The Massive Disconnect between how Wallstreet is doing vs Main Street.

[Charles_Main]

Thanks to Massive Quantitative Easing the Stock market is doing very well while all the Numbers for Main Street pretty much suck.

I don't think we can find a clearer example of an Economic Policy that is designed to do no more than give Stocks a Bump and Help Obama win the Election. Voters see the Stock Market numbers every day, they don't see the Main Street Numbers nearly as well.

 

[RDD_1210]

So you're saying that there is a bias towards helping Big business in this country but not the little guy? I think that's what you're saying if I understand you correctly.

 

[Oddball]

Inflating the shit out of the currency doesn't help any business, large or small.

It does, however, do more harm to the small business operators, as they are less able to absorb the repurcussions.

 

[Foxfyre]

The disconnect between Wall Street and Main Street is more that those of us who need to shelter our income against inflation or need to grow our retirement fund trust Wall Street as being more impervious to government manipulation than is Main Street. Washington has Main Street crushed under a huge thumb of authoritarianism. They can't control a global market so easily.

I have been noting that Greece, who of all developed nations probably has the worst economy in the world right now, only slightly worse than ours, still enjoys a thriving stock market.

 

[American Horse]

So you're saying that there is a bias towards helping Big business in this country but not the little guy? I think that's what you're saying if I understand you correctly.

Explain to us how pumping up stocks prices helps big business?

 

[iamwhatiseem]

Just like I said here...http://www.usmessageboard.com/stock-market/238026-market-snapshot-ii-the-indestructable-dow.html

 

[Annie]

Oh plans for QE4 now? Hmmm:

QE4: Employment Rate Targeting - Business Insider

The Washington Post Drops A Huge Hint About What QE4 Is Going To Look Like
Joe Weisenthal | Sep. 24, 2012, 1:33 PM

Read more: QE4: Employment Rate Targeting - Business Insider


People are already talking about the Fed doing QE4, but there's a problem with that.

QE3 is open ended, so how can we get a new round of asset purchases if the current round is never supposed to end?

Still there is one key way that the Fed can turbocharge the program.

Remember, this current round of QE is designed to keep going until the labor market improves and is robust.

But nobody really knows what that means and everyone is worried that the Fed will get fidgety and start tightening if inflation picks up before the jobs data is good.

So as we've written before, the Fed's next move is likely to be a clarification of what conditions would make the Fed feel that it no longer has to keep buying assets.

In a piece at the Washington Post, Zachary Goldfarb drops a big hint that that is what's coming next:

Bernanke [is] studying the idea of declaring that the Fed will boost the economy until unemployment reaches a specific target or until inflation takes off. Some Fed officials have suggested that the central bank keep on stimulating until unemployment reaches 7 percent or inflation rises to 3 percent; others have proposed Fed action until unemployment reaches 5.5 percent or inflation rises to 2.25 percent.

The 7 percent employment level is that which is proposed by Chicago Fed President Charles Evans. The 5.5 percent was proposed by reformed dove Naryan Kocherlakota in a speech last week. For the Fed to indicate that it wouldn't tighten until one of those numbers were hit would send the clearest signal yet that low rates will be here for a long time.

Expect to see hard definitions on goals in the fairly new future.

Link to the Post article:

Under Ben Bernanke, a more open and forceful Federal Reserve - The Washington Post

 

[Wiseacre]

Inflating the shit out of the currency doesn't help any business, large or small.

It does, however, do more harm to the small business operators, as they are less able to absorb the repurcussions.

Ain't going to help those of us on a fixed income either.

 

[EdwardBaiamonte]

Oh plans for QE4 now? Hmmm:

QE4: Employment Rate Targeting - Business Insider

The Washington Post Drops A Huge Hint About What QE4 Is Going To Look Like
Joe Weisenthal | Sep. 24, 2012, 1:33 PM

Read more: QE4: Employment Rate Targeting - Business Insider


People are already talking about the Fed doing QE4, but there's a problem with that.

QE3 is open ended, so how can we get a new round of asset purchases if the current round is never supposed to end?

Still there is one key way that the Fed can turbocharge the program.

Remember, this current round of QE is designed to keep going until the labor market improves and is robust.

But nobody really knows what that means and everyone is worried that the Fed will get fidgety and start tightening if inflation picks up before the jobs data is good.

So as we've written before, the Fed's next move is likely to be a clarification of what conditions would make the Fed feel that it no longer has to keep buying assets.

In a piece at the Washington Post, Zachary Goldfarb drops a big hint that that is what's coming next:

Bernanke [is] studying the idea of declaring that the Fed will boost the economy until unemployment reaches a specific target or until inflation takes off. Some Fed officials have suggested that the central bank keep on stimulating until unemployment reaches 7 percent or inflation rises to 3 percent; others have proposed Fed action until unemployment reaches 5.5 percent or inflation rises to 2.25 percent.

The 7 percent employment level is that which is proposed by Chicago Fed President Charles Evans. The 5.5 percent was proposed by reformed dove Naryan Kocherlakota in a speech last week. For the Fed to indicate that it wouldn't tighten until one of those numbers were hit would send the clearest signal yet that low rates will be here for a long time.

Expect to see hard definitions on goals in the fairly new future.

Link to the Post article:

Under Ben Bernanke, a more open and forceful Federal Reserve - The Washington Post

Lets not forget that Republicans put a plank in the platform to investigate the Fed, and then eliminate it in favor of a more capitalist, gold based alternative.

Lets hope they prevail!

 

[Toro]

So you're saying that there is a bias towards helping Big business in this country but not the little guy? I think that's what you're saying if I understand you correctly.

Explain to us how pumping up stocks prices helps big business?

It increases the value of big companies. Shareholders like rising stock prices.

 

[Toro]

Inflating the shit out of the currency doesn't help any business, large or small.

It does, however, do more harm to the small business operators, as they are less able to absorb the repurcussions.

QE inflates the economy. It depreciates the currency.

 

[American Horse]

So you're saying that there is a bias towards helping Big business in this country but not the little guy? I think that's what you're saying if I understand you correctly.

Explain to us how pumping up stocks prices helps big business?

It increases the value of big companies. Shareholders like rising stock prices.

But how do they realize that value unless they issue more stock and sell it at the higher price?

But on the other hand if their stock price goes down they can buy it back at a low price.

It appears to me that, excrept for new IPOs (like Facebook for instance ) it changes little other than the market price of their stock.

How would it even encourage them to start up a new production line?

 

[Toro]

Explain to us how pumping up stocks prices helps big business?

It increases the value of big companies. Shareholders like rising stock prices.

But how do they realize that value unless they issue more stock and sell it at the higher price?

But on the other hand if their stock price goes down they can buy it back at a low price.

It appears to me that, excrept for new IPOs (like Facebook for instance ) it changes little other than the market price of their stock.

How would it even encourage them to start up a new production line?

Managements don't like it when their stock goes down because it upsets shareholders. Upset shareholders threaten their jobs. Plus, they usually have stock options, so their pay goes down.

 

[RDD_1210]

Thanks to Massive Quantitative Easing the Stock market is doing very well while all the Numbers for Main Street pretty much suck.

I don't think we can find a clearer example of an Economic Policy that is designed to do no more than give Stocks a Bump and Help Obama win the Election. Voters see the Stock Market numbers every day, they don't see the Main Street Numbers nearly as well.

So do you always start threads and then abandon them when someone asks you a "tough" question right off the bat. I mean, I know you're a hypocrite already, but you didn't even try to follow up on the shit you began in this thread.

You idiots are all the same.

 

[American Horse]

So based on that, my opinion is confirmed, very little accrues from increases in stock prices, and it (the economy) might actually be improved by stock prices that demote less capable upper management. Unpumped up stock prices can be better for our economy than those that are pumped up. And stock price surges catch the small investor by buying high and selling low, while the professional broker benefits because he has the better chance of buying low and selling high.

 

[expat_panama]

...the Stock market is doing very well...

That's the line we're hearing from...

--and in the real world these past four years have been hard on everyone; when it rains everyone's parade gets wet.

Wall St. and Main St. are connected as one continuous pavement and people traveling either end up on the other. Most people live at home (main street) and work for money in a business (wall street). The loopy left portray the two streets as separate so they can demonize the rich. They live on hatred and need people at each others throats to make piecemeal conquest easier.

 

[Toro]

So based on that, my opinion is confirmed, very little accrues from increases in stock prices, and it (the economy) might actually be improved by stock prices that demote less capable upper management. Unpumped up stock prices can be better for our economy than those that are pumped up. And stock price surges catch the small investor by buying high and selling low, while the professional broker benefits because he has the better chance of buying low and selling high.

QE notwithstanding, you don't understand capitalism if you think a general rise in the price of equities doesn't mean much. That's the type of thing I hear socialists say.

QE notwithstanding.

 

[Foxfyre]

The market has mostly recovered a good deal from its 2009 low, but has not yet recovered to exceed its all time high. And that translates to an overall loss resulting from the late 2008 market crash and eight years of a flat and unproductibve market for us long time investors who invested as wisely as we could for the long haul. Still, the market that a a global economy rather than just the U.S. economy controls is the only game in town for us small investors.

The artificially low interest rates will come back to bite us and mean that inflation erodes the value of cash savings every month that passes.

Real estate is still in the toilet and, even at rock bottom interest rates, it remains a far riskier investmet than is a good, well managed mutual fund. A whole bunch of folks are still underwater on their mortgages as real estate values continue to slip downward. Mr. Foxfyre and I are still well in the black, but our home value is about two thirds of what it was eight years ago.

And the market, however manipulated it may be with the day traders and artificial government boosts,etc., is still not completely controllable by the government. Our government can do great mischief here at home and has been doing so. But it cannot control global markets.

 

[American Horse]

So based on that, my opinion is confirmed, very little accrues from increases in stock prices, and it (the economy) might actually be improved by stock prices that demote less capable upper management. Unpumped up stock prices can be better for our economy than those that are pumped up. And stock price surges catch the small investor by buying high and selling low, while the professional broker benefits because he has the better chance of buying low and selling high.

QE notwithstanding, you don't understand capitalism if you think a general rise in the price of equities doesn't mean much. That's the type of thing I hear socialists say.

QE notwithstanding.

That's just the rub: QE cannot be taken out of the recent market rise (and I thought that was what we were discussing)

And, in case I didn't make myself clear, it's the QE on which to base my premise, and this rush of capital into equities has it's parallel in the mortgage bubble spun up by subprime mortgages.

 

[EdwardBaiamonte]

and this rush of capital into equities has it's parallel in the mortgage bubble spun up by subprime mortgages.

Absolutely, the Fed is distorting the free market in many many ways. With such low interest rates, for example, our savers lose $400 billion a year in interest most of which would have been a legitimate stimulus to the economy as opposed to Ben's constant bubbles.