Some intuitive, common-sense observations on the ECONOMY.

[Parisle]

----Uhh,... that would be the "Bush" economy, eh? And they're decidedly "unofficial," too. But between Bush administration prevaricating,.. and the MSM's obvious desire to "script" every aspect of the political discourse around its own concerns, a number of basic economic realities & truisms,..those perhaps most relevant to the average wage-earner,.. get left out of the mix. These are the observations and commentary of a mountain boy from Virginia. Here goes.....

----The stock market is not the decisive indicator of economic health. A healthy economy is characterized primarily by widespread employment, positive trade balance and absence of debt. They like to tell us that 50 million households in the US own stock,... at least through a mutual fund, eh? Well maybe that's true,.. but there are a hell of a lot of people who pick up a few shares here and there through company stock purchase plans, but who never really make it to "investment class" status. The stock market is but minimally relevant to any but the uppermost of that investment class, and a rising market hardly portends good things for the broadest spectrum of the population. The "healthy" goal of the stock market should be to increase dividends while price-per-share remains stable. The market does not need to be always on the rise in order that progress is being made. We knew that in the 70's.

----Unemployment is worse than the 4.7 percent claimed by the administration. I have two sources for this statement. In my work, I get to talk to some fairly high-placed captains of business and industry, and they tell me it's twice that. And I also live, work, socialize and recreate in the more-or-less "normal" middle class world,... and I know what I see. I know how my friends are doing. If nothing else, the combined effects of outsourcing, streamlining, under-employment and illegal labor would cast considerable doubt on the administration's "job creation" figures. Besides,.. we already know that they lie.

----The Bush administration has made 99% of its domestic and foreign policy decisions to suit the privately-dictated will of the corporatist class. This is not the top one percent of the population, nor is it the top one-half percent. It is approximately ten thousand individuals. That's who runs the country. (They often use the "revolving door.") The natural evolution of this circumstance is backwards in the direction of the feudal system,... masters and serfs. Get it?

----From the standpoint of the average American, deregulation has killed us. People cannot live without electricity, for example,... so deregulating power companies is like legalizing extortion.

----We complain and worry about the colossal debt being run up by the Bush administration. It is dreadfully unhealthy to our currency, and it is a drain on our pool of capital. But "somebody" benefits from that debt. No less a conservative than George Will has observed that the interest payment on the national debt (nowadays about $350 billion out of the budget, I think) is in fact the planet's largest single redistribution of income,... and it ain't being redistributed downward, eh? (I would personally LOVE to find a way to inform Halliburton, KBR, Exxon, Chevron, Carlyle, Bechtel, etc, that the T-bills they own in their trust divisions will not be honored, nor redeemed at maturity.)

----A healthy and growing economy may benefit from improvements in productivity or efficiency,... but it is not defined by them. That is the economic model exemplified by the "squeezing blood out of a turnip" metaphor. What truly drives a productive economy is INNOVATION, and that is where we have lost much of our edge. I have scientific-minded friends who claim that we would have acceptable syn-fuels now, if we had tackled the problem in earnest thirty years ago. I believe them. Why we didn't do that is a question which relates back to "who runs the country." Our important decisions are being made by the wrong people,... conflict-of-interest is now the accepted norm, and this is NOT without the knowing acquiescence of the political industry,.. in the form of our two principle political parties,... both of them.

[Sammy Pepys]

1. Agree with everything except your view of the stock market...n/t

....

[Parisle]

2. Okay,.....

---- How so? Tell me more.....

[Sammy Pepys]

3. ok

Primary disagreement here:

They like to tell us that 50 million households in the US own stock,... at least through a mutual fund, eh? Well maybe that's true,.. but there are a hell of a lot of people who pick up a few shares here and there through company stock purchase plans, but who never really make it to "investment class" status. The stock market is but minimally relevant to any but the uppermost of that investment class, and a rising market hardly portends good things for the broadest spectrum of the population.

First off, I think this incorrectly discounts the true (if often neglected) function of the stock market: providing business and industry with capital. That ability to raise capital is an important part of economic growth. While we tend to view the stock market more in "personal finance" terms and "Dow goes up, me make money!", this function is very important to the economy, and does have an effect on more than just the wealthy.

As for the "uppermost of the investment class" statement, that was true many years ago but, as you noted, participation in the market is very widespread mostly through institutional investing, pensions, etc. While I think there can be a case made for the market being "minimally relevant" over the short term, it is extremely important over the long term becasue lots of us are foregoing current consumption now for consumption plus a return at a later date (i.e. retirement, probably one of the most popular financial goals connected to stock market investment). Financial security in retirement is always going to be a critical issue economically AND politically, and because of that the stock market is going to be important to a broader spectrum of the population than just the upper class.

Tangent: In fact, I'd argue that the stock market is even more important to the lower classes who do manage to invest in it, because they require more significant returns on their investments to attain financial security. If you throw a million bucks into a money market account returning 4% over 20 years, you'll more than double your money even if you don't add another cent to the pot, and be able to draw comfortably from for quite a while.

But very few of us have that amount to throw around....we need the higher longterm returns that only the stock market can deliver with any sort of relative consistency.

[Parisle]

4. Aw, Samuel,... you got me,...... sort of.

----I agree with most of what you've said, and I was hardly intending to downplay the market's true and legitimate significance in the everyday economic fortunes of all 300 million of us,..whether we have a portfolio or not. We all utilize banks, insurance firms, pension plans, etc. whose trust activities entail broad market participation.

----My big gripe is with the administration's crowing about what a great economy we have, when this late market spurt,.. representing only tepid growth for a 6-yr interval, mind you,... is essentially their only evidence of that great economy. I believe you joined me in rejecting the sugar-coated employment numbers. The debt and currency concerns are getting pretty hairy, and those have a way of presenting as "icebergs," ... the bulk of their dangers remaining below the surface of our attention until too late in the game. Balance of trade and the account deficit are very scary to me, as well, along with the guargantuan federal debt. Consumer debt is light years into no-man's land,... and possibly worst of all, we have to try to cope with these situations AFTER having largely shucked our manufacturing base and tipped too far over onto the service side of the economy. For Bush to gesture vaguely at a little market gain and pronounce the economy "strong" is just more than I can take. Some folks gained, sure,... but not most of us,.. not in the sense that "strong economy" rhetoric is supposed to trump the half-dozen other problems I mentioned.

[Sammy Pepys]

5. I'll tell you this much....

..and the following is not personally directed at you, because I think you were generally fair.

I think some progressives are a little too quick to dismiss or find alternate theories to any good economic news that comes along. I think trade deficits are a concern, but they get played up as much more of a problem than they really are. I think jobs numbers are generally hard to get an accurate read on, but I don't think the way employment is measured is a major affront to reality.

This is one area I think Dems and progressives need to sharpen up on.

[Parisle]

6. Fair enough,.....

---- We're cool.