next »

[mad_doctor]

Although this seems impressive, it is really only another indicator of the continuing devaluation of the US Dollar.  Since the companies on the Dow Jones Index operate heavily overseas, they are benefitting from a weak dollar.  In other words, they're reporting larger profits, and hence drawing larger stock prices, because they're earning their money overseas where the currency is more valuable relative to the Dollar.

This doesn't change my earlier belief that there will be a second dip in the economy, except that the dip may come from a larger height.  Although I don't follow Elliot Wave Theory, it probably doesn't change anything there either.

mad_doctor's commentary: We're in deep, deep, trouble with our currency.  Our government needs to drop whatever else they're doing and make this a priority asap, especially since everything else they're working on right now will only make it worse. 

[clean]

I think that the value of the dollar is a symptom of the true problem.  I think that the ability of the US government to borrow is about at an end ("e have maxed out our cards").  The government can not continue to spend more than it taxes.

Social Security is going to be an issue.
Medicare and the prescription drug care are an even bigger problem.

Taxes are just going to have to rise, and no one thinks that they should pay more.

IF we are not willing to pay for the current level of government spending, when will we pay off what we as a country have already borrowed?  Think about the taxes for that!

Again, IMHO,  the currency value is only a symptom.  It can be fixed by raising interest rates.  That, of course, leads to other problems.

[qrypt]

What do you propose?  

It will be harder for Britain, which is also facing a currency decline.  Too bad about that decision on joining the euro...

[georgiaprof]

When the average American family with credit cards (and as far as I can tell - that is most of us) owes $10k+ to credit companies, then why should the government pay off their debt?

[parispundit]

Wrong again, Mad Doctor! See the Paul Krugman column in the Times a couple days ago, among other things. The lower dollar is absolutely necessary to improve the balance of trade. And while some of those increased earnings come from currency effects (though they are broken out and the market tends to discount them), others come from the effects on the real economy of improving trade competitiveness, via a lower dollar. The US need a dollar at about 1.60 to the euro for at least a couple of years. Unless the fool inflation hawks take over the Fed, it will happen, too.

'Course, the price of Brie goes up in Chicago, but since I live in Paris, who cares?

[bana_bana]

after I read the following article everything about the financial crisis made sense to me...I see that paper money is the main cause of the problem
http://mises.org/story/1914

[mad_doctor]

Wrong again, Mad Doctor! See the Paul Krugman column in the Times a couple days ago, among other things.

You see, there's where you're going astray, parispundit.  Paul Krugman is wrong about so many things I don't even know where to start talking about them all. ;-)

Also, thanks for the cite, bana_bana.  That's classic stuff, and very important to my perspective on these matters.

[prytania3]

And the Foracle nailed it again:

I glanced at the charts and it looks like the market is going to go down a bit, but I think it'll hit over 10K before it goes down a lot and if it goes down a lot, the PPT will continue pumping I think.

Now I have to reassess.

[parispundit]

Wrong again, Mad Doctor! See the Paul Krugman column in the Times a couple days ago, among other things.

You see, there's where you're going astray, parispundit.  Paul Krugman is wrong about so many things I don't even know where to start talking about them all. ;-)

Well it is true Krugman is wrong about many things, but not this one!
As for Mises, sheesh. I have great respect for Hayek, but none for that old coot.
Meanwhile, here in France they are muttering about banning revolving consumer credit, i.e. abolishing the credit card as Americans know it. Even the Economy Minister is call for severe regulation of it. Down with loan-sharks, up with paternalism!

[normative_]

mad_doctor's commentary: We're in deep, deep, trouble with our currency.  Our government needs to drop whatever else they're doing and make this a priority asap, especially since everything else they're working on right now will only make it worse. 

It's more important to pay attention to the real economy. If that is strong and sound, the currency will be too.

[prytania3]

mad_doctor's commentary: We're in deep, deep, trouble with our currency.  Our government needs to drop whatever else they're doing and make this a priority asap, especially since everything else they're working on right now will only make it worse. 

It's more important to pay attention to the real economy. If that is strong and sound, the currency will be too.

You mean Dow 10K, unemployment 10%? That real economy?

[mad_doctor]

Wrong again, Mad Doctor! See the Paul Krugman column in the Times a couple days ago, among other things.

You see, there's where you're going astray, parispundit.  Paul Krugman is wrong about so many things I don't even know where to start talking about them all. ;-)

Well it is true Krugman is wrong about many things, but not this one!
As for Mises, sheesh. I have great respect for Hayek, but none for that old coot.
Meanwhile, here in France they are muttering about banning revolving consumer credit, i.e. abolishing the credit card as Americans know it. Even the Economy Minister is call for severe regulation of it. Down with loan-sharks, up with paternalism!

OK, I'll bite on this one.  Forgetting for the moment all the things he's wrong about, why should we believe Krugman is right about this?

BTW, I agree w/ you about consumer credit.  We definitely need to change the culture of consumerism to a culture of fiscal responsibility.  If you believe this, though, I don't understand why you don't like von Mises?  He's really saying just that - a nation shouldn't circulate more money than it's worth as a nation.  He's saying the same thing about nations as we're saying about individuals.  

[mad_doctor]

mad_doctor's commentary: We're in deep, deep, trouble with our currency.  Our government needs to drop whatever else they're doing and make this a priority asap, especially since everything else they're working on right now will only make it worse. 

It's more important to pay attention to the real economy. If that is strong and sound, the currency will be too.

I think that was my original point, norm.  The 10,000 is not a real indicator of the economy as much as it is an indicator of a weak Dollar.

[normative_]

mad_doctor's commentary: We're in deep, deep, trouble with our currency.  Our government needs to drop whatever else they're doing and make this a priority asap, especially since everything else they're working on right now will only make it worse.  

It's more important to pay attention to the real economy. If that is strong and sound, the currency will be too.

You mean Dow 10K, unemployment 10%? That real economy?

The current economy sucks. I figure the US could sustain a strong currency again without using interest rates to prop it up artificially in say, another couple of generations. One if you're lucky and start now.

And Madhatter, thanks for the clarification.

[parispundit]

[/quote]

OK, I'll bite on this one.  Forgetting for the moment all the things he's wrong about, why should we believe Krugman is right about this?[/quote]

Because this time he agrees with ME! :)

[/quote]
BTW, I agree w/ you about consumer credit.  We definitely need to change the culture of consumerism to a culture of fiscal responsibility.  If you believe this, though, I don't understand why you don't like von Mises?  He's really saying just that - a nation shouldn't circulate more money than it's worth as a nation.  He's saying the same thing about nations as we're saying about individuals.  
[/quote]

Yes, one of the things Mises gets wrong is assuming a nation's finances work just like an individuals. For example, see Alexander Hamilton's argument about why the US should never pay off its national debt, even if it could. In his day, he wanted the bondholders to have an interest in the political stability of the US. In ours, we want the Chinese to feel the same way about our economic stability. Whereas this does not really apply to individuals.