Dow crosses 12k

[mrhnau]

Dow crosses 12k. The economy has really rebounded since 9/11, and this is just one good indicator. Glad to see it doing so well! Would be nice to see the NASDAQ rebound just as well

 

[michaeledward]

Dow crosses 12k. The economy has really rebounded since 9/11, and this is just one good indicator. Glad to see it doing so well! Would be nice to see the NASDAQ rebound just as well

This begs the question ... "Whose Economy?"

The Dow Jones Industrial Average is generally considered to be an indicator of the overall health of the American Business climate. That businesses are recognizing better profits through increased productivity is not reflected in the wages or benefits of the workers.

http://www.nytimes.com/2006/08/28/business/28wages.html?ex=1161230400&en=668f834c20aebb84&ei=5070

wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960’s. UBS, the investment bank, recently described the current period as “the golden era of profitability.”

So, while corporate profits are going up, workers wages are going down. This leads workers to economize where they can; often foregoing health insurance for more immediate needs. This report tells us that twenty million working adults do not have insurance.

http://www.rwjf.org/newsroom/newsreleasesdetail.jsp?id=10347

I am fortunate to be in one of the upper quintiles of the US Population. While my family income has not risen dramatically, I have not lost any purchasing power in the past six years, and I can take advantage of some of the opportunities presented through the Bush administrations legislation. I am one of the lucky ones.

But, there are too many that qualify as the 'Least of my brothers'.

 

[CoryKS]

Onward and upward!

 

[Ping898]

Dow Jones may be up but doesn't mean my investments are. I am getting pounded on several and every down day seems to take 4 times more away then I get for each up day.

 

[mrhnau]

Dow Jones may be up but doesn't mean my investments are. I am getting pounded on several and every down day seems to take 4 times more away then I get for each up day.

I hear ya. I've taken a beating on a few, but most have done relatively decent.

But, there are too many that qualify as the 'Least of my brothers'.

There are always going to be poor people, even in this country. however, I am not going to let a spirit of permanent negativity blind me to the fact that the economy of the US going up is a good thing. sorry, I can't be that negative.

This report tells us that twenty million working adults do not have insurance.

So, lets get demographics. How many are by choice? I know a few guys that find it cheaper to not be insured. Alot of 20/30 somethings don't find a critical need for it, and save money for the long run by not being insured. I was in that boat for a while. Most reports list someone who has been off of insurance for one day in a year as being uninsured. This can happen when they change insurance agencies or change jobs. Do you realize that a hospital can not refuse you if you have no money? They are responsible for treating life threatening injuries/sickness. There are alot of philanthopist organizations/people/government agencies that take care of the finances of those less fortunate. The "pending disaster" of the uninsured does not really exist I'm afraid. At least in my opinion... what I AM concerned about is the rise in health care/insurance costs, but thats another issue.

regardless, I'm not going to let a number of uninsured distract that the economy of the US is doing well!

 

[michaeledward]

... sorry, I can't be that negative.

...regardless, I'm not going to let a number of uninsured distract that the economy of the US is doing well!

The "economy of the US" has never educated a child, fed a hungry person, provided heat for the poor, or visited the sick. Yes, it is best not to be 'distracted' by any suffering going on around you.

"Let them eat cake."

 

[mrhnau]

The "economy of the US" has never educated a child, fed a hungry person, provided heat for the poor, or visited the sick. Yes, it is best not to be 'distracted' by any suffering going on around you.

"Let them eat cake."

the economy of the US has educated a child, fed a hungry person, provided heat to the poor. Perhaps not visited the sick.

Let me explain. If those companies that comprise the DOW were to go belly up, it means the economy overall is suffering. When the economy is doing well, those employees and investors are paying taxes in the income they get and gains they see in their stocks. It provides people with the ability to pay their taxes, and if chosen, educate their own children privately. People are able to make donations to charitable organizations if they have money. They are able to afford for heat. I periodically get letters from my gas company telling me that if I'm having trouble paying my heating bills, they can help. There is money out there.

Companies doing well is not the cure all, but its a good indicator that the economy overall is doing well. Will the poor still exist? of course. There will be MORE poor if the DOW is doing bad (ie the economy is doing poorly). Is that difficult to understand? Do you desire another Great Depression? Were people not unemployeed and desperate for work? Its not all related to the DOW, but it was an indicator. Then shouldn't we be GLAD when the DOW is doing well? Before you start badmouthing the economy of the US, go look at some of the poverty stricken third world nations. I would much rather live in this economy than in some of the dire poor nations of the world. As for me, I chose to see something positive in a good DOW. Any other view has political motivation or perhaps a deep rooted sense of negativity that will continue as long as we don't live in some state of nirvana (which will never happen).

 

[Ping898]

I won't get into the arguement of companies and economy good or evil, but I will say as much as many of Bush's tax cuts piss me off, I do like the 15% dividend tax because I am not rich, I count as middle class, and I do have stocks, cds and mutual funds and do like having to pay less to the government. No other tax cut has really helped me but that one, but beggars can't be choosers so I will take it!

 

[michaeledward]

Well, thank you so much for explaining that too me. Because it was so much beyond my ability to understand. But, nows I gets it. Thanky Thanky.

Oh, and I also love the straw man argument you have constructed. I certainly am not 'badmouthing' the economy. I mearly point out that, regardless of what the 'ecomony of the US' is has done in the past five years, the majority of 'people in the US' are not doing as well as the economy.

Will the poor still exist? of course. There will be MORE poor if the DOW is doing bad (ie the economy is doing poorly). Is that difficult to understand? Do you desire another Great Depression? Were people not unemployeed and desperate for work? Its not all related to the DOW, but it was an indicator. Then shouldn't we be GLAD when the DOW is doing well? Before you start badmouthing the economy of the US, go look at some of the poverty stricken third world nations.

It looks to me like you are attempting to disenfranchaise anyone who does not share your worldview.

 

[CoryKS]

The "economy of the US" has never educated a child, fed a hungry person, provided heat for the poor, or visited the sick. Yes, it is best not to be 'distracted' by any suffering going on around you.

"Let them eat cake."

Neither has martial arts, but you don't point that out everytime somebody posts a "yay, Kenpo!" article.

 

[mrhnau]

Oh, and I also love the straw man argument you have constructed. I certainly am not 'badmouthing' the economy. I mearly point out that, regardless of what the 'ecomony of the US' is has done in the past five years, the majority of 'people in the US' are not doing as well as the economy.

There are good indicators and bad indicators for the state of the economy. The DOW is a currently a good indicator.For me, it implies that we have successfully rebounded from 9/11. When the NASDAQ catches up, for me it implies that we have rebounded from the tech bubble bursting. Its not a political statement. If you are not happy about the economy doing better, thats your business. For me, I'm happy its doing well.

It looks to me like you are attempting to disenfranchaise anyone who does not share your worldview.

My worldview? If you don't like the DOW going up, thats your business. I have a very hard time understanding why you would insist on analyzing in such a negative way, but if thats what you want, you just go ahead. I won't let your negativity change my opinion or feel one bit sorry that its doing well. Nor will your negativity change the fact that the DOW is doing well.

I'm not interested in disenfranchaising anyone. And honestly, I don't care to enfranchaise anyone either I was only making a statement that the DOW was doing well! geez!

I do not claim its the sole indicator of a good economy. It is a good one though.

 

[michaeledward]

Here is another 'indicator'.

http://www.uwsa.com/uwsa-usdebt.html

Hip Hip Hooray for more than $1000.00 per person in intrest payments.

One has to wonder, how much of the positive growth in the DOW is directly proportional to the growth of the Federal Debt.

Look at the people recommending staying away from credit cards in this thread ... http://www.martialtalk.com/forum/showpost.php?p=642876&postcount=1

If it is such a bad idea on the individual level, is it such a good idea on the federal level?




And just one more thought ... analyzing is neither a negative or a positive, it is analyzing; bringing thought to bear on a topic, and all of its
ramifications. From M-W.com

1 : to study or determine the nature and relationship of the parts of by analysis

What is the relationship of the DJIA to the 'people part' of the economy?

 

[Flatlander]

Personally, I don't consider the behaviour of the Dow Jones Industrial Average to be in any way reflective of the health of the US economy. Rather, it is a reflection of the confidence of international investors in the prospects for the listed companies to perform well.

For example, simply because a listed company seems to be trading at a high multiple doesn't necessarily indicate the financial health of that company. It indicates that there is demand for the stock. There is no necessary connection between the two.

I don't think that I'd be too quick to trust markets, particulary sector specific indices, to accurately report to me how things are really going. Given that they're driven by the whim of the global investor herd who behave, by and large, in generally illogical ways, perhaps we're wiser to look at other indicators.

However, given the markets are up, this can certainly be seen as a good thing for investors, depending upon what type of allocation they have in their investment policy for US investments. Generally, the phenomenon of home bias results in the majority of American investors allocating the lion's share of their portfolio to US stocks. Ergo, the last few years have been pretty good for American investors. It wasn't unforseen, however. If history can teach us anything, have a look at this:

http://www.djindexes.com/mdsidx/index.cfm?event=showavgevents

Given the recent run up in the US markets, and the phenomenon of investor home bias, perhaps folks ought to start thinking about international diversification.

 

[Flatlander]

Here is another 'indicator'.

http://www.uwsa.com/uwsa-usdebt.html

Hip Hip Hooray for more than $1000.00 per person in intrest payments.

According to this federal reserve study, US consumer debt ratios have been trending downward since the end of 2000. Using dollar value indicators is somewhat disingenuous, as it doesn't take inflation or earnings into consideration.

 

[Rich Parsons]

Personally, I don't consider the behaviour of the Dow Jones Industrial Average to be in any way reflective of the health of the US economy. Rather, it is a reflection of the confidence of international investors in the prospects for the listed companies to perform well.

For example, simply because a listed company seems to be trading at a high multiple doesn't necessarily indicate the financial health of that company. It indicates that there is demand for the stock. There is no necessary connection between the two.

I don't think that I'd be too quick to trust markets, particulary sector specific indices, to accurately report to me how things are really going. Given that they're driven by the whim of the global investor herd who behave, by and large, in generally illogical ways, perhaps we're wiser to look at other indicators.

However, given the markets are up, this can certainly be seen as a good thing for investors, depending upon what type of allocation they have in their investment policy for US investments. Generally, the phenomenon of home bias results in the majority of American investors allocating the lion's share of their portfolio to US stocks. Ergo, the last few years have been pretty good for American investors. It wasn't unforseen, however. If history can teach us anything, have a look at this:

http://www.djindexes.com/mdsidx/index.cfm?event=showavgevents

Given the recent run up in the US markets, and the phenomenon of investor home bias, perhaps folks ought to start thinking about international diversification.

Dan,

I happen to agree. I myself though do look at the S&P, from my personal observations over the years, that when this is up a lot not just a little, then the confidence of the average retirement account/401k investor is up, but it still deos not relfect the complete picture. Even if you look at all the indexes together with the consumer index of amount of stuff bought, it gives a warm fuzzy, but they have a tendacy to either lead or lag the true situation.


ME,

As to debt, I heard that the average credit card debt was about $9,000 per household, but I thought it had risen per adult recently.

Some Links:
http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp

http://moneycentral.msn.com/content/Banking/creditcardsmarts/P117014.asp

http://ask.yahoo.com/20040209.html
The Motley Fool's Credit Center features several more mind-blowing statistics:

• Total consumer credit: $1.7 trillion.
• Credit card debt carried by the average American: $8,562.
• Total finance charges Americans paid in 2001: $50 billion.
• Percent of U.S. households deemed credit worthy by the lending industry: 78%.
• Number of credit card holders who declared bankruptcy last year: 1.3 million.

http://www.usdoj.gov/ust/eo/public_affairs/articles/docs/abi_1203.html


Some Minor Good News
http://www.consumeraffairs.com/news04/2005/myvesta_cc_debt.html


But with the Dow over 12K some might be willing to make more risk, which also then causes more investment, which causes, ..., .

 

[michaeledward]

According to this federal reserve study, US consumer debt ratios have been trending downward since the end of 2000. Using dollar value indicators is somewhat disingenuous, as it doesn't take inflation or earnings into consideration.

Two points.

First, I was not referring to Consumer Debt, but rather the debt of the United States government. - Consumers will end up paying that debt, via taxes, but it does not show on a line item in their household budget.

Second, the chart you listed shows Consumer Debt percentage at the end of 2000 and the end of Q2 of '06 as:

00q412.8818.2430.5515.769.296.47
06q214.4019.2325.1818.0611.606.47


All of those numbers are up in that time period, except for the debt service for renters; people who rent their residence have shown a drop in financial obligations in that time period. All others have seen increases.

 

[Flatlander]

First, I was not referring to Consumer Debt, but rather the debt of the United States government. - Consumers will end up paying that debt, via taxes, but it does not show on a line item in their household budget.

Right, sorry about that, my mistake. I should have read your link to gain a better understanding of your point. I misinterpreted your statement.

Second, the chart you listed shows Consumer Debt percentage at the end of 2000 and the end of Q2 of '06 as:

00q412.8818.2430.5515.769.296.47
06q214.4019.2325.1818.0611.606.47


All of those numbers are up in that time period, except for the debt service for renters; people who rent their residence have shown a drop in financial obligations in that time period. All others have seen increases.

The way I interpret the chart, renters have lower DSR's, and homeowners have lower consumer DSR's. Thus, what is up in that time period is homeowners' mortgage obligations. I don't see this as a bad thing, as presumably that debt's purpose is to build equity. This chart, however, seems to contradict that theory. However, the chart also indicates that, though personal savings seems to be down, personal net worth is up over the last 40 or so years, though not significantly.

However, given that this isn't really relevant to the issue of federal debt obligation per citizen, I'll simply apologize for bringing it up.