patrick.net

Peter P says

But stocks are worth exactly how much the next greater fool is willing to pay. :-)

Despite the half-witty statement, P/E ratios mean a lot.
http://www.advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php

YesYNot says

P/E ratios mean a lot

They mean a lot to people who get paid talking about P/E ratios.

Solar eclipses also mean a lot to people who get paid talking about financial astrology.

Remember, in a Keynesian Beauty Context, even I can win. :-)

P/E ratios aren't important because people talk about them. They are important, because stocks have oscillated about a P/E ratio of 15 for 140 years.

They are important for the same reason that price to rent ratios are important for housing.

YesYNot says

They are important, because stocks have oscillated about a P/E ratio of 15 for 140 years.

If you have infinite patience, by all means.

YesYNot says

They are important for the same reason that price to rent ratios are important for housing.

Definitely not as important as behavioral factors. Home prices appear to have high level of order-flow persistence. Trends, up or down, are more prevalent than mean-reversion.

But of course, price-to-rent ratio is important to housing consumers when they make the buy-versus-rent decision.

Prices do not fall because they are too high. They do so only when new losers fail to show up. Then they will not stop falling until buying resumes.

Peter P says

If you have infinite patience, by all means

Most people who buy stocks are investing in their retirement portfolio using a buy and hold philosophy, whether through individual stocks or funds. Hence, the P/E ratio is important and the expression 'stocks are expensive,' is used to refer to P/E ratios. These people might look for alternative investments when the P/E ratio is high. When the P/E ratio is low, people (should) look to move long term investments into stocks.

Only short term traders don't care about the P/E ratio, and most people don't (shouldn't) short term trade.

marcus says

If he had let the banks fail, we don't know how much worse things would have gotten before getting better or whether it would have possibly taken longer rather than less time. WE also don't know the impact on the rest of the world or on our relative position in it.

What would have happened, is nothing. Bad debt and assets would have been written off, Good debt and assets passed on to less risky institutions and boosted growing businesses who could pick up capital and capital tools for a steep discount, fueling growth.

This highly risky and unusual process that is seldom seen in America is called "Bankruptcy Proceedings".

In fact, beneficial effects would have continued for 20-40 years, once investors and board members of banking institutions realized Uncle Sam Deeppockets wouldn't bail them out in the future, and would invest and manage more conservatively. After that point, you'd get a new generation of MBA jerks who weren't around during the last bankster suicide and would go back to aggressive speculation.

However, US Foreign Influence due to weaker banks would have relatively declined versus the rest of the world, which is not an option for a late stage Merchant Oligarchy.

thunderlips11 says

However, US Foreign Influence due to weaker banks would have relatively declined versus the rest of the world, which is not an option for a late stage Merchant Oligarchy.

Bingo! The TBTF's are an arm of American foreign policy. So we all eat shit so the wonks can strut about and punish those who oppose the new world order.

errc says

which was designed to maximize revenues for those evil corporations (in the name of giving more people, better healthcare lmao

why are you laughing when something is true?

PPACA was the compromise everyone should have gotten behind in 2009, since the right didn't want government doing the insurance part at all. Keeping the complicated state-level exchange system was the left's attempt to meet you fuckheads in the middle.

What Dems wanted was universal health insurance for poor people so tens of millions of people would no longer have to beg for charity or try their luck in the ER, and also premium subsidies for the middle quintiles, paid by rich people in the top 5%.

We liberals got that -- two things the right did not actually want to pay for, which is why the right opposed PPACA when it was going down the ways in 2009-2010.

If we didn't have the conservative opposition controlling the Senate, the left would have passed Pelosi's bill, which did have single payer etc. But that's not how reality was configured in 2009.

gsr says

But bad solutions went through legislative process quite easily, right? Remember, even Elizabeth warren of your party was against the last spending bill. But since Obama approved it, it must be good.

No, there are some battles that cannot be won. In politics, if you're reduced to explaining your vote to your electorate, you've already lost. Warren as a blue state Senator has the luxury of being an opposionist and bomb-thrower.

Obama as CEO of the country has a wider portfolio and has to pick his battles with the GOP.

gsr says

Remember, we had 4.4% unemployment in 2007

shows how the Bush Boom was being funded from unsustainable (+10% pa) consumer credit expansion. When that party ended, the pullback was going to be epic.

I KNEW the crash was coming already in 2007, but the severity of 2H08 surprised, if not utterly stunned, me. Still have PTSD about it, actually.

I don't see anything particularly unsustainable about the current status quo. Deficits are falling, energy is cheap almost, we've got Gen Y arriving into the workforce to take over for their parents this decade and next.

gsr says

I don't see finding "lesser of two evils" is a useful exercise.

It is, since we don't live in Pretend Candy Cane Rainbow CountryLand.

The dominating fact of today's challenges is 30-40% of the country is throroughly bullshitted by rightwing propaganda. Another 30-40% are too apathetic about things to care one way or the other.

gsr says

Krugman is dishonest as usual. Care to break up the distribution between states and the federal government?

The states did shrink their sizes due to budget shortfalls, and they can't print money. The same is not true for Federal government.

FRED says otherwise, Quelle Surprise.

Since the 2011 takeover by the GOP, Federal Employment is down ~150,000.

for the wide-angle view

plus you're forgetting that ARRA had $144B of grant money for states to spend, and all the tax cuts and deficit spending helped keep the lights on in every local economy.

Could the title be: "Evil vs Evil" as in Democrat vs. Republican.
Please be sure to continue to vote Ds or Rs in the next election. It's worked out sooo well.

FMTT

HEY YOU says

vote Ds or Rs

The 97,488 Nader voters in FL in 2000 demonstrated for anyone with a functional IQ that voting I isn't going to be a winning strategy either.

The key to reform is to get better Ds (or Rs for that matter, but good luck with that) through the primary.

Our politics is so fucked because our populace is also fucked (in the head).

Bellingham Bill says

Blurtman says

Obama picked up the pieces and maintained the status quo, unnecessarily prolonging the aftershocks

what "aftershocks" and what should Obama had done differently in 2009-2010?

An honest discussion would also reference the size of the labor force over time. Typically this is the population aged 16-64. In the link below you will see two troubling trends that illustrate the limits of the data you have provided. Older adults aged 65 and older are not leaving the labor force, and there are less people aged 25-64 that are working. All on Obama's watch.

http://www.usnews.com/news/blogs/data-mine/2014/10/03/older-adults-staying-in-labor-force-longer-means-younger-ones-participating-less

Blurtman says

All on Obama's watch.

And after the 2010 midterm, that's all Obama can do domestically, "watch".

The electorate lame-ducked him 6 years prior to the end of his term.

The GOP has its eyes toward 2016, they're not interested in making things better now for anyone.

They can just blame the black guy, it's all on his watch donchaknow.

I agree that things are not so good for people now. The GOP doesn't have any answers, they're the ones who put in the policies that have fucked us so.

From the article:

"The participation rate for those 25 to 54 fell in September to its lowest level since December – to 80.7 percent from 81.1 percent in August. Those Americans, Piegza says, have “a tremendous level of potential income-earning years still left."

Let's face it, this is a parasite economy not a productive one. How can we be competitive when our wages are still 5-10X that of our competitors?

Bellingham Bill says

And after the 2010 midterm, that's all Obama can do domestically, "watch".

The electorate lame-ducked him 6 years prior to the end of his term.

The GOP has its eyes toward 2016, they're not interested in making things better now for anyone.

They can just blame the black guy, it's all on his watch donchaknow.

I agree that the Repubs have been purposely obstructionist. I have only utilized the language that I did to counter what I viewed as a partisan representation on your part. It is a good thing Mitch McConnel's wife is no longer the head of the Labor Department. She did enough damage.

When anyone discusses the state of employment in the USA, it seems that data is always lacking. Even the Fed has been criticized for using the employment to population ratio, which also masks trends. If I had my druthers, data would not only include job creation, but also median wages of the new jobs, the size of the working age population, the percent of the working age population that is full time employed, and trends for earnings.

gsr says

Krugman is dishonest as usual. Care to break up the distribution between states and the federal government?

Yep. Japan has been taking Krugman's "advice" - we all know how that worked out.

YesYNot says

Obama versus Bush

Fuck them both. They both committed crimes against humanity. I don't give a shit what accomplishes either has in economics as these are trumped by the atrocities committed.

Bellingham Bill says

shows how the Bush Boom was being funded from unsustainable (+10% pa) consumer credit expansion. When that party ended, the pullback was going to be epic.

What we have today is Corporate credit expansion in addition to consumer credit expansion. You know very well we have kicked the can down the road. There has been no structural changes.

Do you realistically think if this economy can withstand more than 0% of interest rate?

Blurtman says

The FRED series are MBST and TREAST.

http://research.stlouisfed.org/fred2/graph/?g=VLM

shows the timing of the liquidity infusions. The first surge helped reverse the 2009 crash, the middle surge largely buffered the contractionary efforts of the House GOP, trying to shut the economy down on Obama's term, and the last surge has gotten us to where we are now.

Blurtman says

the percent of the working age population that is full time employed,

yes, this is the most important measure.

Just looking at

http://research.stlouisfed.org/fred2/series/WASCUR

isn't helpful since

http://research.stlouisfed.org/fred2/series/GINIALLRH

shows how much the top 5% is skewing things.

I agree that the data needs to be analyzed per quintile.

The top quintile is the success story, the middle two quintiles are getting by if not recovered from the 2008/9 crash, the bottom two are still screwed, is my guess.

gsr says

Do you realistically think if this economy can withstand more than 0% of interest rate?

QE ensures we don't have to go there for the foreseeable future.

Dr Copper is telling you something.

gsr says

What we have today is Corporate credit expansion

elevated but not skyrocketing:

http://research.stlouisfed.org/fred2/graph/?g=VLW

Bellingham Bill says

elevated but not skyrocketing:

You are comparing against GDP, which is inflated too. As long we have unlimited expansion of credit, we will also have unlimited GDP.

Bellingham Bill says

QE ensures we don't have to go there for the foreseeable future.

No, it has nothing to do with copper spot. It has something to do with servicing the debt. This one talks about just federal budget. But we have corporate debt as well as private debt. We are all in it together.

The Fed will NOT be able unload their balance sheet.
http://www.thefiscaltimes.com/Articles/2014/01/08/Rising-interest-rates-will-slam-Federal-Budget

gsr says

You are comparing against GDP, which is inflated too.

Of course, Japan and Greece are in much worse shape.
http://www.forbes.com/sites/jeffreydorfman/2014/07/12/forget-debt-as-a-percent-of-gdp-its-really-much-worse/

gsr says

You are comparing against GDP, which is inflated too

thus a wash

gsr says

The Fed will NOT be able unload their balance sheet.

And?

gsr says

Japan and Greece are in much worse shape.

Greece, sure, since they're on the gold standard.

Japan, not so much. They just gave their citizenry tax cuts 1992-now and the resulting savings got pushed into their quadrillion yen debt.

It's just money they owe themselves. Pay it back, don't pay it back, no diff on the macro level.

Same thing with our debt. My thesis is that debt extension is substituting for our previous more redistributionary regime of the 1930s-1970s. Like Japan, substituting bond sales to the rich what was previously tax exaction on the rich. (good deal for them!)

pay it back, don't pay it back, no diff.

Best solution of course would be to raise taxes on the rich and then use that money to pay the debt we owe them off.

Bellingham Bill says

gsr says

You are comparing against GDP, which is inflated too

thus a wash

No, the problem is that this inflation won't be perpetual. The expansion of credit will not be able generate the inflation continuously. It will eventually result in contraction, and hence deflation. Look at oil prices today. It will eventually happen to every inflated assets.

Bellingham Bill says

Greece, sure, since they're on the gold standard.

Why spreading lies???

Bellingham Bill says

Japan, not so much. They just gave their citizenry tax cuts 1992-now and the resulting savings got pushed into their quadrillion yen debt.

You have not read news about Japan lately.

gsr says

the problem is that this inflation won't be perpetual.

http://research.stlouisfed.org/fred2/series/CPIAUCNS

Bellingham Bill says

And?

At least the Fed pretends that. The same way they pretend they can raise interest rate next year without affecting the growth. At this moment, it is a game of perception. It can change any time.

gsr says

Why spreading lies???

humor, actually. They can't issue their own currency, same thing as a gold standard, yes

Bellingham Bill says

gsr says

Why spreading lies???

humor, actually. They can't issue their own currency, same thing as a gold standard, yes

Again, that's nonsense. Euro is NOT same as Gold. It is like any fiat currency. It is like saying USD is also Gold for every state here and every country in the rest of the world.

gsr says

You have not read news about Japan lately.

Japan has yet to "eat their rich", yes.