RPT-CORRECTED-UPDATE 1-Congress, Obama face dynamite in 'fiscal cliff' -CEOs
A failure in Washington to solve the crisis by the year's end could prompt major companies to curtail investment plans, said Duncan Niederauer, CEO of NYSE Euronext, operator of the New York Stock Exchange.
"We simply won't be investing in the United States. We will be investing elsewhere where we have more certainty of the outcome," Niederauer said in an interview.
"We simply won't be investing in the United States. We will be investing elsewhere where we have more certainty of the outcome," Niederauer said in an interview.
If certainty of the outcome is all that matters then Europe seems the perfect place to invest! Or perhaps China? Rain or shine, their official numbers always seem fantastic!
Sandy Cutler, CEO of manufacturer Eaton Corp, shared his concern.
"Until we solve the fiscal issues (in the United States and Europe), you're not going to get back to normal GDP growth," Cutler told investors on Tuesday.
"Until we solve the fiscal issues (in the United States and Europe), you're not going to get back to normal GDP growth," Cutler told investors on Tuesday.
Normal GDP growth? What a hoot!
July 27, 2012
Real GDP Growth per Capita
Click to enlarge.
Step right up! We're running a special on old normals and new normals! Borrow the money to buy the old normal at the regular price and get a new normal at that same low price!
Who cares about normal GDP growth? What we really want is "normal" stock market growth........say 6% real returns on average.
ReplyDeletemab,
ReplyDeleteI always enjoy reading sarcasm in the comments of a sarcasm report!
I think we need a bit of a reality check though. I'm not sure if we can get the average stock to perform that well.
That's why we should limit our investments to just the great companies.
And how will we know which ones are the great ones? That's easy. They are the ones that will give us 6% real returns going forward and with little to no added risk.
I really like this plan. I think we can expand on it. We've now got this list of great companies. Right?
Let's just stick to the best company within that list. There's no point diversifying if they are all great.
I bet we could get a 20% real return on it. It is, after all, the best company to invest in. That's pretty much a given.
All that is left to do is find that company. Any ideas? I've heard some people have great success using a rear view mirror. You simply stare into it looking for great investment ideas. That's what I'm told anyway.
We'll want to backtest the great company of course, just to be sure. I suggest that we use at least 10 years of historical data and then slap some trend lines on it. It might not work when predicting the weather, but it is bound to work when investing in stocks. Why else would the brokerage firms offer all those tools?
(Are we absolutely sure that we can't have too much sarcasm? ;))
Wait I think you forgot about "normal" interest rate returns! Back when my mother was 35years younger interest rates were incredible and everyone was going to retire rich! Right now she's 95 and if it's nomralized she'll be 60in no time.
ReplyDeleteOne more thought think what happens when we "normalize" the age of the seniors. 95 year olds become 60 and no Medicare costs! I think it's a plan.
ReplyDeleteMark,
ReplyDeleteThe important thing is that everyone gets what they think they're paying for. Everything else is just noise.
If you buy and hold the S&P 500, you're "entitled" to get the historical 6% real returns that financial "professionals" told you you'd get based on past performance when people worked hard and saved. You know, back when fraud was prosecuted not rewarded.
And if you're looking for higher returns and willing to pay a hedge fund guru 2%/20%, you're "entitled" to even higher returns. Much higher! Look, nobody is going to borrow and bid up asset prices without a guaranteed return.
It's all about private sector entitlements! Public sector entitlements that are funded through weekly paycheck deductions are the problem. We need to get rid of those ASA effing P! We just can't afford them. We can only afford multi-trillion dollar bailouts for the top 1%. And welfare.........we can always afford THAT!
At the risk of actually being serious, I say why give a shit about the stock market? It's doubled since 2009 and the economy is still in the sewer.
ReplyDeleteIn fact, the stock market has soared since 1982, the last shitty decade not withstanding.
http://research.stlouisfed.org/fred2/graph/?g=cTA
Stocks are owned by a small minority of the population at the top of the wealth distribution. Enriching them further is flatly counter-productive.
We need GDP growth, and we need economic benefits to flow through society and not get captured by the top 2%
http://www.angrybearblog.com/2012/01/where-has-all-money-gone-pt-iii-not-to.html
JzB
"We simply won't be investing in the United States. We will be investing elsewhere where we have more certainty of the outcome," Niederauer said in an interview.
ReplyDeleteBelize?
It isn't the run up in stock prices, it is the liquidation that will prove fatal. How is the market doing in equivalent barrels of oil or ounces of gold?
ReplyDeletedd,
ReplyDeleteOne more thought think what happens when we "normalize" the age of the seniors...
Dog years! 490 becomes the new 70!
Gallows sarcasm. Sigh.
mab,
ReplyDelete"Safe" investments backed by FDIC.
"Sure Thing" investments backed by FUKD.
I think it could work! Now we just need to figure out who is guaranteeing FUKD and we're good to go, lol. Sigh.
Jazzbumpa,
ReplyDeleteIt's doubled since 2009 and the economy is still in the sewer.
They'll probably meet up again during the next recession. Sigh.
Fatboy,
ReplyDeleteBelize?
It's difficult to put a value on the relaxation benefits of basking on a warm beach during economic downturns. That's why CEOs are paid the big bucks. It's like they have an innate ability to make that difficult valuation seem so easy.
Rob Dawg,
ReplyDeleteIt isn't the run up in stock prices, it is the liquidation that will prove fatal.
You make it sound like there are itchy trigger fingers hovering over the sell buttons on $18.2 trillion in retirement assets, lol.
I don't know why I laughed. Perhaps it was gallows humor.
Jazzbumpa,
ReplyDeleteBenjamin Bernanke: Stock prices -- many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.
One of the main concerns that firms have is there's not enough demand. There are not enough people coming and demanding their products. And if people feel that their financial situation is better because their 401(k) looks better or for whatever reason -- their house is worth more -- they're more willing to go out and spend, and that's going to provide the demand that firms need in order to be willing to hire and to invest.
Bernanke and the rest of the Fed are lobbyists for Wall St. And Wall Street has become a criminal enterprise. It's now about wealth extraction not wealth creation.
Exactly so. The makers-takers meme has it exactly backwards. 50 years ago my dad told me, "Every one in a wile,when a crumb falls off the plate, the Democrats might let you keep it. The Republicans won't even do that."
ReplyDeleteAnd he was right - right down to the damned snack cakes.
http://www.dailykos.com/story/2012/11/16/1162235/-Private-equity-owned-Hostess-blames-striking-workers-as-it-liquidates
WASF!
JzB
Mark,
ReplyDeleteTo show how completely broken the economy is, you should add the federal deficit to your real GDP chart. That will expose the fact that the new normal, barely positive GDP growth is a figment of unsustainable debt growth.
How long can we run $1.2 trillion deficits and hang on to sub 2% growth? Even if there is no future recession this century, the debt eventually eats everything.
Mark,
ReplyDeleteMaybe you laughed because I said oil and gold instead of soybeans and dog food.
CalPERS is facing a crunch they don't want to talk about. Lots of "early" retirements and for some reason fidig themselves unable to sustain 7.5% compounded returns. They are faced too with liquidating positions that won't pay off for years to maintain cash obligations. Low growth is killing their model too.
November 4, 2010
ReplyDeleteBen Bernanke's Street Creds
A collapse in U.S. stock prices certainly would cause a lot of white knuckles on Wall Street. But what effect would it have on the broader U.S. economy? If Wall Street crashes, does Main Street follow? Not necessarily. - Ben Bernanke, October 2000
And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. - Ben Bernanke, November 2010
We've got old normal and new normal.
We've got old Bernanke and new Bernanke.
In the spirit of a sarcasm report, I say...
Hurray.
In the spirit; those of us who understand know where we are; what to hoard (my preference is wine); how to prepare (my preference is enough space for multi-generational living); and who to believe. Thank you Mark for your reality based analysis.
ReplyDeletedd,
ReplyDeleteThe real money was made in phasers! They just aren't making any more of them... yet.
That said, there's been some phaser deflation lately. I see the price has come down to $99. Perhaps discretionary money has once again been rerouted to gasoline. Sigh.
I'm saying this somewhat tongue-in-cheek of course. Somewhat.