Posted on 04/28/2007 2:32:45 PM PDT by Sleeping Beauty
Because we have a fiat economy (the Feds stopped telling the world how much money we print in March 2006, for the first time since 1914);
Because our national spending deficit has reached such a high level of GDP that it has set off international monetary alarms;
Because Iran has started selling oil denominated in Euros and other currencies (bypassing the dollar as the international reserve currency) and may soon insist that the US exchange into Euros before we can buy oil;
And because China, Europe, Russia, and South America backs Iran on this, gleefully, I might add;
Because the US must borrow $10 million each and every day from China to keep our government running
Because the Feds are going to be forced soon to start lowering interest rates, which will further devalue the dollar in the global money market --
-- The dollar has crashed against 13 out of 16 of the world's leading currencies over the past 90 days.
Now let's bring this down to the Dow going up to 13,000 and rising. Most of the companies leading their sectors are making the profits from the rapidly weakening dollar.
Take Apple for instance. In January, they sell 50,000 i-pods in Europe. They accept payment in March in Euros. They exchange the back into dollars -- and they end up with 30 percent more money than they expected! Conversely, When Apple receives an order for i-pods payable immediately -- the order tends to be MUCH higher than Apple expected -- because in the country buying, i-pods are now cheaper than a couple of CDs.
Ipso facto -- outrageously explosive 1st quarter profit reports -- driving the stock market to record highs.
Have at it...
No. That counts as savings. But when we put you into a pool with the rest of America -- and add the pluses and minuses together -- the final number is a minus. In most other countries, including Mexico, it's a plus.
My theory is that if this were a democrat president Wall Street would be paved with confetti and there would be suggestions about allowing a third term.
“The earnings of certain sector leaders are historically high — outrageously high.”
I don’t know exactly who you are referring to, but I’d love to see some names. I don’t understand the concept of “outrageous earnings.” We are Capitalists, the more lawful profit earned, the better.
Earnings in general are not as high as last year, we are dropping below double-digit earnings growth for the first time in a while. The FED is having an effect. If a company can still make higher profits in these conditions, more power to them. If you can make more money this year than last, good for you too! I hope you make “outrageous money!”
The only thing the FED is still worried about: Inflation remains above their preferred target.
I have to go out for a while, so I will probably miss the rest of the conversation. I’l check in later to see what other comments come in. It’s a good subject.
Thanks SaxxonWoods.
I mean’t outrageous in a good way. I should have said “awesome.” Like Apple’s 88 percent.
Hope to see you around on other economic threads. You know your stuff.
Getting rid of SarbOx would probably give the economy a shot in the arm.
Suggest you remember that the decline started in the first quarter of 2007. Do you remember when the DemoCRAPS took over the house and senate? H’mmm, do you suppose the public is wary of the “new” leader of the USA?
Well, inside the US -- the stock market has been doing great since the Dems took over and the WSJ has been very bullish for the past three months. People in the stock market are making BIG money since the Dems got in.
See what I saying? It doesn't really spin very well as a Dem or GOP achievement.
I don't really think politics are involved. This is much more about monetary policy. And, this is a trailing indicator many years in the making.
For folks with large equity holdings, it's a very good thing. For the middle class, it's a risky time because our imports are going to cost a lot more. Most of the stuff in Wal-Mart is an import, for example.
What's SarbOx?
It’s going to pay their mortgages that have been resetting.
John
Did you read the reports as to why the stocks went up so high? The earnings reports were excellent - many beyond expectations. That's not a theory, it is a fact.
In constant dollars since 2001, it's more like a 7500-7800 Dow.
Think of the Fed as a Brinks truck careening from curb to curb, shoveling out dollars like mad from every door and window, and you have the explanation for a stock bubble, followed by a real estate bubble, followed by another stock bubble.
The stocks are high because there are huge pools are cash in equity funds and somewhat fewer stocks. A couple of clicks on a keyboard and the money could vanish into the european markets.
Probably because the government has grown more than the economy or the Dow during W's tenure.
The government is reaching a record size every day.
never too early to start on our retirement cottage :)
I don’t think one has to be a “contrarian” to be successful in any market. I think rather than doing the opposite of what is successful, one is better off accepting whatever IS happening in the market. Most people deny the reality — whatever is happening, in favor of their theories and explanations — and THAT is their problem.
Liberals tend to be contrarians — always doing the opposite of what reality is directing them to.
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