Years ago, when I was a young man, P/E ratios on stocks used to be in the 7 or 8 rang

[Neubarth]

Years ago, when I was a young man, P/E ratios on stocks used to be in the 7 or 8 range.

Right now, they are in the twenties. They were a lot higher.

If stocks continue to fall to a P/E Average of 8 or 9, they will have to come down over 50% more in price.

Could happen.

Not saying that I know for certain that it will. Right now, I would not trust the stock market.

 

[Toro]

The S&P 500 is trading at 20x earnings only because financial firms have written down hundreds of billions of dollars.

Of the 500 companies in the S&P 500, 204 are trading at below 10x earnings, including 174 nonfinancial companies.

Companies trading at or below 10x this year's operating earnings include Harley-Davidson, Coach, Carnival, Tiffany & Co, IGT, CBS, Time, Disney, ConocoPhillips, ExxonMobil, Pfizer, Merck, Wyeth, Ingersoll-Rand, Caterpillar, Honeywell, GE, eBay, Dell, HP, Texas Instruments, Microsoft, and AT&T.

America is on sale.

This is the cheapest market I have ever seen in my career and I have been buying stocks as long-term investments.

 

[editec]

Odd that nobody ever looks at PE ratios as a measure of inflation, isn't it?

If a burger flipper in Idaho gets a twenty five cent per hour raise, the FED goes nuts worrying about inflation.

But if the PE ratio goes from 7 or 8 to 25 or 30, that's a good thing?!

This economic classist bias is truly destructive to our society.

We have been measuring the health of the economy, not by how the economy is treating most Americans, but by how it treats that very small population percentage of Americans who are really in the investor class.

And that classist economic outlook of ours has come back to bite all of us on the ass recently, hasn't it?

Many of you object to the huge number of illegals in the nation, but few of you really understand why those basically innocent people are so bad for our economy

Those ten or twenty million cheap workers are just another reason why American workers salaries haven't been keeping up with inflation. They are suppressing wages in the service sector.

Simple economics, really. Excess workers depress average incomes.

Between that problem, and our criminally stupid trade policies, we have been destroying the very foundation upon which our economy's wealth has always depended... the middle class workers who are GAINfully employed.

When the working classes are well off, when they can pay their bills, and put something aside for the futures, too, America is well off.​

When the working classes cannot pay their bills and save for their futures, too, America is getting poorer and has to look to foreign sources for investment money.​

Supply side economic theory is as discredited as the flat earth theory.​

Kensian economic theory, as practiced only to benefit the investor class, which is how it's been done for the last four decades, is ALSO deader than the dodo.​

The problem is not government, the problem is TOXIC GOVERNMENT, folks.​

 

[sparky]

that distinct wall st/main st mentality of investors gets mighty annoying after a while, but then most investors are thinking of their immediate future(s) ,as opposed to the long run

if anything else, the bailout scenario should have painted them all in said light here.....

what's really in store? well my $.02 this a.m. would be a more all inclusive article pointing out the speculative path we're about to travel on , based on the path we've been on....

 

[midcan5]

I'm never sure what to make of this stuff, intellectually it is somewhat simple, but psychologically it is truly a mess. I just checked a few companies we own and they were 10-13 p/e, looking around only Apple was 20. But who cares if the overall feelings of the 'people' is negative. We were out at a dinner party last evening and even people who can spend aren't. Bubbles are bad enough but this time the wonders of a free market are all too evident. Money is like a drug and has similar consequences.

 

[sparky]

well i wouldn't wait for any manner of governmental enlightenment midcan5, it's their job to mitigate, not create panic

it should also be rather apparent to almost anyone by now that $$$ , and $$$ied interests not only run America, they've proliferated globally via collaborating factions such as the WTO, IMF & UN via usury...

now the tin hat brigade my take this to lofty extents, but i prefer the simplicity , as well as undeniable relevance, of pointing out the job description of the worlds elites is....to stay elite....

add into this economic juggernaut, the fact that we're a debt driven gdp, and it's not too hard to imagine why writers like Mr.Christopher Laird opines as he does....

 

[Neubarth]

I have cut your post apart, not to foment an argument, but to make a point that there is a topic that many of us do not understand, and that is the "Classist Bias" that has taken over in America.

Most people would like to ignore it. They most certainly can not deny it. We need this topic as a separate one on the board.

With CEO's of companies are making 7, 8, 9 and even over ten million dollars per year for their stewardship, (even when the company is losing money.), there is something seriously wrong with our concept of remuneration for services rendered. With Pro athletes making ten times more than the POTUS, our perspectives are all wrong. Have we come to the stage of "Bread and Circus" in the American Empire?

Will the present economic crisis bring us back to Normalcy? (Harding coined that word when he ran for president many a year ago.)

This economic classist bias is truly destructive to our society.

We have been measuring the health of the economy, not by how the economy is treating most Americans, but by how it treats that very small population percentage of Americans who are really in the investor class.

And that classist economic outlook of ours has come back to bite all of us on the ass recently, hasn't it?

The problem is not government, the problem is TOXIC GOVERNMENT, folks.​

 

[Paulie]

I'm never sure what to make of this stuff, intellectually it is somewhat simple, but psychologically it is truly a mess. I just checked a few companies we own and they were 10-13 p/e, looking around only Apple was 20. But who cares if the overall feelings of the 'people' is negative. We were out at a dinner party last evening and even people who can spend aren't. Bubbles are bad enough but this time the wonders of a free market are all too evident. Money is like a drug and has similar consequences.

You're blaming bubbles on the "free" market?

 

[editec]

You're blaming bubbles on the "free" market?

Free market?

No.

I don't blame bubbles on unicorns, either... since there are no unicorns just there is no, nor has there ever been, nor will ther ever be a mythical creature known as a "FREE market"

I definitely DO blame bubbles on too few people having too much disposable income to invest, while far too many people have far too little money to spend or save, though.

Now how do you suppose those conditions happened?

A simple four word answer will suffice, I hope: supply side economic policies

 

[Paulie]

Free market?

No.

I don't blame bubbles on unicorns, either... since there are no unicorns just there is no, nor has there ever been, nor will ther ever be a mythical creature known as a "FREE market"

I definitely DO blame bubbles on too few people having too much disposable income to invest, while far too many people have far too little money to spend or save, though.

Now how do you suppose those conditions happened?

A simple four word answer will suffice, I hope: supply side economic policies

Yeah, it's got nothing to do with an ever-expanding monetary base, manipulated interest rates, cheap credit, fractional reserve lending, etc.

It's all the fault of supply side economics.

Even you, who doesn't give the Fed a free pass, manages to forget the root causes.

 

[tigerbob]

We have been measuring the health of the economy, not by how the economy is treating most Americans, but by how it treats that very small population percentage of Americans who are really in the investor class.

Not sure what is meant by "investor class".

Those people who have a fortune at their disposal and can play the markets like some guy playing 5 hands at a high rollers blackjack table?

Or the people with a small amount to invest (let's say $10k) who look for bargains that might give a modest return in the medium turn (the ones watching others lose on the 25c slot machines and taking seats only when others have vacated them)?

Or somewhere in the middle - pension fund managers for example?

I'm not sure there is such an animal.

 

[editec]

Yeah, it's got nothing to do with an ever-expanding monetary base, manipulated interest rates, cheap credit, fractional reserve lending, etc.

You know this gets tiring.

I make a simple declaritive statement and then people come in to fault me for all the other potential declarative statements I did not say.

Yes, those things CERTAINLY played a part in the disaster.

Who do you think GOT ALL THE MONEY from those dumb FED policies? The burger flippers in Idaho, or the class of people who believe in supply side economics?

Don't assume, just because I did not say one thing, because I was talking about another, that I therefore do NOT agree with what ever it is I did not say, okay?

Thank you in advance for not attempting to put words in my mouth.

It's all the fault of supply side economics.

It is certainly part and parcel of the FREE TRADERS oligarchy, Paul.

Even you, who doesn't give the Fed a free pass, manages to forget the root causes.

Maybe I just fucking understand the problem a little better than you do?

Maybe I simple cannot, with each and every post, highlight EVERY FUCKING PROBLEM that is causing our economy to tank?

Maybe the problem is too big to mention every detail of the problem in EVERY post?

But the team who caused and most benefitting from this ongoing economic disaster in American call themselves supply siders.

Now think think think what supply siders imagine is the problem and why they must come at every economic issue with that in mind?

What is supply side econoics RELLY,?

It is also the theory behind TRICKLE DOWN economics, sport.

Yeah, that's right it is the theory that a health economy takes care ONLY of the supply side of the economic equasion, that if the RICH ARE RICH, the workers will be too.

And that is wrong. That is terrible, terribly, terribly WRONG.

It is entirely possible for the supply side of the equasion to have FAR TOO MUCH FUCKING MONEY....and what happens in that case?

BUBBLES!

And not tiny ones, but fucking disasterous ones.

 

[sparky]

I have cut your post apart, not to foment an argument, but to make a point that there is a topic that many of us do not understand, and that is the "Classist Bias" that has taken over in America.

Most people would like to ignore it. They most certainly can not deny it. We need this topic as a separate one on the board.

and i'd be glad to oblige anyone willing Neubarth. However may i add here that classism is at the very root of the discussion in many debates here, especially those of fiscal nature.

look at it this way, strip the labels of capitalism, socialism, communism, or fudalism from all the industrialized countries of the world, and view them in terms of their own disparity ONLY

if the top echelon owns & manipulates more and more of the lions share of the wealth, while the majority of it's populance life style is in continuous decline, then you've a classist system

then ask how we look in comparission

 

[BaronVonBigmeat]

If a burger flipper in Idaho gets a twenty five cent per hour raise, the FED goes nuts worrying about inflation.

But if the PE ratio goes from 7 or 8 to 25 or 30, that's a good thing?!

This is actually a pretty good point. I read somewhere that when the fed measures and calculates inflation, that inflation of stock prices and other assets are not even considered as inflation. Even though a lot of the market's runup after 1996 was clearly inflation.

Likewise, they have some gimmicky way of measuring inflation in housing prices. "Imputed rent", I believe is the term. They don't look at house values, they look at the house's potential rental value. That's just plain stupid, because low interest rates from loose fed policy inflate house prices but depress apartment prices, because people are moving into houses thanks to cheap mortgages.

But hey, no one complained because inflation in stock prices and hosue prices is "good" inflation. Well, good if you're a relatively well-off baby boomer, maybe not so good if you're a young blue-collar couple looking to buy your first home.

 

[Paulie]

Yeah, it's got nothing to do with an ever-expanding monetary base, manipulated interest rates, cheap credit, fractional reserve lending, etc.

You know this gets tiring.

I make a simple declaritive statement and then people come in to fault me for all the other potential declarative statements I did not say.

Yes, those things CERTAINLY played a part in the disaster.

Who do you think GOT ALL THE MONEY from those dumb FED policies? The burger flippers in Idaho, or the class of people who believe in supply side economics?

Don't assume, just because I did not say one thing, because I was talking about another, that I therefore do NOT agree with what ever it is I did not say, okay?

Thank you in advance for not attempting to put words in my mouth.



It is certainly part and parcel of the FREE TRADERS oligarchy, Paul.



Maybe I just fucking understand the problem a little better than you do?

Maybe I simple cannot, with each and every post, highlight EVERY FUCKING PROBLEM that is causing our economy to tank?

Maybe the problem is too big to mention every detail of the problem in EVERY post?

But the team who caused and most benefitting from this ongoing economic disaster in American call themselves supply siders.

Now think think think what supply siders imagine is the problem and why they must come at every economic issue with that in mind?

What is supply side econoics RELLY,?

It is also the theory behind TRICKLE DOWN economics, sport.

Yeah, that's right it is the theory that a health economy takes care ONLY of the supply side of the economic equasion, that if the RICH ARE RICH, the workers will be too.

And that is wrong. That is terrible, terribly, terribly WRONG.

It is entirely possible for the supply side of the equasion to have FAR TOO MUCH FUCKING MONEY....and what happens in that case?

BUBBLES!

And not tiny ones, but fucking disasterous ones.

Editec, I don't know what else to tell you except that I simply don't agree with you. When I think about supply side economics, I picture a modest, balanced budget that takes into consideration what spending is constitutional. I picture low taxes for all, due to less necessity for revenue. I picture surplusses paying down debt, and I picture a humble foreign policy where the MANY unnecessary bases around the world are closed.

It's impossible to imagine the potential beauty of a true free market, because all we've ever seen is a manipulated and controlled market that's been passed off to us through propaganda as a "free market".

I don't expect you to understand. You've been on this earth a lot longer than I have, and I suppose you've lived through the ups and downs and the pain long enough that you have lost your will to continue fighting for the freedom we were intended to have. You picture a society that couldn't possibly financially police itself, probably because you think people are too stupid. I can't imagine any other reason why you would advocate the government control how you make your own decisions.

If I'd have been stupid enough to take a mortgage i couldn't handle, and was tricked into it through an offer that sounds too good to be true, I would man up to it and take responsibility. I wouldn't blame a bank, or the loan officer, or the government for not having my back. I would blame myself for not being more informed beforehand. That's what freedom is all about. The freedom to be as informed as possible, and the freedom to make your own choice. Also, the freedom to potentially fail.

But I'm just a wacky "libertopian", right? What do I know.

 

[sparky]

But hey, no one complained because inflation in stock prices and hosue prices is "good" inflation. Well, good if you're a relatively well-off baby boomer, maybe not so good if you're a young blue-collar couple looking to buy your first home.

times where when a 'blue collar' could own a home, and have his wife stay in it Barron. Anyone who can recall (either by having lived it, or talked it around) the middle classes heyday the last generation enjoyed , and can place that quality of lifestyle side by side with this generations counterparts da*m well knows it's declined

and the gov? well, they don't keep (to my knowledge) anything of statistical relevance , other than a decline in two consequtive 1/4's equating to a recession

also of note is, this is the very same governance that denyed any sort of economic decline until one day this paulson charater shows up demanding a trillion bucks, or else we slide into a depression

The simple fact that our governance flew right on over the R word, and started using the D word should tell us everything we need to know about their economic integrity, clarity, and reliability

in fact, one can find these very same Bozo's doing the press secretary circle jerk almost any day of the week over the issue....

Yes, Mark.

Q Tony, does today's unemployment report leave any doubt that the economy is in recession?

MR. FRATTO: We've been -- I think we go through this the first Friday of every month this year.

Q Here we go again. (Laughter.)

MR. FRATTO: Yes. We don't make determinations or predictions on what the National Bureau of Economic Research will call the bottom of the business cycle, but if you go to the national -- the Business Cycle Dating Committee, they have a webpage; they'll tell you exactly what they take into account to determine what the bottom of the business cycle is. And I'll just refer you to that.

But make no mistake, we know this is a very challenging, difficult time for the economy. It's a challenging time for the global economy; it's a challenging time here in the United States. We know it's very difficult for families. The only thing that we can be focused on is not what you call it, but what do you do about it. And we're focused on what we can do about it and how quickly we can implement those things to have an impact as quickly as possible so that businesses can go back to generating growth and hiring employees and keeping employees hired and having good work for them to do.

 

[sparky]

Editec, I don't know what else to tell you except that I simply don't agree with you. When I think about supply side economics, I picture a modest, balanced budget that takes into consideration what spending is constitutional. I picture low taxes for all, due to less necessity for revenue. I picture surplusses paying down debt, and I picture a humble foreign policy where the MANY unnecessary bases around the world are closed.

It's impossible to imagine the potential beauty of a true free market, because all we've ever seen is a manipulated and controlled market that's been passed off to us through propaganda as a "free market".

I don't expect you to understand. You've been on this earth a lot longer than I have, and I suppose you've lived through the ups and downs and the pain long enough that you have lost your will to continue fighting for the freedom we were intended to have. You picture a society that couldn't possibly financially police itself, probably because you think people are too stupid. I can't imagine any other reason why you would advocate the government control how you make your own decisions.

If I'd have been stupid enough to take a mortgage i couldn't handle, and was tricked into it through an offer that sounds too good to be true, I would man up to it and take responsibility. I wouldn't blame a bank, or the loan officer, or the government for not having my back. I would blame myself for not being more informed beforehand. That's what freedom is all about. The freedom to be as informed as possible, and the freedom to make your own choice. Also, the freedom to potentially fail.

But I'm just a wacky "libertopian", right? What do I know.

Krugman just won the nobel based on the perfect world (and the 1800 corn laws) your talking up Paul

the basic jist , at first sniff, works, in reality we've had 20-30 years of decline since the reaganista's trickle down debacle duped us into thinking feeding the top of the pyramid benifitted the bottom

the middle class's decline since then speaks for the issue quite clearly, does it not?

 

[BaronVonBigmeat]

More like 35 years of decline since Nixon took us off the gold standard.

I'm sure you're familiar with the statistics--since the 70's,

* it takes two incomes to provide what one income once did
* income for non-college grads has remained mostly stagnant
* trade deficits have exploded
* our manufacturing base has eroded while wall street has benefited
* things which were once affordable, aren't anymore--health care, college educations, etc.

 

[sparky]

i owned my first home in the 70's Barron, and thank you for considering the changes since

of interest, and for the sake of further economic acedemic banter, the top down scenario is easily found in wiki

the Laffer curve would seem a rather apropos addition for this here....

In 1924, Secretary of Treasury Andrew Mellon wrote, "It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the Government, and that more revenue may often be obtained by lower rates." Exercising his understanding that "73% of nothing is nothing" he pushed for the reduction of the top income tax bracket from 73% to an eventual 24% (as well as tax breaks for lower brackets). Personal income-tax receipts rose from $719 million in 1921 to over $1 billion in 1929, which supporters attribute to the rate cut.

 

[Kevin_Kennedy]

More like 35 years of decline since Nixon took us off the gold standard.

I'm sure you're familiar with the statistics--since the 70's,

* it takes two incomes to provide what one income once did
* income for non-college grads has remained mostly stagnant
* trade deficits have exploded
* our manufacturing base has eroded while wall street has benefited
* things which were once affordable, aren't anymore--health care, college educations, etc.

Though what we had under the Bretton Woods system was only a bastardized gold standard.