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The Only Thing That Will Save the Economy in 2012

RDS

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Some good advise to usher the New Year despite uncertanities.

There is only one thing that will save the economy: your job and your 401k in 2012.

We have to have confidence.

I know, I know. You think I'm as batty as Julie Andrews -- spinning up that dirt road to the von Trapp manor with guitar in hand, singing, "I have confidence in me!"

Maybe it is a little crazy. But it's true. Even the cold, hard facts of this complex global economy make this same emotional plea. Confidence -- or a lack there-of -- is paramount.

 
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True but lets not forget that one of the key reasons that the economy is in this snag is because people had to much confidence in the housing market. Though certainly an increase in confidence now would help a lot.
 
:doh


yes. because the fundamentals of an economy don't matter. confidence will fix the last several decades of an increasingly poor school system. If we all just close our eyes, click our heels three times, and really believe... Europeans will travel 30 years back in time and have enough kids to prop up their welfare states. China and Japan will, too, but we have to wrinkle our nose (but with confidence!). Student Debt will disappear if you are just confident that it will do so.

plans? bah - who needs plans!?! living beneath our means? it's for the birds!!! I've got Confidence. Why, I've even got people with confidence, everywhere I go, People Who Project Confidence. So no worries, our economy is in the hands of our Confidence men. that'll work, yes sir, no doubts about it.






i'd say we have too much confidence right now - the treasury is at what? just shy of 2%?
 
That sounds to me like a paper that wants to give the illusion that they are writing about possible ways to help the economy, without taking the risk. Something as stupid as being more confident might make the dumb reader think that actually matters.

There has to be systemic reform, period.
 
Confidence is a huge part of any economic system, especially a fiat one.

Think about it. Word starts hitting the wires that the housing market is crashing. People who are in a position to buy a house now hear that prices are about to crash, so they don't buy houses. Because they don't buy houses, the bottom starts to drop out of the market. Those who are trying to sell their houses accept smaller sums to shore up their losses, driving down the market. Banks become worried that a portion of their portfolios will become negative, so money freezes up, making the bottom drop even further. A portion of those who still want to by a house for whatever reason now cannot, because credit markets freeze, sending the bottom of the real estate market even farther down. People who lose their jobs (which happens even in good economies) end up short-selling or foreclosing on a sum far less than what they owe or what the collateral asset was worth when they took out the loan. Banks end up stuck with the houses which they cannot unload due to the weakness of the market, so they tighten up credit even more, making it even harder to generate action in an already depressed market.

The same things happen with stocks. Tell me, when the Dow and S&P start plummeting, who starts putting money in? No one, that's who. There needs to be a bottom before real investment starts happening again. That bottom is only really represented by confidence - the confidence that the downward slide is over.

The sky doesn't actually have to be falling for all the animals in the barnyard to be whipped into a panic, and when the panicking starts, the sky may as well be falling!
 
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Gonzo Rodeo said:
Tell me, when the Dow and S&P start plummeting, who starts putting money in? No one, that's who.

I do. For my trading account, I firmly believe in the old trader's axiom, "If they go up, sell'em. If they go down, buy'em." Often, I express these sentiments in the form of straddles or strangles: buying both puts and calls either at the same strike price (straddle) or with some strikes separating the two (strangle).

Now, most assuredly, one is not looking for just any up or down of small magnitude. One is looking for those times when the elevator shaft seems to open up and grasp the market for a ride seemingly with no bottom or top in sight. 'Irrational' exuberance or despair, to almost-coin a phrase. They don't happen terribly often, but when they do, carpe diem!

Straddles and strangles are expensive in the sense that you are purchasing both puts and calls. But in an 'elevator ride' situation, they are a great way to express the opinion that, "I don't know which way the market is going, but I think it is likely to go a lot in whichever way it does go."
 
we have a simple choice to make.

we can hire people to make goods and deliver services, or we can pay them entitlements.
 
if people are insecure they wont spend money,if they dont spend, the bakery and the jiffy lube down the street wont make money,they lay off people so the people they lay off cant spend,so other businesses have to lay people off,its a continuous cycle.fact is our money is paper and so is our economy so its only worth what people decide it is,so if people dont hold faith in our money or economy,its worth as much as monopoly money.

the largest enemy to our economy is the msm and politicians projecting doomsday economy prophecies and forecasts for elections or other purposes.when people are scared they dont spend and the chain reaction hurts everyone.
 
The only thing I have "confidence" in for 2012 is that the government will again run a $1.3 to $1.5 trillion deficit and that will again be the only thing preventing a deflationary implosion that would rip this country apart at the seems.
 
How about we reduce executive pay, use that money to pay laborers and workers higher wages and start to raise interest rates so the average American people will be more interested in saving and lending their money to earn returns when they retire than buying stupid **** now?
 
How about we reduce executive pay, use that money to pay laborers and workers higher wages and start to raise interest rates so the average American people will be more interested in saving and lending their money to earn returns when they retire than buying stupid **** now?

If corporations do it without being legally bound to do so, then yes. Allowing the government the authority to control worker wages so directly takes us way too far down the path to excessive control.

Govt. can encourage this practice by creating incentives to the corporations. Companies that raise their average non-executive salary at least 10% above the rate of inflation for the previous year will receive XX in return.
 
How about we reduce executive pay, use that money to pay laborers and workers higher wages and start to raise interest rates so the average American people will be more interested in saving and lending their money to earn returns when they retire than buying stupid **** now?

In 2007, before all this string-up-the-execs talk, Jeffery Immelt made $14 mil.

GE has 300,000 employees.

If you took the entire $14 mil and distributed it evenly among all the GE employees.... they'd all get a $46 dollar raise. For the year.
 
If corporations do it without being legally bound to do so, then yes. Allowing the government the authority to control worker wages so directly takes us way too far down the path to excessive control.

Govt. can encourage this practice by creating incentives to the corporations. Companies that raise their average non-executive salary at least 10% above the rate of inflation for the previous year will receive XX in return.

Or we'll just give them tax credits.
 
In 2007, before all this string-up-the-execs talk, Jeffery Immelt made $14 mil.

GE has 300,000 employees.

If you took the entire $14 mil and distributed it evenly among all the GE employees.... they'd all get a $46 dollar raise. For the year.

I didn't say to string up the executives. I never blamed the executives. I never said that executives were bad.

I'm just saying that I think by increasing wages for workers and laborers it'll help the economy, and executive pay is one of the few things in a business that can be reduced to make up for that.
 
Or we'll just give them tax credits.

I'm not so sure tax credits are the best method. They'd already get a break by decreasing their "profits" through the increase in employee pay. Perhaps something involving access to government contracts/bids or grants for R&D would be good...or..I dunno, I'm sure there are tons of options I'm too ignorant to know of.
 
I didn't say to string up the executives. I never blamed the executives. I never said that executives were bad.

I'm just saying that I think by increasing wages for workers and laborers it'll help the economy, and executive pay is one of the few things in a business that can be reduced to make up for that.

Executives have a skill set that is quite literally worth millions of dollars. Most people in this country can't even manage a Taco Bell.... and these guys are managing a global labor pool larger than some countries. Do you want a Taco Bell manager, who makes $30k a year, to be in charge of a huge company like GE? Do you think that will ensure those 300,000 employees stay employed?

Again, if you paid Jeffery Immelt ZERO dollars, that would be a $0.02/hr raise for all of his employees. And that was his 2007 compensation; he made far less in 2008 and 2009, making his salary worth less than a penny per employee.

How on earth does executive pay have anything at all to do with the economy?
 
How much was his total compensation package? How much company stock? Any bonuses tied to performance? And perhaps most importantly, how much money is he contracted to receive if the board decides to be rid of him?
 
Base salary of $3.3 mil, cash bonus of $5.8 mil, $4.7 in stocks. That was 2007. He waived his bonus in 2008, and didn't get one in 2009.
 
Parachutes are essential for a company to jettison its underperforming executives. Otherwise th company and it's value will suffer.
 
In 2007, before all this string-up-the-execs talk, Jeffery Immelt made $14 mil.

GE has 300,000 employees.

If you took the entire $14 mil and distributed it evenly among all the GE employees.... they'd all get a $46 dollar raise. For the year.

We would probably need more than just the CEO to take a pay cut. It would probably involve most employees who make more than $400k to do so. Do you have any figures for that? I bet if GE set a max pay rate at $400k there would be a lot more than $46 per employee in raises for most of those 300,000 employees. Regardless, that extra $46 may make more of a difference to a middle class employee than millions do for Immelt.
 
I'm not so sure tax credits are the best method. They'd already get a break by decreasing their "profits" through the increase in employee pay. Perhaps something involving access to government contracts/bids or grants for R&D would be good...or..I dunno, I'm sure there are tons of options I'm too ignorant to know of.

The simplest thing to do is to have highly progressive income tax. The higher the top levels of income tax, the less we incentivies companies to pay outragious top salaries and the more we encorage them to pay higher lower level salaries. Unfortunately, when our top tax rate is only 35%, thats not high enough to create the proper incentives and disincentives.
 
Parachutes are essential for a company to jettison its underperforming executives. Otherwise th company and it's value will suffer.

I don't agree with that at all - neither in theory or reality.
 
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