http://www.nytimes.com/2008/11/01/bu...arkets.html?hp

''... the Commerce Department reported that inflation was at 4.2 percent in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserves preferred ceiling
of 2 percent.''

--
Due to extreme spam originating from Google Groups, and their inattention
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"Ignoramus27079" wrote in message
...

''... the Commerce Department reported that ...

I sure as hell don't call it metalworking...or anything related...

Vaughn

Ignoramus27079 wrote:

''... the Commerce Department reported that inflation was at 4.2 percent in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserves preferred ceiling
of 2 percent.''


Iggy,

I enjoyed filling my tank for less that 20 bucks (small car), then I went into the big
grocery store and noticed my savings had been grabbed by cost increases in food.

Btw, how is a quart of no-name motor oil priced at 2.89 a quart with gas is down to 2.22
in my area?


Wes
--

I'll have respect for the law when the law has respect for me.

''... the Commerce Department reported that inflation was at 4.2 percent
in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices


I just had my best year ever at the roadside market, and a terrible year at
wholesale. The cause was the same in both cases. Retail groceries raised the
price of apples over 50% from last year. I kept price the same on commodity
apples and raised 10% on premium varieties for both wholesale and retail.
Thus my roadside price was way below the grocery and customers noticed.
Grocery sales died and took the wholesale with it. There was no good reason
for the groceries to take that large increase.

I bet the same thing is happening in a lot of other areas.

karl

On 2008-10-31, Wes wrote:
Ignoramus27079 wrote:

''... the Commerce Department reported that inflation was at 4.2 percent in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserves preferred ceiling
of 2 percent.''


Iggy,

I enjoyed filling my tank for less that 20 bucks (small car), then I went into the big
grocery store and noticed my savings had been grabbed by cost increases in food.

Btw, how is a quart of no-name motor oil priced at 2.89 a quart with gas is down to 2.22
in my area?


Good question. I think that deflation has not yet materialized.
--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
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"Ignoramus27079" wrote in message
...
On 2008-10-31, Wes wrote:
Ignoramus27079 wrote:

''... the Commerce Department reported that inflation was at 4.2 percent
in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserve?Ts preferred ceiling
of 2 percent.''


Iggy,

I enjoyed filling my tank for less that 20 bucks (small car), then I went
into the big
grocery store and noticed my savings had been grabbed by cost increases
in food.

Btw, how is a quart of no-name motor oil priced at 2.89 a quart with gas
is down to 2.22
in my area?


Good question. I think that deflation has not yet materialized.

That's the third month in a row that inflation has dropped, Iggy. And if
you're worried about deflation (quite a few of the world's economists are,
for reasons I'm sure you understand), the price of gasoline dropping from
$3.50 to $2.20 (it's $2.21 today here in NJ) is enough to set off alarm
bells.

We aren't there yet, but what economists are looking for now is signs that
we're going into something like Japan's "lost decade," the 1990s. With the
overnight rate at 1%, the Fed is out of gas and out of tools, except for the
weaker ones of lowering longer-term rates. If there's a further drop,
printing money and creating make-work jobs are the only tools left. And if
companies still don't want to borrow after that, as happened in Japan, we're
in for a hell of a bad ride.

Cheap gas may feel good now. It's certainly a relief. But to economists,
it's a sign of real danger ahead. Once deflation takes hold, there are no
remedies. You just have to wait it out -- typically, for around a decade.

Whoever is president, the likelihood is high that he'll have to pull out the
stops with fiscal measures the likes of which we haven't seen for decades --
and this, in an extremely unfavorable environment for further deficit
spending.

Brace yourself. We'd better hope that things turn up late in the first
quarter, as some business leaders think will happen. Otherwise, deflation
will drive us into a dead-man spiral.

--
Ed Huntress

On Fri, 31 Oct 2008 22:42:47 -0400, "Ed Huntress"
wrote:
snip
That's the third month in a row that inflation has dropped
snip
Not to quibble but its disinflation when the rate of increase
slows. Deflation is where the actual value of money increases.

http://en.wikipedia.org/wiki/Disinflation

It can be argued that the fall in the house value indicates a
deflation, but this would be inconsistent with the way the
increase in house costs did not count toward the inflation
numbers.

"F. George McDuffee" wrote in message
...
On Fri, 31 Oct 2008 22:42:47 -0400, "Ed Huntress"
wrote:
snip
That's the third month in a row that inflation has dropped
snip
Not to quibble but its disinflation when the rate of increase
slows. Deflation is where the actual value of money increases.

http://en.wikipedia.org/wiki/Disinflation

It can be argued that the fall in the house value indicates a
deflation, but this would be inconsistent with the way the
increase in house costs did not count toward the inflation
numbers.

Right. I'm not saying we have deflation, only that the rate of inflation is
dropping pretty consistently, despite the inflationary effects of higher oil
prices this year. And the danger is that it will cross the line and become
deflation, should the downtrend continue.

--
Ed Huntress

I don't normally reply to political posts, especially in NGs where they do
not belong, but I will make an exception to this one. I sincerely worry
about our country when the people that elect our leaders are so massively
uninformed. The population's exposure to a biased media and the media's
propensity to edit by exclusion world news frightens the hell out of me. Of
course, you say, I am talking about somebody else, that could not be me.
Well, boys and girls, it is you. The person in the mirror you see in the
morning. I refuse to label Americans as ignorant or stupid, as most of the
rest of the word does, because it is far from the truth. However, if you do
not feel insulted by the rhetoric spewed from the mouth of both candidates,
you should be and it is indicative of the level of understanding in the
general population.

Please do your own simple arithmetic. There is no such thing as a free
lunch. Everything has a cost, please ask yourself where the money will come
from for the advertised programs being spouted and if you determine that
there are no funds for these things, no matter how noble and righteous they
may be, you must NOT trust anything else the candidate says. We are already
in a terrible state with massive national, corporate and personal debt. If
you think the sub-prime mortgage thing is big, think about personal credit
card debt. It is even bigger. Remember, no man is truly free, if he is in
debt. What are you going to do about it. Don't look somewhere else. Look in
the mirror. Put a plan together and vote responsibly.
Steve

"Ignoramus27079" wrote in message
...
http://www.nytimes.com/2008/11/01/bu...arkets.html?hp

''... the Commerce Department reported that inflation was at 4.2 percent
in
September compared with a year ago, down slightly from the 4.5 percent
annual gain in August. Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserve?Ts preferred ceiling
of 2 percent.''

--
Due to extreme spam originating from Google Groups, and their
inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

Ignoramus27079 writes:

Outside of food and fuel products, prices
climbed 2.4 percent, above the Federal Reserveƒ Ts preferred ceiling
of 2 percent.''

We are in a huge deflation. The CPI and other "inflation" indexes are
political inventions with little attachment to reality in sign,
magnitude, or timing.

Trillions and trillions in bubbled debt and stock market valuation,
which was money or its liquid equivalent in the minds of its owners, has
literally disappeared. The money supply has shrunk by an enormous
proportion, beyond any government ability to counteract. Market prices
a few months ago were based on paying with paper pyramid assets that
have vanished.

Petroleum is a very sensitive commodity to such conditions. One day it
is buried in the Arabian sands, a few weeks later it is sloshing in your
automobile tank. It is also a monetary vehicle as a financial
commodity, so its price also reflects its usage as a short-term money
substitute/equivalent. That's why prices have fallen by half from the
summer, as I predicted, reflecting the current massive money supply
deflation.

Groceries are not sensitive, they lag by months. Between producers,
wholesalers, and retailers, groceries are still priced from last
summer's conditions, as if gasoline were still $4.50/gallon.

A lot of retail stainless products are selling as if nickel were still
$25/lb, which is a pointless price lag. Look at the 5-year chart here;
it sums up the old bubble and the current deflation quite graphically:

http://www.kitcometals.com/charts/ni...istorical.html

"Ed Huntress" wrote:

That's the third month in a row that inflation has dropped, Iggy. And if
you're worried about deflation (quite a few of the world's economists are,
for reasons I'm sure you understand), the price of gasoline dropping from
$3.50 to $2.20 (it's $2.21 today here in NJ) is enough to set off alarm
bells.

Why is that a worry? My simplistic view is that the market is working. I remember, quite
fondly, where gas hit $0.999 a gallon not so long ago. No one cried for a bail out of big
oil like we just did for banking.

I think the growth model is dangerous. It implies we need more to market to. Remember
when zero population growth was an item of interest?

When you look at our numbers as far as consumpution, we and the world would be better off
if there were fewer Americans, Canadians, and Europeans.

A world of 2 Billion would be far richer. And we waste time talking about global warming.

Some things need deflating.

Wes
--
"Additionally as a security officer, I carry a gun to protect
government officials but my life isn't worth protecting at home
in their eyes." Dick Anthony Heller

"Steve Lusardi" wrote:

Please do your own simple arithmetic. There is no such thing as a free
lunch. Everything has a cost, please ask yourself where the money will come
from for the advertised programs being spouted and if you determine that
there are no funds for these things, no matter how noble and righteous they
may be, you must NOT trust anything else the candidate says. We are already
in a terrible state with massive national, corporate and personal debt. If
you think the sub-prime mortgage thing is big, think about personal credit
card debt. It is even bigger. Remember, no man is truly free, if he is in
debt. What are you going to do about it. Don't look somewhere else. Look in
the mirror. Put a plan together and vote responsibly.
Steve

If you took all of Gates money, it would be 200 a head one time. He is the richest man in
America.

The numbers do not work. Obama is a Hope Hustler, nothing more cynical than offering hope
to people that will not be significantly better off after the election.

The bailout, well that one at 850B across 300M heads is 2833 bucks per person.

The Social Security IOU's make the bail out look like chump change. Obama is selling hope
to desperate people and CAN NOT come though on his election promises. The money isn't
there to grab and sustain the promises.

I'd love it if someone could make my world better but Obama can't. McCain will have to
live within reality even though he has made a few promises. It is an election, stuff gets
said, pay attention to what can be done and pick your candidate.

As a Libertarian leaning Conservative, endorsing McCain gives me heart burn. But that is
the lay of the land this cycle.


Wes
--
"Additionally as a security officer, I carry a gun to protect
government officials but my life isn't worth protecting at home
in their eyes." Dick Anthony Heller

"Wes" wrote in message
...
"Ed Huntress" wrote:

That's the third month in a row that inflation has dropped, Iggy. And if
you're worried about deflation (quite a few of the world's economists are,
for reasons I'm sure you understand), the price of gasoline dropping from
$3.50 to $2.20 (it's $2.21 today here in NJ) is enough to set off alarm
bells.

Why is that a worry? My simplistic view is that the market is working. I
remember, quite
fondly, where gas hit $0.999 a gallon not so long ago. No one cried for a
bail out of big
oil like we just did for banking.

I think the growth model is dangerous. It implies we need more to market
to. Remember
when zero population growth was an item of interest?

When you look at our numbers as far as consumpution, we and the world
would be better off
if there were fewer Americans, Canadians, and Europeans.

A world of 2 Billion would be far richer. And we waste time talking about
global warming.

Some things need deflating.

That's a good question, and I should really let Iggy or George give you a
good explanation, but here's an oversimplified version that may make the
point.

Lower prices that result from improved productivity, or from new mineral
discoveries or even an "adjustment" to inflated prices are good things, by
themselves. But lower prices that accompany a declining economy are
deflationary -- the same thing costs less, even though its cost of
production hasn't (yet) dropped. At a certain tipping point, the downward
pressure on prices becomes self-perpetuating. And, unlike inflation, there
are no monetary actions that can stop it. Once it's locked in, there are no
fiscal actions that can stop it either. You wind up in a spiral that has to
work itself out over time. Japan just went through 10 years of it, roughly.
During the Great Depression, the whole world went through 10 years of it.

To explain why it happens, let me offer this simplistic example: Say that
commerical banks need a 4-point spread to make money. In other words, they
have to charge 4% more for loans than the interest they pay to depositors.
Now say there is an economic contraction, and manufacturers and service
businesses are downsizing to adjust to declining markets. They don't want
capital for expansion and they couldn't pay the interest if they wanted it.
So banks drop their rates to try to keep loans moving, because that's how
they make their money. When it hits around 4%, government officials,
bankers, investors, and corporations start sweating. If it hits 2%, you're
in a dive. Think about that 4% spread: Even if banks pull in their horns and
batten down the hatches, they can't live on less than 3%. So, what can they
afford to pay to depositors? Negative 1%. In other words, for the bank to
stay in business, it has to *charge* depositors 1% for them to accept
depositors' money.

Of course, they then have no depositors. This is a kind of equilibrium,
because they don't have many borrowers, either. g In Japan in the early
'90s, banks dropped their loan rates to 0% interest (with some government
help, of course) and they still couldn't give out loans. There was no growth
in the economy and nobody wanted their stinking money.

You probably notice that, in these circumstances, stuffing your money under
your mattress produces a higher return than depositing it in a bank. This is
very bad ju-ju. Your investment choices boil down to Serta Perfect Sleeper
or Sealy Posturepedic.

Nobody's going anywhere. Banks are dead in the water, industry keeps cutting
wages, prices keep dropping, and the economy is as dead as a road-killed
'possum. If the Fed has already dropped their overnight rate below 1% and
banks still don't want money, then the Fed has lost control of the monetary
system. There is nothing more they can do.

At this point Congress takes over and tries desperately to prime the pump
(expect this to happen within six months from now). They'll pump money into
infrastructure projects, and then into any make-work they can come up
ith -- think CCC Camps and the Writer's Project, circa 1933. But if they've
waited too long, all this will do is debase the currency. They can cause
some inflation this way but no real economic growth.

Anyway, the point is NOT that deflation is likely -- it's extremely rare and
unlikely. The point is that once you pass that tipping point, and the
economy is trending down with no turnaround in sight (think, like right
now), you're in deep doo-doo. There are no monetary or fiscal tools left to
stop it. When the Fed's overnight rate drops below 1%, you're at the end of
the rope. And that's why it scares the living bejesus out of government
treasury people, bankers, and businesspeople. And it should scare all of us.

BTW, the overnight rate just dropped to 1%.

--
Ed Huntress

"Ed Huntress" wrote:


Of course, they then have no depositors. This is a kind of equilibrium,
because they don't have many borrowers, either. g In Japan in the early
'90s, banks dropped their loan rates to 0% interest (with some government
help, of course) and they still couldn't give out loans. There was no growth
in the economy and nobody wanted their stinking money.


Now iirc, Japan was suffering from overstated property values. IOW, they had the same
bubble we are in currently. I hope you are not telling me that if there is an unreality
in the market we need to keep that unreality going.

I see what is happening as a correction. Yes, it may not be pretty but we can't keep a
sham going forever and our chickens have come home to roost.

I think you made a good case that we are screwed and that is the framework I'm working
with. Hunker down, reduce expenses, smile at the bosses and hang on to the job as long as
I can. If I loose the job, start immediately looking for a new one because 52 weeks of
unemployment isn't going to last as long as the downturn.

Recently my plant laid off permanently 16 people, that is something that the plant has
never done, corporate management is sure that for the foreseeable future those jobs are
gone and a temporary layoff would have given those people false hope.

Getting back to my original point, the growth model isn't working. This isn't an empty
country with huge resources to exploit. The export market isn't as big as it once was. We
need to figure out how to live within the reality that the growth model is getting just as
tapped out as the oil patch.


Wes



--
"Additionally as a security officer, I carry a gun to protect
government officials but my life isn't worth protecting at home
in their eyes." Dick Anthony Heller

"Wes" wrote in message
...
"Ed Huntress" wrote:


Of course, they then have no depositors. This is a kind of equilibrium,
because they don't have many borrowers, either. g In Japan in the early
'90s, banks dropped their loan rates to 0% interest (with some government
help, of course) and they still couldn't give out loans. There was no
growth
in the economy and nobody wanted their stinking money.


Now iirc, Japan was suffering from overstated property values. IOW, they
had the same
bubble we are in currently. I hope you are not telling me that if there
is an unreality
in the market we need to keep that unreality going.

Haha! That's another good point. There are some really good economists
around who are saying that our economy is now dependent upon bubbles, that
the whole house of cards depends upon irrationally inflated valuations, and
that we're lurching from one bubble to the next.

But they were saying that six months to a year ago. Their assumption was
that it would take an economic collapse to wring the inflated value out of
assets (securities, not physical assets), and they didn't see that kind of
collapse coming. Now, maybe they'll re-calculate and say that it's possible
for us to have a real economy again, after we shuck off another trillion or
two in inflated values.

I don't have any idea, but they make a good case.


I see what is happening as a correction. Yes, it may not be pretty but we
can't keep a
sham going forever and our chickens have come home to roost.

I think you made a good case that we are screwed and that is the framework
I'm working
with. Hunker down, reduce expenses, smile at the bosses and hang on to
the job as long as
I can. If I loose the job, start immediately looking for a new one
because 52 weeks of
unemployment isn't going to last as long as the downturn.

This all makes sense. A point made frequently in the popular economic
literature is that we're in uncharted territory. Undergraduate economics
(which is all that most of us here know) is the economics of slowly
changing systems, in which irrational behavior can only depart a certain
distance from the realities of an economy before there's a sharp and sudden
correction, and the correction is subject only to limited interventions.

This is a huge correction, and the interventions are extreme. The people in
charge of keeping things from imploding -- Treasury and the Fed -- are now
operating in territory in which the irrational components themselves are
what they're trying to correct. The underlying fundamentals are so out of
whack that they aren't the ones driving the economy. And there is little
experience in economics of dealing (successfully, at least) with such huge
departures from fundamental realities.

Normal corrections now, says the govenment, would cause the economy to
implode. Ten years from now the conservative economists will say that it was
the government intervention itself that caused all the trouble. They'll
probably be wrong, as they were when they said such things about the Great
Depression, but they can live in a fantasy world of economic models that
never have to be tried out in reality.

Sorry if that sounds airy-fairy and abstract, but, given where we are, I
think you can see things from that perspective. The "corrections" you're
talking about will happen; the question is whether anyone can effect a soft
landing.


Recently my plant laid off permanently 16 people, that is something that
the plant has
never done, corporate management is sure that for the foreseeable future
those jobs are
gone and a temporary layoff would have given those people false hope.

Getting back to my original point, the growth model isn't working. This
isn't an empty
country with huge resources to exploit. The export market isn't as big as
it once was. We
need to figure out how to live within the reality that the growth model is
getting just as
tapped out as the oil patch.

There are non-growth models of economics, untested and hotly debated, that
are promoted by the green/sustainable/leftish crowd. There are fundamental
issues with such models that upend some of the precepts of capitalism
itself. If I were a student now I'd be interested in studying them.

But back for a moment to deflation -- do you follow the basic idea? Growth
models or not, that's the way the system works now. Slowdowns can be
handled. Declining prices are not necessarily bad. But put the two together,
and pass a tipping point of low interest rates with negative growth, and
you're in a deflationary spiral. And those scare economists far more than
inflationary spirals do.

--
Ed Huntress

On Sun, 02 Nov 2008 02:12:08 -0500, Wes wrote:

"Ed Huntress" wrote:


Of course, they then have no depositors. This is a kind of equilibrium,
because they don't have many borrowers, either. g In Japan in the early
'90s, banks dropped their loan rates to 0% interest (with some government
help, of course) and they still couldn't give out loans. There was no growth
in the economy and nobody wanted their stinking money.


Now iirc, Japan was suffering from overstated property values. IOW, they had the same
bubble we are in currently. I hope you are not telling me that if there is an unreality
in the market we need to keep that unreality going.

I see what is happening as a correction. Yes, it may not be pretty but we can't keep a
sham going forever and our chickens have come home to roost.

I think you made a good case that we are screwed and that is the framework I'm working
with. Hunker down, reduce expenses, smile at the bosses and hang on to the job as long as
I can. If I loose the job, start immediately looking for a new one because 52 weeks of
unemployment isn't going to last as long as the downturn.

Recently my plant laid off permanently 16 people, that is something that the plant has
never done, corporate management is sure that for the foreseeable future those jobs are
gone and a temporary layoff would have given those people false hope.

Getting back to my original point, the growth model isn't working. This isn't an empty
country with huge resources to exploit. The export market isn't as big as it once was. We
need to figure out how to live within the reality that the growth model is getting just as
tapped out as the oil patch.


Wes
===================
IMNSHO the problem is a proliferation of "zombie" financial
organizations [and per several other threads almost all major
American corporations when the sources of their incomes are now
financial organizations that do something else on the side].

Japan had and still has this problem. We [the US] are rapidly
creating huge numbers of corporate "living dead." This appears
to be the result of the refusal to admit failure and move on.

Just a suggestion -- if a "for profit" corporation domiciled in
the US has more than 10 million $US in claimed assets [not equity
-- assets], or employs more than 1,000 people, but fails to
generate any US taxable income for 5 consecutive years, they
should be placed in involuntary chapter 11 [reorganization] with
3 more years to either become profitable [i.e. paying taxes] or
go into chapter 7 [liquidation]

This would have "solved" the Detroit automaker problem.

On Sun, 2 Nov 2008 06:58:24 -0500, "Ed Huntress"
wrote:
snip
Haha! That's another good point. There are some really good economists
around who are saying that our economy is now dependent upon bubbles, that
the whole house of cards depends upon irrationally inflated valuations, and
that we're lurching from one bubble to the next.

But they were saying that six months to a year ago. Their assumption was
that it would take an economic collapse to wring the inflated value out of
assets (securities, not physical assets), and they didn't see that kind of
collapse coming. Now, maybe they'll re-calculate and say that it's possible
for us to have a real economy again, after we shuck off another trillion or
two in inflated values.

I don't have any idea, but they make a good case.
snip
-------------------
Major error appears to be the confusion between the Wall Street
Casino and the "real economy."

"Ed Huntress" wrote:

Getting back to my original point, the growth model isn't working. This
isn't an empty
country with huge resources to exploit. The export market isn't as big as
it once was. We
need to figure out how to live within the reality that the growth model is
getting just as
tapped out as the oil patch.

There are non-growth models of economics, untested and hotly debated, that
are promoted by the green/sustainable/leftish crowd. There are fundamental
issues with such models that upend some of the precepts of capitalism
itself. If I were a student now I'd be interested in studying them.

While I don't count myself amoungst the g/s/l crowd, I do think they have some valid
points. The question is when they are going to start making sense to a sizable majority
of the population.

I wonder how traditional things like home sales are going to far when the boombers start
dying off. How a drawdown of investments will affect the market as they pull out funds to
live on. In addition to the current mess, I already had worries about the next 15 years.

But back for a moment to deflation -- do you follow the basic idea? Growth
models or not, that's the way the system works now. Slowdowns can be
handled. Declining prices are not necessarily bad. But put the two together,
and pass a tipping point of low interest rates with negative growth, and
you're in a deflationary spiral. And those scare economists far more than
inflationary spirals do.

I'm still trying to wrap my head around it but I do see sense in what you are saying. I
have a feeling this Christmas season is going to be hard on retailers since they typically
make most of their profits during the holliday season. Credit card companies have pulled
down limits on credit cards and hiked interest rates to reduce exposure and I have a
feeling there are more people this year that are scaling down purchases for the holiday
season.

I was really hoping to avoid living in interesting times. ;

Wes

On Nov 2, 3:49*pm, Wes wrote:
"Ed Huntress" wrote:
Getting back to my original point, the growth model isn't working. *This
isn't an empty
country with huge resources to exploit. *The export market isn't as big as
it once was. We
need to figure out how to live within the reality that the growth model is
getting just as
tapped out as the oil patch.

There are non-growth models of economics, untested and hotly debated, that
are promoted by the green/sustainable/leftish crowd. There are fundamental
issues with such models that upend some of the precepts of capitalism
itself. If I were a student now I'd be interested in studying them.

While I don't count myself amoungst the g/s/l crowd, I do think they have some valid
points. *The question is when they are going to start making sense to a sizable majority
of the population.

I wonder how traditional things like home sales are going to far when the boombers start
dying off. *How a drawdown of investments will affect the market as they pull out funds to
live on. *In addition to the current mess, I already had worries about the next 15 years.



But back for a moment to deflation -- do you follow the basic idea? Growth
models or not, that's the way the system works now. Slowdowns can be
handled. Declining prices are not necessarily bad. But put the two together,
and pass a tipping point of low interest rates with negative growth, and
you're in a deflationary spiral. And those scare economists far more than
inflationary spirals do.

I'm still trying to wrap my head around it but I do see sense in what you are saying. *I
have a feeling this Christmas season is going to be hard on retailers since they typically
make most of their profits during the holliday season. *Credit card companies have pulled
down limits on credit cards and hiked interest rates to reduce exposure and I have a
feeling there are more people this year that are scaling down purchases for the holiday
season.

I was really hoping to avoid living in interesting times. ;

Wes

LOL...Wes we all are witnessing history in the making.

Think of it as "When the Republicans Stole Christmas"

It's going to be a bloodbath in retailing this Christmas.

TMT

"For many retailers, holiday sales account for as much as 40% of their
annual revenue and up to 80% of their profits — hence the name Black
Friday or the day when stores traditionally go from being "in the red"
to "in the black." "

http://www.time.com/time/business/ar...855555,00.html

Too_Many_Tools wrote:

LOL...Wes we all are witnessing history in the making.

Think of it as "When the Republicans Stole Christmas"

It's going to be a bloodbath in retailing this Christmas.

TMT

"For many retailers, holiday sales account for as much as 40% of their
annual revenue and up to 80% of their profits =97 hence the name Black
Friday or the day when stores traditionally go from being "in the red"
to "in the black." "

http://www.time.com/time/business/ar...855555,00.html


Yup, it will be bad. You may want to blame it all on republicans but dems have their
hands in this though I'm sure Waxman will stay away from it. A hint, to help you out, the
Waxman hasn't managed to pin this on a republican. That should tell you something.

Obama has made promises he can not come through on. If he wins, there is going to be a
lot of anger when the people living on false hope figure out they were lied to.

There is nothing more cynical and cruel than what Obama has offered the desperate people
in our society. He promises much and can provide little or nothing.

Wes
--
"Additionally as a security officer, I carry a gun to protect
government officials but my life isn't worth protecting at home
in their eyes." Dick Anthony Heller

"Wes" wrote in message
...
Too_Many_Tools wrote:

LOL...Wes we all are witnessing history in the making.

Think of it as "When the Republicans Stole Christmas"

It's going to be a bloodbath in retailing this Christmas.

TMT

"For many retailers, holiday sales account for as much as 40% of their
annual revenue and up to 80% of their profits =97 hence the name Black
Friday or the day when stores traditionally go from being "in the red"
to "in the black." "

http://www.time.com/time/business/ar...855555,00.html


Yup, it will be bad. You may want to blame it all on republicans but dems
have their
hands in this though I'm sure Waxman will stay away from it. A hint, to
help you out, the
Waxman hasn't managed to pin this on a republican. That should tell you
something.

Obama has made promises he can not come through on. If he wins, there is
going to be a
lot of anger when the people living on false hope figure out they were
lied to.

There is nothing more cynical and cruel than what Obama has offered the
desperate people
in our society. He promises much and can provide little or nothing.

George Bush is the person in whom the Right placed its blind faith, the one
they glorified and held up as the ultimate standard-bearer of what they
believe in. And now he -- and they -- lay in shambles and disgrace. No
matter what metric one uses, it's difficult to overstate what a profound
failure the Bush presidency is, and everyone -- including Bush -- knows
that. The most important aspect of this Tuesday's election is to finalize
their humiliating repudiation and to bury them for what they've done.


HTH

J

"Wes" wrote in message
...
"Ed Huntress" wrote:

Getting back to my original point, the growth model isn't working. This
isn't an empty
country with huge resources to exploit. The export market isn't as big
as
it once was. We
need to figure out how to live within the reality that the growth model
is
getting just as
tapped out as the oil patch.

There are non-growth models of economics, untested and hotly debated, that
are promoted by the green/sustainable/leftish crowd. There are fundamental
issues with such models that upend some of the precepts of capitalism
itself. If I were a student now I'd be interested in studying them.

While I don't count myself amoungst the g/s/l crowd, I do think they have
some valid
points. The question is when they are going to start making sense to a
sizable majority
of the population.

The question is how you make capitalism work without growth. This is a very
old question that's been bantered around for at least a century. There are
current books on the subject if you're interested.

As with many other things I'm way behind in the thinking about this, but
when I was a student, the answer to the question of how you have capitalism
without growth was, you don't. The g/s/l crowd mostly promotes a form of
socialist birthday cake with capitalist icing on top.

Or they did. Maybe they have something new up their sleeves. The whole
subject is a good one for thought and discussion, and they do that in
undergrad economics. But it's too involved for a nominal metalworking
newsgroup. d8-)


I wonder how traditional things like home sales are going to far when the
boombers start
dying off. How a drawdown of investments will affect the market as they
pull out funds to
live on. In addition to the current mess, I already had worries about the
next 15 years.

Well, demographic shifts insert another dynamic into the equation, and
you've just made the final exam essay really complicated. I wouldn't want to
have to tackle it. Keep in mind, though, that when we boomers take out our
savings as a retirement annuity, we spend the money. It doesn't disappear
and it will wind up accumulated somewhere again, where it's available for
investment. It's a zero-sum game at that point, where we're no longer
producing things, but the money doesn't go down a rabbit hole. It keeps
popping up when it gets spent.


But back for a moment to deflation -- do you follow the basic idea? Growth
models or not, that's the way the system works now. Slowdowns can be
handled. Declining prices are not necessarily bad. But put the two
together,
and pass a tipping point of low interest rates with negative growth, and
you're in a deflationary spiral. And those scare economists far more than
inflationary spirals do.

I'm still trying to wrap my head around it but I do see sense in what you
are saying.

Just so I'm not giving the impression that it's *likely*. It's not likely at
all. The economists who run the Fed and the Treasury are wise to that game
and will act in plenty of time to prevent it. We hope. g But don't assume
that because the shell game of high finance caught them flat-footed that
they can't calculate an interest rate. That's their meat.

I have a feeling this Christmas season is going to be hard on retailers
since they typically
make most of their profits during the holliday season. Credit card
companies have pulled
down limits on credit cards and hiked interest rates to reduce exposure
and I have a
feeling there are more people this year that are scaling down purchases
for the holiday
season.

Well, that's a recession for you. It's just reminding us that Greenspan
didn't find a cure for the business cycle after all. But it isn't recession
that's the scary thing out there. Helplessness, like the helplessness of
deflation, and a financial system that's out of control because nobody knows
what the hell is going on -- those are the scary things.


I was really hoping to avoid living in interesting times. ;

One thing is sure, I believe: Trying to hold it back, resisting change and
dragging our feet over necessary responses because they're ideologically
difficult to swallow, will only let them get worse, and maybe get out of
hand. McCain and his advisors have a streak of Hoover in them. They'd take
too long to recognize the things that should be obvious.

But I've already voted, so it's no use arguing with me. d8-)

--
Ed Huntress

"Ed Huntress" wrote:

I was really hoping to avoid living in interesting times. ;

One thing is sure, I believe: Trying to hold it back, resisting change and
dragging our feet over necessary responses because they're ideologically
difficult to swallow, will only let them get worse, and maybe get out of
hand. McCain and his advisors have a streak of Hoover in them. They'd take
too long to recognize the things that should be obvious.

But I've already voted, so it's no use arguing with me. d8-)


Oh heck Ed, I wasn't trying to change your vote. Just like you never really thought you
would change mine. I gotta tell you Hillary in office scares me a lot less than Obama.
Not that McCain, given some of his positions, is a total thrill for me either.

If your guy wins, he has two years to make everyone happy or face a backlash that will be
1994 on steroids. I believe he promised way too much and his recent retreating isn't
going to resonate with those that voted for him.

I have bought my roll of Tums for tomorrow, the question is how much of the roll I chew to
knock down the heartburn.

Wes

"Wes" wrote in message
...
"Ed Huntress" wrote:

I was really hoping to avoid living in interesting times. ;

One thing is sure, I believe: Trying to hold it back, resisting change and
dragging our feet over necessary responses because they're ideologically
difficult to swallow, will only let them get worse, and maybe get out of
hand. McCain and his advisors have a streak of Hoover in them. They'd take
too long to recognize the things that should be obvious.

But I've already voted, so it's no use arguing with me. d8-)


Oh heck Ed, I wasn't trying to change your vote. Just like you never
really thought you
would change mine. I gotta tell you Hillary in office scares me a lot
less than Obama.
Not that McCain, given some of his positions, is a total thrill for me
either.

I wouldn't have voted for Hillary. If it was between those two, I would have
voted for McCain. She gives me the creeps.


If your guy wins, he has two years to make everyone happy or face a
backlash that will be
1994 on steroids. I believe he promised way too much and his recent
retreating isn't
going to resonate with those that voted for him.

Everybody promises too much. McCain promised to buy every delinquent
mortgage out there at face value, too. Both of them made promises before the
financial meltdown and then, apparently, felt they had to stick to them.

That's politics. I think that most of us discount those campaign program
ideas. I take them more as an indication of what their motivations and
philosophy are all about.


I have bought my roll of Tums for tomorrow, the question is how much of
the roll I chew to
knock down the heartburn.

Eh, it will be fun. You'll see lots of happy, happy people, excited as can
be. Doesn't it make you happy to see so many happy people? Both coasts will
be happy. Canada will be happy. Kenya will be happy. Even France will be
happy.

Happy, happy, happy. They'll be dancing in the streets, all over the world.
They'll be dancin' in Chi-caaaaa-go. Down in New Orleans. Way up in New York
City. Oh, it doesn't matter what you wear, just as long as you are there...
d8-)

--
Ed Huntress

On Sun, 2 Nov 2008 20:41:00 -0500, "Ed Huntress"
wrote:

The question is how you make capitalism work without growth. This is a very
old question that's been bantered around for at least a century. There are
current books on the subject if you're interested.

As with many other things I'm way behind in the thinking about this, but
when I was a student, the answer to the question of how you have capitalism
without growth was, you don't. The g/s/l crowd mostly promotes a form of
socialist birthday cake with capitalist icing on top.
------------------
Continued growth is only a problem when the organizations
involved become fixated on it. There appears to be no intrinsic
reason that Capitalism and/or "the free market" [these are not
the same] can't exist in a mature or static economy.

As one of the other posters observed, there is no basic reason we
do not have a 32 hour work week as some countries such as France
have gone to as a way of sharing the productivity gains of the
last few decades.

Unfortunately, "planned obsolescence" in the sense of Packard's
"The Waste Makers" seems to have taken hold in many industries,
as a high tech version of hiring people to go out and throw
bricks through windows so the glass factories and glazers will
have employment.
http://en.wikipedia.org/wiki/Planned_obsolescence
http://en.wikipedia.org/wiki/Vance_Packard
http://www.writing.upenn.edu/~afilreis/50s/packard.html
http://books.google.com/books?as_aut...r-navigational

FWIW -- The increasingly shoddy construction of new houses and
other buildings indicates that many of these will not last the
life of a 30 year mortgage.

"F. George McDuffee" wrote in message
...
On Sun, 2 Nov 2008 20:41:00 -0500, "Ed Huntress"
wrote:

The question is how you make capitalism work without growth. This is a
very
old question that's been bantered around for at least a century. There are
current books on the subject if you're interested.

As with many other things I'm way behind in the thinking about this, but
when I was a student, the answer to the question of how you have
capitalism
without growth was, you don't. The g/s/l crowd mostly promotes a form of
socialist birthday cake with capitalist icing on top.
------------------
Continued growth is only a problem when the organizations
involved become fixated on it. There appears to be no intrinsic
reason that Capitalism and/or "the free market" [these are not
the same] can't exist in a mature or static economy.

Without capital growth there isn't enough reason to assume risk, George. The
thought on this is that the system runs down like an unwound watch when the
only return on capital is dividends.

Nobody has ever tried it -- successfully.


As one of the other posters observed, there is no basic reason we
do not have a 32 hour work week as some countries such as France
have gone to as a way of sharing the productivity gains of the
last few decades.

Unfortunately, "planned obsolescence" in the sense of Packard's
"The Waste Makers" seems to have taken hold in many industries,
as a high tech version of hiring people to go out and throw
bricks through windows so the glass factories and glazers will
have employment.
http://en.wikipedia.org/wiki/Planned_obsolescence
http://en.wikipedia.org/wiki/Vance_Packard
http://www.writing.upenn.edu/~afilreis/50s/packard.html
http://books.google.com/books?as_aut...r-navigational

FWIW -- The increasingly shoddy construction of new houses and
other buildings indicates that many of these will not last the
life of a 30 year mortgage.

"Ed Huntress" wrote in message
...

"F. George McDuffee" wrote in message
...
On Sun, 2 Nov 2008 20:41:00 -0500, "Ed Huntress"
wrote:

The question is how you make capitalism work without growth. This is a
very
old question that's been bantered around for at least a century. There
are
current books on the subject if you're interested.

As with many other things I'm way behind in the thinking about this, but
when I was a student, the answer to the question of how you have
capitalism
without growth was, you don't. The g/s/l crowd mostly promotes a form of
socialist birthday cake with capitalist icing on top.
------------------
Continued growth is only a problem when the organizations
involved become fixated on it. There appears to be no intrinsic
reason that Capitalism and/or "the free market" [these are not
the same] can't exist in a mature or static economy.

Without capital growth there isn't enough reason to assume risk, George.
The thought on this is that the system runs down like an unwound watch
when the only return on capital is dividends.

Nobody has ever tried it -- successfully.

Ed, you are showing you age. You whipper snappers don't remember America pre
1958.
It was at that time that equities and bond yields flipped more or less
permanently.

In the second quarter of 1958, the dividend yield on stocks was 3.9% and
the yield on 10-year Treasuries was 2.9%. Three months later, dividend
yields were down to 3.5% while Treasuries had climbed to match them at 3.5%.
The next three months stock prices kept rising and pushed the dividend yield
down to 3.3% while bond prices fell, driving bond yields to 3.8%. The two
yields had come close in the past but had always diverged. In 1958, they
reversed their historical positions more or less permanently.

The period between 1958 and 2008 might only have been an anomaly that is now
correcting as dividend yields revert to past tradition and rise above bond
yields.

Until 1982, the rate of unemployment (unemployment as a percent of the
civilian labor force) and the median duration of unemployment (in months)
moved up and down together in almost lockstep. Since 1982, however, the
duration of unemployment has increased dramatically relative to changes in
the unemployment rate. 1982 was also the point at which the growth rate of
real compensation began to lag productivity -significantly and persistently.

Income inequality has risen steadily over the past fifteen to twenty years.
Just how much longer will Americans tolerate these trends?

Thousands of Americans are losing their homes to foreclosures. Congress has
just passed a bill that "bails out Wall Street." The recent failures and
mergers of investment banks have been accompanied by stupifying bonuses to
the very executives responsible for much of the carnage left in their wake.


JC

On Tue, 4 Nov 2008 12:41:26 -0500, "Ed Huntress"
wrote:
snip
Without capital growth there isn't enough reason to assume risk, George. The
thought on this is that the system runs down like an unwound watch when the
only return on capital is dividends.
snip
------------------
Don't confuse capital growth with "growth," don't confuse raw
capital growth with inflation adjusted/tax effect growth, and
above all don't confuse an increase in "spondulicks" with an
increase in capital. {see my earlier post on this}

Even in a relatively static economy [from a population and
standard of living/conspicious consumption standpoint] there
should still be plenty of opportunity for profitable investment,
for example upgrading/replacement of existing plants/equipment,
production of consumables such as food and clothing, and
[legitimate] replacement products.

What would be missing is the "leverage" [steroids/meth] and
outsized returns, which never seems to "trickle down" to the
savers that provided the capital in the first place.

For the "investors" :-( that are looking for "action" there are
plenty of casinos, both in the US and abroad, that are more than
willing to accommodate them. This also has the benefit that "the
players" are further removed from the real economy, and less
likely to cause damage.

"John R. Carroll" wrote in message
...

"Ed Huntress" wrote in message
...

"F. George McDuffee" wrote in message
...
On Sun, 2 Nov 2008 20:41:00 -0500, "Ed Huntress"
wrote:

The question is how you make capitalism work without growth. This is a
very
old question that's been bantered around for at least a century. There
are
current books on the subject if you're interested.

As with many other things I'm way behind in the thinking about this, but
when I was a student, the answer to the question of how you have
capitalism
without growth was, you don't. The g/s/l crowd mostly promotes a form of
socialist birthday cake with capitalist icing on top.
------------------
Continued growth is only a problem when the organizations
involved become fixated on it. There appears to be no intrinsic
reason that Capitalism and/or "the free market" [these are not
the same] can't exist in a mature or static economy.

Without capital growth there isn't enough reason to assume risk, George.
The thought on this is that the system runs down like an unwound watch
when the only return on capital is dividends.

Nobody has ever tried it -- successfully.

Ed, you are showing you age. You whipper snappers don't remember America
pre 1958.
It was at that time that equities and bond yields flipped more or less
permanently.

In the second quarter of 1958, the dividend yield on stocks was 3.9% and
the yield on 10-year Treasuries was 2.9%. Three months later, dividend
yields were down to 3.5% while Treasuries had climbed to match them at
3.5%. The next three months stock prices kept rising and pushed the
dividend yield down to 3.3% while bond prices fell, driving bond yields to
3.8%. The two yields had come close in the past but had always diverged.
In 1958, they reversed their historical positions more or less
permanently.

The period between 1958 and 2008 might only have been an anomaly that is
now correcting as dividend yields revert to past tradition and rise above
bond yields.

I'm aware of that history, John. The "anomaly," though, is also a period
when growth in stock values, which rose from something like 1,000 to 12,000
on the index basis, became the point and dividends on equities became almost
insignificant.

With no growth, trading equities becomes a zero-sum game and everyone wants
bonds, because there's nothing to be gained by investing in equities (except
for gamblers who think they'll win the zero-sum game). Like Japan in the
'70s and '80s, corporations would wind up being financed by debt and will be
vulnerable to bankrupcy with the slightest economic downturn (Japan avoided
this because the big banks held the bonds, and they kept bailing out
troubled companies).


Until 1982, the rate of unemployment (unemployment as a percent of the
civilian labor force) and the median duration of unemployment (in months)
moved up and down together in almost lockstep. Since 1982, however, the
duration of unemployment has increased dramatically relative to changes in
the unemployment rate. 1982 was also the point at which the growth rate of
real compensation began to lag productivity -significantly and
persistently.

Income inequality has risen steadily over the past fifteen to twenty
years. Just how much longer will Americans tolerate these trends?

It isn't clear what you're arguing for here, except some kind of change. If
the change is toward a sustainable no-growth capitalist economy, though, I
don't believe one has ever succeeded.


Thousands of Americans are losing their homes to foreclosures. Congress
has just passed a bill that "bails out Wall Street." The recent failures
and mergers of investment banks have been accompanied by stupifying
bonuses to the very executives responsible for much of the carnage left in
their wake.

Yes, we have trouble. But the question is how to organize a no-growth
economy that works. Another question is whether anyone would want it if you
could.

The trick looks like it must be a case of shifting definitions of "growth"
to another model -- one, for example, in which externalities (CO2 emissions,
and other quality-of-life issues) get a price put on them and they become
part of the gain/loss equations. And it may take more than just physical
externalities.

That soon becomes a planning system in which markets are mostly products of
policy. Again, Japan had some of that, when MITI was directing economic
growth in specific sectors. It didn't work.

--
Ed Huntress

"Ed Huntress" wrote in message
...

"John R. Carroll" wrote in message
...

"Ed Huntress" wrote in message
...

"F. George McDuffee" wrote in message
...
On Sun, 2 Nov 2008 20:41:00 -0500, "Ed Huntress"
wrote:

The question is how you make capitalism work without growth. This is a
very
old question that's been bantered around for at least a century. There
are
current books on the subject if you're interested.

As with many other things I'm way behind in the thinking about this,
but
when I was a student, the answer to the question of how you have
capitalism
without growth was, you don't. The g/s/l crowd mostly promotes a form
of
socialist birthday cake with capitalist icing on top.
------------------
Continued growth is only a problem when the organizations
involved become fixated on it. There appears to be no intrinsic
reason that Capitalism and/or "the free market" [these are not
the same] can't exist in a mature or static economy.

Without capital growth there isn't enough reason to assume risk, George.
The thought on this is that the system runs down like an unwound watch
when the only return on capital is dividends.

Nobody has ever tried it -- successfully.

Ed, you are showing you age. You whipper snappers don't remember America
pre 1958.
It was at that time that equities and bond yields flipped more or less
permanently.

In the second quarter of 1958, the dividend yield on stocks was 3.9% and
the yield on 10-year Treasuries was 2.9%. Three months later, dividend
yields were down to 3.5% while Treasuries had climbed to match them at
3.5%. The next three months stock prices kept rising and pushed the
dividend yield down to 3.3% while bond prices fell, driving bond yields
to 3.8%. The two yields had come close in the past but had always
diverged. In 1958, they reversed their historical positions more or less
permanently.

The period between 1958 and 2008 might only have been an anomaly that is
now correcting as dividend yields revert to past tradition and rise above
bond yields.

I'm aware of that history, John. The "anomaly," though, is also a period
when growth in stock values, which rose from something like 1,000 to
12,000 on the index basis, became the point and dividends on equities
became almost insignificant.

With no growth, trading equities becomes a zero-sum game and everyone
wants bonds, because there's nothing to be gained by investing in equities
(except for gamblers who think they'll win the zero-sum game). Like Japan
in the '70s and '80s, corporations would wind up being financed by debt
and will be vulnerable to bankrupcy with the slightest economic downturn
(Japan avoided this because the big banks held the bonds, and they kept
bailing out troubled companies).

You are confusing growth and increases in share price Ed.
Had growth been financed with equity rather than debt, the dilution would
have kept share prices stable and driven companies towards dividends.
A lot of large, profitable, publicly traded companies specifically abandoned
dividends years ago.
They had to do this to pump up their share price. IOW they substituted one
metric, increasing share prices, for another - value.

JC

"F. George McDuffee" wrote in message
...
On Tue, 4 Nov 2008 12:41:26 -0500, "Ed Huntress"
wrote:
snip
Without capital growth there isn't enough reason to assume risk, George.
The
thought on this is that the system runs down like an unwound watch when
the
only return on capital is dividends.
snip
------------------
Don't confuse capital growth with "growth," don't confuse raw
capital growth with inflation adjusted/tax effect growth, and
above all don't confuse an increase in "spondulicks" with an
increase in capital. {see my earlier post on this}

Even in a relatively static economy [from a population and
standard of living/conspicious consumption standpoint] there
should still be plenty of opportunity for profitable investment,
for example upgrading/replacement of existing plants/equipment,
production of consumables such as food and clothing, and
[legitimate] replacement products.

That's a static economy, like a machine into which you put fixed amounts of
inputs and get fixed amounts of outputs. If you know of a capitalist system
that has worked with static growth, I'd love to hear about it.


What would be missing is the "leverage" [steroids/meth] and
outsized returns, which never seems to "trickle down" to the
savers that provided the capital in the first place.

You're talking about the kind of out-of-control finance that we've been
going through lately. That's not the basic growth model of capitalism.


For the "investors" :-( that are looking for "action" there are
plenty of casinos, both in the US and abroad, that are more than
willing to accommodate them. This also has the benefit that "the
players" are further removed from the real economy, and less
likely to cause damage.

The kind of imaginary growth we've had lately is not the operating principle
of capitalism. All experience-based models show that capitalism works when
you have opportunities for growth. Without it, you kill the incentive for
capital to take risks.

With no growth, productivity increases and other innovations are zero-sum;
growth in one area means loss in another. THAT's the gambling game, in which
there is no net growth, and any advantage one party gains comes at the
expense of another.

If you say that it isn't necessary for that to happen, then you're talking
about a growth model again. Slow growth, fast growth -- any growth will
motivate the system. But in a global economy, no one country or group of
countries (like the West, for example) can simply choose slow growth. If you
try, you get killed by the other countries that successfully operate on a
fast-growth model.

This can get complicated. If you know of a way to run capitalism with no
growth, you should patent it. You'll grow like crazy. d8-)

--
Ed Huntress

"John R. Carroll" wrote in message
news

"Ed Huntress" wrote in message
...

"John R. Carroll" wrote in message
...

"Ed Huntress" wrote in message
...

"F. George McDuffee" wrote in
message ...
On Sun, 2 Nov 2008 20:41:00 -0500, "Ed Huntress"
wrote:

The question is how you make capitalism work without growth. This is a
very
old question that's been bantered around for at least a century. There
are
current books on the subject if you're interested.

As with many other things I'm way behind in the thinking about this,
but
when I was a student, the answer to the question of how you have
capitalism
without growth was, you don't. The g/s/l crowd mostly promotes a form
of
socialist birthday cake with capitalist icing on top.
------------------
Continued growth is only a problem when the organizations
involved become fixated on it. There appears to be no intrinsic
reason that Capitalism and/or "the free market" [these are not
the same] can't exist in a mature or static economy.

Without capital growth there isn't enough reason to assume risk,
George. The thought on this is that the system runs down like an
unwound watch when the only return on capital is dividends.

Nobody has ever tried it -- successfully.

Ed, you are showing you age. You whipper snappers don't remember America
pre 1958.
It was at that time that equities and bond yields flipped more or less
permanently.

In the second quarter of 1958, the dividend yield on stocks was 3.9% and
the yield on 10-year Treasuries was 2.9%. Three months later, dividend
yields were down to 3.5% while Treasuries had climbed to match them at
3.5%. The next three months stock prices kept rising and pushed the
dividend yield down to 3.3% while bond prices fell, driving bond yields
to 3.8%. The two yields had come close in the past but had always
diverged. In 1958, they reversed their historical positions more or less
permanently.

The period between 1958 and 2008 might only have been an anomaly that is
now correcting as dividend yields revert to past tradition and rise
above bond yields.

I'm aware of that history, John. The "anomaly," though, is also a period
when growth in stock values, which rose from something like 1,000 to
12,000 on the index basis, became the point and dividends on equities
became almost insignificant.

With no growth, trading equities becomes a zero-sum game and everyone
wants bonds, because there's nothing to be gained by investing in
equities (except for gamblers who think they'll win the zero-sum game).
Like Japan in the '70s and '80s, corporations would wind up being
financed by debt and will be vulnerable to bankrupcy with the slightest
economic downturn (Japan avoided this because the big banks held the
bonds, and they kept bailing out troubled companies).

You are confusing growth and increases in share price Ed.
Had growth been financed with equity rather than debt, the dilution would
have kept share prices stable and driven companies towards dividends.

Before we get too far off the track here, remember that the subject is
whether you can have a capitalist system with no growth. My assertion is
that you can't. Share prices versus dividends still leaves open the question
of why someone would risk capital by buying equity in a company that isn't
going to grow. Even if one company grows in such a system, it requires that
another one decline. The stock market then becomes a gambling game -- or,
more likely, it dries up -- because it's a zero-sum game overall.

A lot of large, profitable, publicly traded companies specifically
abandoned dividends years ago.
They had to do this to pump up their share price. IOW they substituted one
metric, increasing share prices, for another - value.

JC

On Tue, 4 Nov 2008 10:50:05 -0800, "John R. Carroll"
wrote:


"Ed Huntress" wrote in message
...

"John R. Carroll" wrote in message
...

"Ed Huntress" wrote in message
...

"F. George McDuffee" wrote in message
...
On Sun, 2 Nov 2008 20:41:00 -0500, "Ed Huntress"
wrote:

The question is how you make capitalism work without growth. This is a
very
old question that's been bantered around for at least a century. There
are
current books on the subject if you're interested.

As with many other things I'm way behind in the thinking about this,
but
when I was a student, the answer to the question of how you have
capitalism
without growth was, you don't. The g/s/l crowd mostly promotes a form
of
socialist birthday cake with capitalist icing on top.
------------------
Continued growth is only a problem when the organizations
involved become fixated on it. There appears to be no intrinsic
reason that Capitalism and/or "the free market" [these are not
the same] can't exist in a mature or static economy.

Without capital growth there isn't enough reason to assume risk, George.
The thought on this is that the system runs down like an unwound watch
when the only return on capital is dividends.

Nobody has ever tried it -- successfully.

Ed, you are showing you age. You whipper snappers don't remember America
pre 1958.
It was at that time that equities and bond yields flipped more or less
permanently.

In the second quarter of 1958, the dividend yield on stocks was 3.9% and
the yield on 10-year Treasuries was 2.9%. Three months later, dividend
yields were down to 3.5% while Treasuries had climbed to match them at
3.5%. The next three months stock prices kept rising and pushed the
dividend yield down to 3.3% while bond prices fell, driving bond yields
to 3.8%. The two yields had come close in the past but had always
diverged. In 1958, they reversed their historical positions more or less
permanently.

The period between 1958 and 2008 might only have been an anomaly that is
now correcting as dividend yields revert to past tradition and rise above
bond yields.

I'm aware of that history, John. The "anomaly," though, is also a period
when growth in stock values, which rose from something like 1,000 to
12,000 on the index basis, became the point and dividends on equities
became almost insignificant.

With no growth, trading equities becomes a zero-sum game and everyone
wants bonds, because there's nothing to be gained by investing in equities
(except for gamblers who think they'll win the zero-sum game). Like Japan
in the '70s and '80s, corporations would wind up being financed by debt
and will be vulnerable to bankrupcy with the slightest economic downturn
(Japan avoided this because the big banks held the bonds, and they kept
bailing out troubled companies).

You are confusing growth and increases in share price Ed.
Had growth been financed with equity rather than debt, the dilution would
have kept share prices stable and driven companies towards dividends.
A lot of large, profitable, publicly traded companies specifically abandoned
dividends years ago.
They had to do this to pump up their share price. IOW they substituted one
metric, increasing share prices, for another - value.

JC

-----------
In turn this seems to have been largely the result of an insane
tax code where the profit from an increase in share prices was
capital gains and taxed at 1/2 [or less] the rate for regular
earned income and dividends/interest.

Note that after the IPO, the corporations do not benefit from an
increase in their share price, only the speculators. Secondary
stock sales [99%+ of the market] do not help the corporations
develop new products, increase employment, etc. This is just
more BS to justify preferential tax treatment.

It can be argued that a *HIGHER* capital gains tax rate than the
normal income tax rate would do much to dampen
manipulation/speculation and encourage dividend distribution.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Tue, 4 Nov 2008 14:02:02 -0500, "Ed Huntress"
wrote:

snipped for sanity

Before we get too far off the track here, remember that the subject is
whether you can have a capitalist system with no growth. My assertion is
that you can't. Share prices versus dividends still leaves open the question
of why someone would risk capital by buying equity in a company that isn't
going to grow. Even if one company grows in such a system, it requires that
another one decline. The stock market then becomes a gambling game -- or,
more likely, it dries up -- because it's a zero-sum game overall.


Someone would risk cash for income i.e. dividends. The only justifiable and
sustainable rise in the price of the equities is the rate of inflation, since
those equities represent the value of the company.


I think that John has hit the nail on the head. income from capital gains
should be taxed at similar rates to income from labour.


Mind you, I think that anyone that makes a living from gambling should be
treated with significantly less respect than an honest pimp or drug pusher :-(


Mark Rand (happy Obama day
RTFM

"Mark Rand" wrote in message
...
On Tue, 4 Nov 2008 14:02:02 -0500, "Ed Huntress"
wrote:

snipped for sanity

Before we get too far off the track here, remember that the subject is
whether you can have a capitalist system with no growth. My assertion is
that you can't. Share prices versus dividends still leaves open the
question
of why someone would risk capital by buying equity in a company that isn't
going to grow. Even if one company grows in such a system, it requires
that
another one decline. The stock market then becomes a gambling game -- or,
more likely, it dries up -- because it's a zero-sum game overall.


Someone would risk cash for income i.e. dividends.

But they don't. Dividends-only securities only work when there's a guarentee
for the principle. In other words, bonds, and some types of preferred
stocks. The high-risk equities market would dry up with no growth. Where
would the capital come from for new startups?

The only justifiable and
sustainable rise in the price of the equities is the rate of inflation,
since
those equities represent the value of the company.

Geez. What kind of capitalism do you have over there? g The only
justifiable and sustainable source of increase in the price of equities is
economic growth.


I think that John has hit the nail on the head. income from capital gains
should be taxed at similar rates to income from labour.

That's another old argument. Are you basing yours on "fairness," or on
proven trends in capital investment?


Mind you, I think that anyone that makes a living from gambling should be
treated with significantly less respect than an honest pimp or drug pusher
:-(

I always wanted to be a card-counter at blackjack, but now they use too many
decks. Don't try me in a friendly game with only one deck, however. d8-)



Mark Rand (happy Obama day
RTFM

Thanks. It's quite a party.

--
Ed Huntress

"Ed Huntress" wrote in message
...

"Mark Rand" wrote in message
...
On Tue, 4 Nov 2008 14:02:02 -0500, "Ed Huntress"

wrote:

snipped for sanity

Before we get too far off the track here, remember that the subject is
whether you can have a capitalist system with no growth. My assertion is
that you can't. Share prices versus dividends still leaves open the
question
of why someone would risk capital by buying equity in a company that
isn't
going to grow. Even if one company grows in such a system, it requires
that
another one decline. The stock market then becomes a gambling game -- or,
more likely, it dries up -- because it's a zero-sum game overall.


Someone would risk cash for income i.e. dividends.

But they don't. Dividends-only securities only work when there's a
guarentee for the principle. In other words, bonds, and some types of
preferred stocks. The high-risk equities market would dry up with no
growth. Where would the capital come from for new startups?

Well Ed I'll tell you.
The tax plan Obama is going to ask Congress to pass changes the capital
gains rate on any money put into a start up at ZERO.
Since passive income is taxed at capital gain rates, it will essentially be
tax free.

I'll bey you didn't know that G

JC

"John R. Carroll" wrote in message
...

"Ed Huntress" wrote in message
...

"Mark Rand" wrote in message
...
On Tue, 4 Nov 2008 14:02:02 -0500, "Ed Huntress"

wrote:

snipped for sanity

Before we get too far off the track here, remember that the subject is
whether you can have a capitalist system with no growth. My assertion is
that you can't. Share prices versus dividends still leaves open the
question
of why someone would risk capital by buying equity in a company that
isn't
going to grow. Even if one company grows in such a system, it requires
that
another one decline. The stock market then becomes a gambling game --
or,
more likely, it dries up -- because it's a zero-sum game overall.


Someone would risk cash for income i.e. dividends.

But they don't. Dividends-only securities only work when there's a
guarentee for the principle. In other words, bonds, and some types of
preferred stocks. The high-risk equities market would dry up with no
growth. Where would the capital come from for new startups?

Well Ed I'll tell you.
The tax plan Obama is going to ask Congress to pass changes the capital
gains rate on any money put into a start up at ZERO.
Since passive income is taxed at capital gain rates, it will essentially
be tax free.

I'll bey you didn't know that G

I heard it. I've been watching a LOT of TV -- including Fox, MSNBC, the BBC,
and CNBC. That's more TV than I've watched in the past year. And I've been
reading _The Economist_ from cover to cover, and even Rupert Murdoch's new
toy newspaper, the _Wall Street Journal_.

In other words, my life is a complete wreck, and I need two weeks in a
health spa. d8-)

--
Ed Huntress

On Wed, 5 Nov 2008 18:15:06 -0500, "Ed Huntress"
wrote:




In other words, my life is a complete wreck, and I need two weeks in a
health spa. d8-)


You'll just have to make do with a weekend in the workshop like the rest of us
:-)


Mark Rand
RTFM

On Wed, 5 Nov 2008 15:01:49 -0800, "John R. Carroll"
wrote:


"Ed Huntress" wrote in message
...

"Mark Rand" wrote in message
...
On Tue, 4 Nov 2008 14:02:02 -0500, "Ed Huntress"

wrote:

snipped for sanity

Before we get too far off the track here, remember that the subject is
whether you can have a capitalist system with no growth. My assertion is
that you can't. Share prices versus dividends still leaves open the
question
of why someone would risk capital by buying equity in a company that
isn't
going to grow. Even if one company grows in such a system, it requires
that
another one decline. The stock market then becomes a gambling game -- or,
more likely, it dries up -- because it's a zero-sum game overall.


Someone would risk cash for income i.e. dividends.

But they don't. Dividends-only securities only work when there's a
guarentee for the principle. In other words, bonds, and some types of
preferred stocks. The high-risk equities market would dry up with no
growth. Where would the capital come from for new startups?

Well Ed I'll tell you.
The tax plan Obama is going to ask Congress to pass changes the capital
gains rate on any money put into a start up at ZERO.
Since passive income is taxed at capital gain rates, it will essentially be
tax free.

I'll bey you didn't know that G

JC

=============
Which is reasonable if the intention is to increase the
opportunity for employment, innovation, etc.

This occurs only on the start-ups, and to a much lesser extent
with IPOs [much of the IPO money goes for underwriting charges,
and sales of existing stock which does not fund any company
activity].

Secondary sales, i.e. by one "investor" to another, contributes
no money to the corporation but is a simple reshuffle in
ownership of existing assets.

Unfortunately, the huge majority of exchange stock sales (99%)
are secondary, although the excuse/rationale for the great
unwashed for this activity and special tax treatment is that this
somehow [magically?] provides funds for corporate
investment/development. This is one of the worst cases of "bait
and switch" I have ever seen.

I have no problem with low or even zero income taxes on profits
derived from direct investment into corporations/companies,
either from "capital gains" [one time sale of IPO stock] or even
dividends, but I have a great deal of reservation about any
special tax treatments for "profits" from the secondary market
speculation/manipulation, and indeed a *HIGHER* than regular tax
on these profits, particularly when held only a short time [i.e.
day trading] appears to be fully justified as this activity is
not only non- but counter- productive, and ties up considerable
capital and highly talented people in totally unproductive
activities. Why subsidize, at best useless, and most likely
harmful, activities?


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

"F. George McDuffee" wrote in message
...
On Wed, 5 Nov 2008 15:01:49 -0800, "John R. Carroll"
wrote:


"Ed Huntress" wrote in message
...

"Mark Rand" wrote in message
...
On Tue, 4 Nov 2008 14:02:02 -0500, "Ed Huntress"

wrote:

snipped for sanity

Before we get too far off the track here, remember that the subject is
whether you can have a capitalist system with no growth. My assertion
is
that you can't. Share prices versus dividends still leaves open the
question
of why someone would risk capital by buying equity in a company that
isn't
going to grow. Even if one company grows in such a system, it requires
that
another one decline. The stock market then becomes a gambling game --
or,
more likely, it dries up -- because it's a zero-sum game overall.


Someone would risk cash for income i.e. dividends.

But they don't. Dividends-only securities only work when there's a
guarentee for the principle. In other words, bonds, and some types of
preferred stocks. The high-risk equities market would dry up with no
growth. Where would the capital come from for new startups?

Well Ed I'll tell you.
The tax plan Obama is going to ask Congress to pass changes the capital
gains rate on any money put into a start up at ZERO.
Since passive income is taxed at capital gain rates, it will essentially
be
tax free.

I'll bey you didn't know that G

JC

=============
Which is reasonable if the intention is to increase the
opportunity for employment, innovation, etc.

There isn't any other reason to consider such.



This occurs only on the start-ups, and to a much lesser extent
with IPOs [much of the IPO money goes for underwriting charges,
and sales of existing stock which does not fund any company
activity].

IPO's aren't start ups. IPO's are how start ups eventually cash out.



Secondary sales, i.e. by one "investor" to another, contributes
no money to the corporation but is a simple reshuffle in
ownership of existing assets.

And isn't a start up.


Unfortunately, the huge majority of exchange stock sales (99%)
are secondary, although the excuse/rationale for the great
unwashed for this activity and special tax treatment is that this
somehow [magically?] provides funds for corporate
investment/development. This is one of the worst cases of "bait
and switch" I have ever seen.

And isn't a start up.


I have no problem with low or even zero income taxes on profits
derived from direct investment into corporations/companies,
either from "capital gains" [one time sale of IPO stock] or even
dividends, but I have a great deal of reservation about any
special tax treatments for "profits" from the secondary market
speculation/manipulation, and indeed a *HIGHER* than regular tax
on these profits, particularly when held only a short time [i.e.
day trading] appears to be fully justified as this activity is
not only non- but counter- productive, and ties up considerable
capital and highly talented people in totally unproductive
activities. Why subsidize, at best useless, and most likely
harmful, activities?

You are talking about what is well beyond a start up.

JC