Posted on 08/01/2002 6:58:07 PM PDT by ReveBM
We are going to be able to call this year…it’s 2002..the summer of our discontent. We are examining some of the most basic precepts of American business: globalization; individual responsibility; shareholder activism; equity participation, by everyone; and, yes, even the very integrity of global capitalism itself.
All of this is taking place at a time in which debt ratios, to almost everything, are at their highest levels in recorded recent history.
Well, I have a hunch. My hunch is that if this market decline which we have experienced, really in the last two years, is no more or less than a normal decline -- in the last fifty-year bull market since the Battle of Midway in 1942 -- that we will recover, and we will go up, and we have had just one more market decline; perhaps as serious as ’62, but still, a psychological one which will recover, and which will go on to the long-term bull market.
And, that just about now, yes, we may catch this low again, and we may fuss around here, during a no-news month of August. But, essentially, the low has substantially been reached.
If, on the other hand, the pillars of business that I have mentioned come apart, and if, as I have said in an earlier commentary, they are infected with “termites”, then, we will go down to a new, lower level. And, one that may spiral down, particularly as we learn that our fate is not in our own hands, but in the hands of foreigners, for whom we have worked very hard in the past two years to bring out, to manifest, their dislike for Americans.
Yes, we are going to find out whether this is just a normal decline, or whether this is a real, seminal change in the markets that only occurs once every couple of generations. It is not a good odds-on bet to say that it is the latter -- and I surely hope it is not – we will find out. But, my hunch is that the odds are greater that it is the latter than most people would say.
Mr. LeBaron, judging by his daily videos, is probably diametrically opposed to the type of conservatism espoused on freerepublic.com. He is certainly no fan at all of President Bush.
However, freepers disagreeing with his viewpoint on what exactly ills our society or stock markets may still appreciate his perspective of dark clouds on the horizon.
Are there any conservatives besides me that are worried about the future, and about its future manifestations in the stock market more specifically?
Truth works; but interest rate adjustment by the Fed over the last decade, was accompanied by many misrepresentations of costs important to people, not just to industry; inflation was misrepresented, same for the C.P.I. and P.P.I. So when investors respond by taking decisions based upon poor information, results now prove to be near-fatal from some, serious for many, and otherwise generally bad.
How government may "control" the economy in the short run, has proven to be both a failure and unavailable as a tool: interest rate adjustments.
Leaving that behind, what's next?
Tax cuts:
End the Long-Term (one year or more) Capital Gains Tax.No reporting of Gains nor of Losses, for this year, and henceforth.
The country sorely needs the breathe of fresh, long-term investment, especially as a form of savings.
End income-taxes on pass-book savings accounts.
Begin a phase-out tax rate for seniors' interest income; as they get older, they pay a lower and lower income-tax rate on their interest income.
These cuts would give us a lot of relief for this year; we need an injection to kick start whatever savings we can promote; because people need something upon which to balance the costs of their taking risks.
We are in bad shape when there is little or no operating capital to fall back upon for production, but more so when there is little or no more liquidity of the people.
We hear speeches about "liquidity;" it's a word tossed 'round quite a bit by "higher-ups." Yet when we are forced by tougher times to examine the peoples' liquidity, just by needing to know, that tells you something, and then there's the actual reading of the figures: There is no money left.
Valuation in the stock market has become so refined a game, that small variations of the adjustments along a course, result in dramatic changes. Kind of like the "critical" tuning of a fin on a plane or sailboat; there's some little, tiny room for adjustment, but outside that variance, there is disaster.
This kind of tight-rope is exhausting and prone to mistakes.
I am referring, here, to the disappearance of dividends which otherwise in our past, played a role in balancing investments, judging opportunity costs; something which the presence of the long-term 30 year Treasury Bond also helped; and also "traditional" passbook savings accounts.
Because what worked was "caretaking" and therefore "dull" business to "upwardly-mobile" Masters of Business, and was also not studied well-enough ... these "experts" have abandoned the wheel.
Thus, now, we observe how difficult it is to carry heavy loads over long distances without wheels.
Especially when we are inhibited by government and government "experts" who prevent our manufacturing wheels.
Without complex mathematica to explain this all, and relying upon simple deliberative process, most of this lesson is lost on the "Big Wheels."
They make still have cash, but a country's currency is only as good as that country's ability to produce- and- sell- goods ... its way "out of the hole."
And we are now stuck selling our assets to survive.
Real estate became lucrative in the last Depression, for a while, as it offered some possibilities for investment, for people who had some money, and certainly in production/industry there was not much to offer.
But soon after that "blossom," it is the banks which end up owning the properties, as loans default.
Banks become big real estate holders in poor times.
Probably, the federal government will step in, to establish local zoning controls befitting the nationalizing socialists' agenda ... but step in the name of helping folks by assuming the mortgages.
People will like it; until eventually the economy improves and then the other foot lands: the enforcment of federal laws about what you can and cannot do with your property.
See: Sustaining Nothing, Losing Everything, Sierra Times, June 20, 2002, by Tom DeWeese (posted June 21, 2002 by brityank).
"What is Sustainable Development? ...On June 29, 1993, former President Bill Clinton issued Executive Order #12852 to create the President's Council on Sustainable Development. Sustainable Development calls for changing the very infrastructure of the nation away from private ownership and control of property to nothing short of a national zoning system.
Locally elected officials will no longer be the single driving force in making decisions for their communities. Rules will be made behind the scenes in non-elected "sustainability councils" armed with truckloads of federal regulations, guidelines and money.
According to Sustainable Development policies, air conditioning, convenience foods, single-family housing and cars are among the products that have already been determined to be unsustainable. Under such a system, the federal government, backed by an army of private, non-governmental organizations.
(NGOs), like the Sierra Club, Planned Parenthood, and the National Education Association will influence, if not dictate, policy in state governments and in local communities...
...The Community Character Act (S.975), and its counterpart in the House of Representatives (H.R.1433), is the legislation that will legalize enforcement of Sustainable Development in every community in the nation. The bill requires local governments to implement land-management plans using guidelines outlined in a federal document called the "Smart Growth Legislative Guidebook." This publication was developed with $2 million provided by the Clinton Administration to "guide" counties, cities and towns on how to "update their local zoning."
The Community Character Act offers grants to communities that will pay up to 90% of the costs for localities to "update" their zoning, but only if they do it the way the federal government dictates. The Community Character Act requires localities to "conserve historic, scenic, natural and cultural resources." These are euphemisms that mean more land grabs and fewer places where people can freely go about their daily lives. It means planned economies, restricted housing, and diminished use of cars. It means government control of property. The bill contains not a single mention of private-property rights protection..."
See: Stock-Market Stinker, New York Post, June 30, 2002, by Jessica Sommar (posted by sarcasm).
See: Wake-up signals from Wall Street, Washington Times, July 3, 2002, by Paul Craig Roberts (posted by JohnHuang2).
See: The Negative Wealth Effect and the Housing Bubble, SchaeffersResearch.com, Aug. 1, 2002, by Ron Taylor (posted by shrinkermd).
See: Mortgages to Come With Equity Lines Attached [muslim mortgages mentioned], Washington Post, July 27, 2002, by Kenneth R. Harney (posted Aug. 1, 2002 by palmer).
Fewer and fewer people have true liquidity...much less real savings.
I know all too many people that used the availability of easy credit to over-extend themselves. They have tapped all of their home equity to refinance their short term debt. They still have that total debt(!), albeit at a lower interest load, yet they tend to act as though the equity, that was loaned to them, is their money that the mortgage company was simply holding for them!?.
Human nature is sadly predictable...
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