marginally.
For example you cannot see 9/11 in the monthly charts. the market did what it was going to do and 9/11's effect only lasted a couple weeks.

[woodturner]

Are massive job losses, an irresponsible stock market, corporate greed and coruption part of your so called Natural Market Cycle ?

What are "massive job losses"? To be sure, there are areas in the US that have experienced slightly higher job losses than typical - Detroit and Flint may be the worse, rate of job loss is up something like 3% - but it's due to the lack of competitiveness of the US auto makers, and the high premiums the unions demand. As a result, the overpaid autoworkers are not competitive on a global scale, so the companies are forced to outsource or cut production.

I'm not sure how you can have "responsible" gambling (e.g. the stock market)

There will always be some personal and corporate greed - personal greed and living beyond one's means is largely what got us into this mess. Haven't seen any evidence of higher levels of corporate greed than usual, though.

[woodturner]

Well I can tell you that the new home construction industry isn't any better here, and that at the end of the year we will loose close to 500 Union jobs at the Bobcat skidstear loader manufactureing plant.

The reason for the decline in new home construction is that new homes have been significantly overbuilt nationwide. If our population growth is x% and we build new homes at a rate of 10x, it's obvious that supply will eventually outstrip demand.

It's tough in the global economy to support the huge premium required by unions. There was a time in this country when the unions served a useful purpose, but too often in this global economy they are harmful to the worker. A company cannot stay in business paying their workers too much and having to sell their products at too high a price. Everyone likes high wages, but when the real value of a job is $y/hr and the union demands $2y/hr, that's not sustainable - especially when foreign workers will work for $0.5y/hr, enough difference to cover the shipping costs.

Everyone wants to make a high wage, but the market effectively sets a value on each worker's wage. If the worker is paid more than that amount, their job is in jeopardy, not matter the economic conditions. If the worker is paid market or less, their job is relatively secure and stable.

[Charlie]

Deleted by me.

[woodturner]

Yeah well, we won't talk about the rediculous pay and bonuses management seems to be geting, or all the unneccesay use of oil shiping crap here in cargo ships. All I expect is alteast a liveing wage and bennefits, plus enough for an occassional extra. ...Unions suport workers rights and keep wages respectable. ... Houseing you can blame on the banks and the stock market for leting it get out of hand, they sucked it dry.

The market sets prices for nearly everything, including executive salaries. Executives make large salaries and bonuses when they contribute more to the company that they cost, same as any other worker. Some executives have not "earned their keep" and have been forced out, but most do because the companies are doing well under their leadership.

I realize that to some people executive salaries may seem high, but that's simply a lack of understanding and perhaps some sour grapes. Any executive that does not "earn his keep" will not last long, just as the carpenter who does not produce more value than he earns in burdened wages will not last long. If executive salaries were out of line, the shareholders would force them out.

In this day and age, unions are causing workers to lose their jobs in many cases. Companies can't pay the excessive wages many unions demand. If the company is required to hire union workers, the only option is to shut down the plant and move elsewhere. Because of the way the system is set up, the company can't pay the union workers a fair wage, they have to pay the union wage or shut the plant and move to another state.

The challenge with many hourly jobs is that there is little benefit to greater experience, beyond a point. Taking the carpenter example, an experienced carpenter should earn more than a new carpenter. Once that new carpenter has worked a year or two and learned to be proficient at his craft, however, why should the guy with 20 years experience make more than him, when they both produce the same quality and quantity of work? The market simply doesn't support that, and there is no way to make that economic model work long term, as we are now learning through experience.

Part of the problem is many people's expectations of a "living wage" are unrealistic. Minimum wage is a living wage, but many people think they need to earn $20 to $30 an hour to support a disproportionate lifestyle. When you consider than many college graduates start their first job making only slightly above minimum wage (often $12K to $15K a year), it's hard to justify higher wages for unskilled labor.

The housing market debacle happened primarily due to individual greed. People bought houses they couldn't afford with loans they didn't understand. While the banks provided the credit, the individual is the one responsible. Lending money is what banks due - but we are each responsible for our own personal finances, and if we spend more than we have and can earn, we have no one to blame but ourselves.

[dbhost]

Looks like somebody here was paying attention in economics class...

[cgallery]

The market sets prices for nearly everything, including executive salaries. Executives make large salaries and bonuses when they contribute more to the company that they cost, same as any other worker. Some executives have not "earned their keep" and have been forced out, but most do because the companies are doing well under their leadership.

Warren Buffet and I disagree . Too many executives are allowed to select their own compensation committees, then further stack the deck when it comes to connecting short-term #'s (prone to cooking) w/ bonuses.

I realize that to some people executive salaries may seem high, but that's simply a lack of understanding and perhaps some sour grapes. Any executive that does not "earn his keep" will not last long, just as the carpenter who does not produce more value than he earns in burdened wages will not last long. If executive salaries were out of line, the shareholders would force them out.

Shareholders don't force executives out because the dollars involved are decimal point dust on the corporation's bottom line. Still doesn't make it right.

In this day and age, unions are causing workers to lose their jobs in many cases. Companies can't pay the excessive wages many unions demand. If the company is required to hire union workers, the only option is to shut down the plant and move elsewhere. Because of the way the system is set up, the company can't pay the union workers a fair wage, they have to pay the union wage or shut the plant and move to another state.

Agreed. Unions are still working w/ the same play book they wrote in the 60's and 70's.

The challenge with many hourly jobs is that there is little benefit to greater experience, beyond a point. Taking the carpenter example, an experienced carpenter should earn more than a new carpenter. Once that new carpenter has worked a year or two and learned to be proficient at his craft, however, why should the guy with 20 years experience make more than him, when they both produce the same quality and quantity of work? The market simply doesn't support that, and there is no way to make that economic model work long term, as we are now learning through experience.

Maybe your example isn't the best, but I have hired carpenters w/ 20+ years experience, and carpenters w/ 2-3 years experience. There is a world of difference.

Part of the problem is many people's expectations of a "living wage" are unrealistic. Minimum wage is a living wage, but many people think they need to earn $20 to $30 an hour to support a disproportionate lifestyle. When you consider than many college graduates start their first job making only slightly above minimum wage (often $12K to $15K a year), it's hard to justify higher wages for unskilled labor.

Have unskilled workers earned $20 to $30/hour? I know skilled workers (welders, for example) can make $20-$30/hour, but I don't know of any places paying unskilled workers $41k to $62k/year.

The housing market debacle happened primarily due to individual greed. People bought houses they couldn't afford with loans they didn't understand. While the banks provided the credit, the individual is the one responsible. Lending money is what banks due - but we are each responsible for our own personal finances, and if we spend more than we have and can earn, we have no one to blame but ourselves.

Disagree, can't give banks a free pass. Basically, they were lending money to people that couldn't afford to repay. Why? Because as fast as they could, they were re-selling those loans (often to FM^2) and booking enormous profits. Why? Because executive compensation is tied to short-term results, of course.

[Charlie]

Deleted by me.