Economics and the possibility of a meltdown

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Economics and the possibility of a meltdown

Post by TRex2 on Mon Dec 31, 2018 10:43 am

While a total meltdown is unlikely, we are ripe for a recession.

A little info:
https://moneymaven.io/mishtalk/economics/suddenly-there-s-no-appetite-for-bond-deals-as-spreads-widen-lb8DY1H_oUS2vMiqdcy8mw/
Rise of the Zombie

In the US, 15% of the companies in the S&P 1500 are Zombie corporations. The Zombie attribute applies to firms that are unable to cover debt servicing costs from current profits over an extended period.

Prolonged cheap debt explains the Rise of the Zombie Corporations.

Zombie corporations only survive because they can roll over debt.

Fools' Mission

The Fed is desperate to keep Zombies alive, but that keeps productivity low and it is at the expense of corporations that make better use of capital.

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Re: Economics and the possibility of a meltdown

Post by rick1 on Mon Dec 31, 2018 5:43 pm

Maybe or maybe not. There's an old song from back in the 60's when I was a teenager called,
"The Answer My Friend Is Blowing In The Wind." Stocks may tumble, even the fake ones, the 10 and 30 year notes may raise and stay above 3%, new home builds or sales may draw back and oil may stay below $50.00, the Feds may continue to raise rates 3 or 4 times a year, so who knows. But read the link below:


https://www.thebalance.com/us-economy-wont-collapse-3980688

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Re: Economics and the possibility of a meltdown

Post by TRex2 on Tue Jan 01, 2019 9:05 am

The article (Top 10 Reasons Why the U.S. Economy Won't Collapse) is well thought out, but subtly slanted to the Leftist point of view (we have to borrow, and being fiscally responsible is of no value), and is short sighted in much of its analysis.  

That said, I agree with much of what is in that article, and much of it I have said, myself.

But not all of it.  Point #6, for instance is egregiously incorrect. Quantitative easing and low interest rates cause malinvestments. They may add to liquidity, but only to a small degree. They create market bubbles, something the article dismisses without even addressing. Point #7 is only partially correct: stock prices should be, and usually are, based on corporate earnings. The reason they "crashed" in 1929, 1982, 2000, and 2008 is that they were priced according "the greater fool rule."

Any time you see the phrase in point #8 it should be used as a warning sign that the person writing the article is infected with the Keynesian economic theory, which, on its own, is a recipe for disaster. My counter point is that wealth is created by harvesting things from the earth, or manufacturing things. Consuming (eating) your wealth doesn't make you wealthier and to suggest it does is lunacy.

As for Point #10: if you borrow enough, you will bankrupt yourself, and the author completely ignores that, bowing to the Leftist mantra that Obama was always right.

Ultimately, the artcle makes assertions that it cannot, and in some cases it doesn't even try to, back up. If the article were the work of a blog poster, it would be acceptable, but coming from someone who is supposed to be a nationally recognized economic expert, it provides me more reason to worry, rather than calming me.

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Re: Economics and the possibility of a meltdown

Post by rick1 on Tue Jan 01, 2019 1:49 pm

Well TRex, sounds like the economist are like our representatives in government, they tell you what some of the facts are but don't tell you what ALL the facts are (the good and the bad).

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Re: Economics and the possibility of a meltdown

Post by TRex2 on Tue Jan 01, 2019 3:46 pm

rick1 wrote:Well TRex, sounds like the economist are like our representatives in government, they tell you what some of the facts are but don't tell you what ALL the facts are (the good and the bad).
That is true.

Well, I don't know if I got this across or not, but I do agree with most of what she says, I just think she soft petals what really could but isn't likely (in the near future) to happen.

(Not to mention, I get irritable around leftists Laughing )

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Re: Economics and the possibility of a meltdown

Post by Dave58 on Fri Jan 11, 2019 3:23 am

https://www.nbcnews.com/politics/politics-news/doomsday-scenario-here-s-what-happens-if-shutdown-drags-n955946

Is this even a possibility ???
If so any guesses on how soon SSI would affected ??

I tell folks that I don't care who they voted for if they don't like who is in office then by all means vote against them next time..

I think the people in Washington forgot who they work for....

So much for my 3 in the morning Mad Mad

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Re: Economics and the possibility of a meltdown

Post by rick1 on Fri Jan 11, 2019 3:50 am

Dave, I still remember from back in the '60's my grandfather and dad saying that those in public office have three traits, they lie, they cheat and the are all thieves. Notice how they are all getting paid while 800,000 employees aren't.

I didn't get paid back in the 90's when Pres. Clinton shut down the government, but of course I'm a prepper, so I was ready.

The article that you posted is mostly true, but the FDA is still inspecting meats, eggs and poultry. They aren't inspecting fruits and vegetables, so watch what you eat.

As far as food stamps/SNAP program, while, I see first hand how people (not all) buy the best cuts of meat and most expensive items in the store and while checking out they are on their free cell phone and when they get outside, they get in their $40,000 SUV and that really tee's me off.

I see people on social security/disability that are in their 30's and 40's, but yet they can cut firewood or drag a 150 lb deer out of the woods. We as American citizens have turned the U.S. into a welfare state.

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