More and more people agree with me that this is a Depression.

[uscitizen]

But all we heard from years is the market drives the economy. If the market does well so does the rest of America.
This is not correct?

That is not correct any longer.

A long long time ago, in a land of hard work and industrial might, the productivity of the industrial-manufacturing complex was unequaled any place else in the world.

Our productivity was reflected in rising earnings in almost every company and along with those rising earnings came rising stock dividends and the stock prices of those companies would usually rise proportionally. Rising productivity and rising earnings directly related to rising stocks and their dividends. Hence, the rising market was an indication of the health of the economy.

Now, we have moved into a modern era where the price of stocks is detached from earnings. Stocks can go up with no earnings. Most companies do not pay dividends any more, so there is no "interest" on the loan. In essence the stock holders are giving their money freely to the company and expecting nothing in return but an increase in the stock price. They get the increase in the stock price as more people are talked into buying into the Ponzi Scheme that is the modern stock market. If a company goes bankrupt, just like all ponzi schemes do eventually, the company seldom pays the stock holders off, as the Bond holders usually part the company. All stocks are now is a gamble that you can find a fool who will buy the stock from you at a higher price even though the company has not posted annual earnings for the past three years. Look at Ford.. They have doubled and trippled the number of shares they have out there so now there are between three and four Billion shares in the market place. If Ford declares bankruptcy, all of those shareholders are fugged no matter what price they paid for the shares.

All stocks are now is a gamble and they are in no way tied to industrial productivity.

Well I wont go as far as to say that stocks are in no way tied to industrial output and such. But very little linkage exists there now.

I mostly agree with your post though.

 

[Paulie]

But all we heard from years is the market drives the economy. If the market does well so does the rest of America.
This is not correct?

If you're talking about the securities market specifically, a recovered market typically always precedes a recovered broad economy, and a thriving market typically drives a thriving economy. Conversely, when the economy starts to turn south, that tends to drive the market south.

 

[uscitizen]

But all we heard from years is the market drives the economy. If the market does well so does the rest of America.
This is not correct?

If you're talking about the securities market specifically, a recovered market typically always precedes a recovered broad economy, and a thriving market typically drives a thriving economy. Conversely, when the economy starts to turn south, that tends to drive the market south.

that was the way it used to work. However in my opinion those assumptions are no longer very valid. Things have changed. Imports, China, 70% consumer driven economy, etc.

those that were experts in economics did not see this one coming or thought it would just be a 6 months bump. Well they were wrong.

 

[Paulie]

But all we heard from years is the market drives the economy. If the market does well so does the rest of America.
This is not correct?

If you're talking about the securities market specifically, a recovered market typically always precedes a recovered broad economy, and a thriving market typically drives a thriving economy. Conversely, when the economy starts to turn south, that tends to drive the market south.

that was the way it used to work. However in my opinion those assumptions are no longer very valid. Things have changed. Imports, China, 70% consumer driven economy, etc.

those that were experts in economics did not see this one coming or thought it would just be a 6 months bump. Well they were wrong.

Did not see what coming? This recession?

Please. Those "experts" you speak of are morons. There were plenty of economists who saw this coming, they just didn't get favorable press time and were laughed at for predicting it.

Basically, almost any notable Keynesian has claimed ignorance. But yet, we continue to go with Keynesianism. Go figure