Oh dear my fellow bears, I truly am thinking we're screwed Brothers :); The baskets are even getting their plan in place to do "QE for The People" 'next time 'round'
Tweet Topic Started: 18 Sep 2015, 08:47 AM (7,774 Views)
Like it or not we live in an economy driven by consumption (spending)
Where do the things we consume come from? Do they magically materialise from thin air into warehouses? Or does somebody produce them?
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Savers are a drag on the economy and spenders benefit the economy.
Where do savers get their savings from? Are you saying that corporations that retain earnings i.e. profits are a drag on the economy?
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Housing is such an important part of that spending, governments will do almost anything to maintain that spending.
Lowering our standard of living is the government's highest priority? Yikes!
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China is experiencing a slow down because they are transitioning from a manufacturing economy to a consumption economy. When the Chinese people begin to spend more the world will take off again, especially if that coincides with the USA and Europe also returning to retail therapy. When that happens wages will grow and we will see higher inflation along with higher interest rates. Will those higher rates crash housing and the economy - no because we will also have higher incomes.
Where do the things we consume come from? Do they magically materialise from thin air into warehouses? Or does somebody produce them?
A variety of places both within our country and some from abroad. Learn to use Google.
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Where do savers get their savings from? Are you saying that corporations that retain earnings i.e. profits are a drag on the economy?
Mostly corporations buy back shares, distribute dividends, or make acquisitions from their war chest, so the money isn't retained forever. It might have escaped your notice that GDP is essentially a measure of spending, nit saving. You can make a case that GDP is not a great measure of economic activity, but that's another argument.
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Lowering our standard of living is the government's highest priority? Yikes!
Heavily biased BS
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All wrong, but it makes a good bedtime story
Then we disagree
Any expressed market opinion is my own and is not to be taken as financial advice
A variety of places both within our country and some from abroad. Learn to use Google.
So when you wrote "Like it or not we live in an economy driven by consumption (spending)" that wasn't quite correct was it? If nobody produces anything, nothing can be consumed.
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Mostly corporations buy back shares, distribute dividends, or make acquisitions from their war chest, so the money isn't retained forever.
Is it burned? Or does the sum of savings grow? How could anyone spend if they didn't have any savings? Isn't one person's spending another person's saving? Are pensioners living off their savings a drag on the economy?
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It might have escaped your notice that GDP is essentially a measure of spending, nit saving. You can make a case that GDP is not a great measure of economic activity, but that's another argument.
It might have escaped your notice that consumption requires production of the good or service that is consumed, and the production of goods and services requires capital, which is savings.
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Heavily biased BS
So when the cost of every other good or service goes down and it improves our standard of living, houses exist in bizzaro world such that paying more for less improves our standard of living?
“Talk sense to a fool and he calls you foolish.” - Euripides
Mostly corporations buy back shares, distribute dividends, or make acquisitions from their war chest, so the money isn't retained forever. It might have escaped your notice that GDP is essentially a measure of spending, nit saving. You can make a case that GDP is not a great measure of economic activity, but that's another argument.
Your thinking is very much tied to the Anglo Saxon corporate model, which is quite different to the Japanese, Korean and Chinese models where retaining profits is far more important as there is a strong vision that corporations belong to the workers, not shareholders. The Chinese have been far more aggressive in acquisition than Japanese or Chinese corporations, but also their business models and risk management strategies leave much to be desired comparatively.
Loki
18 Sep 2015, 03:02 PM
So when the cost of every other good or service goes down and it improves our standard of living, houses exist in bizzaro world such that paying more for less improves our standard of living?
Well when you have a paradigm that gears houses are speculative or investment instruments, that's inevitable. And if you remove that paradigm, it's not hard to imagine the whole economy falling into complete disarray. That's why there is such a strong emphasis on rising house prices being essential for consumption. Nobody has a clue the economy could exist without this relationship.
Your thinking is very much tied to the Anglo Saxon corporate model, which is quite different to the Japanese, Korean and Chinese models where retaining profits is far more important as there is a strong vision that corporations belong to the workers, not shareholders. The Chinese have been far more aggressive in acquisition than Japanese or Chinese corporations, but also their business models and risk management strategies leave much to be desired comparatively.
Be fair, I'm not advocating that, just observing what happens. I think that it's tied to the share price bonuses given to CEO's and other executives and I don't think that in the long term it's the best approach.
On example was IBM who I think went 28 years (something like that) before it paid a dividend, but the shareholders won through increased value as the company grew. These days IBM is all about the share price, but it's no longer run by IT people with a vision for greatness, just businessmen with a vision for higher share prices.
Loki
18 Sep 2015, 03:02 PM
So when you wrote "Like it or not we live in an economy driven by consumption (spending)" that wasn't quite correct was it? If nobody produces anything, nothing can be consumed.
It's simply not true that we don't produce anything, that's just you losing control, of reality.
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Is it burned? Or does the sum of savings grow? How could anyone spend if they didn't have any savings? Isn't one person's spending another person's saving? Are pensioners living off their savings a drag on the economy?
Ones persons spending is another persons income. Not all income is savings, as you really should know. Everyone must spend some of their income at least to exist.
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It might have escaped your notice that consumption requires production of the good or service that is consumed, and the production of goods and services requires capital, which is savings.
Not really, I can produce goods and services with just my labour. Can't you?
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So when the cost of every other good or service goes down and it improves our standard of living, houses exist in bizzaro world such that paying more for less improves our standard of living?
If the cost of goods and services goes down to you then it improves your standard of living, but not the standard of living for the people who manufacture (or work for the manufacturers) or produce the goods and services that you consume.
You have a very one sided view of almost everything that happens to suit your bias.
If the cost of goods and services goes down to you then it improves your standard of living, but not the standard of living for the people who manufacture (or work for the manufacturers) or produce the goods and services that you consume.
You have a very one sided view of almost everything that happens to suit your bias.
Hence, the high cost structures in Australia and NZ. Hence, without increasing costs, including human labor, it becomes unsustainable, which is something we should learn from the Japan experience. If you tie your future to ever increasing asset prices, the piper needs to be paid at some point.
Savers are a drag on the economy and spenders benefit the economy.
Pish and tiffle..
Savings today will be tomorrow or next years spendings.
How much of the money being spent in the economy today, was saved in the past?
If we all spent everything we had today, today would be great, but what would happen tomorrow?
If we all spent everything we had today and borrowed everything we were going to earn for the next six months and spent that today as well, today would be great, but what would happen tomorrow?
If our governments did this as well, today would be great, but what would happen tomorrow?
If you don't know the answer, ask a Greek.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
Savings today will be tomorrow or next years spendings.
How much of the money being spent in the economy today, was saved in the past?
If we all spent everything we had today, today would be great, but what would happen tomorrow?
If we all spent everything we had today and borrowed everything we were going to earn for the next six months and spent that today as well, today would be great, but what would happen tomorrow?
If our governments did this as well, today would be great, but what would happen tomorrow?
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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