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Titanic Trips

March 6, 2013 by  

Titanic Trips
PHOTOS.COM

It’s just money; it’s made up. Pieces of paper with pictures on it… And it’s certainly no different today than it’s ever been. 1637, 1797, 1819, ’37, ’57, ’84, 1901, ’07, ’29, 1937, 1974, 1987 — and whatever we want to call this. It’s all just the same thing over and over; we can’t help ourselves.” — Wall Street CEO John Tuld (played by Jeremy Irons) in the 2011 movie “Margin Call”

A man grabs milk from his fridge. He takes a slug. He says, “Still sour.” He puts the milk back in the fridge.

That sums up my philosophy on investing and pretty much every other human endeavor. People tend to be suckers. How else can you explain why so many of us repeatedly make mistakes that would make a 5-year-old scream, “Stop, stove hot!”?

Not making the same mistakes over and over is something we lose in our teenage years.

As Voltaire observed, “Common sense is not so common.”

A titanic example is the Titanic itself. A year ago, it was announced that a new HMS Titanic — the old one is apparently rusted — is going to set sail in 2016. More than 40,000 people, some willing to pay $1 million, have already signed up for its maiden — whoops, second from maiden — voyage. It sounds like a joke, but Australian billionaire Clive Palmer unveiled his plan to build the Titanic II and add to his “for suckers” assets, which he calls his tourism business.

Palmer said his company Blue Star Line has commissioned the state-owned Chinese company CSC Jinling Shipyard to build a near replica of the ill-fated Titanic. I say near because I suspect this one will have more lifeboats.

At my age, I, too, am nostalgic. But really, the Titanic? I understand why people might pay a million dollars to fly on a replica of the Spirit of St. Louis. It never crashed. But the Titanic sunk, taking with it the lives of more than 1,500 people. For a century, it has been recognized as one of the pinnacles of human stupidity.

What’s next, a trip on the Hindenburg? I believe thousands of people would sign on for that, too.

Billionaires like Palmer don’t make many mistakes. (It is interesting that most of his wealth is tied to hard assets through his mining empire.) But most of the rest of us do make mistakes.

There is another kind of Titanic that is currently sailing at breakneck speed through iceberg fields. It is called the stock market.

A Constant Rebirth Of Old Pains

My family is no stranger to stock market crashes. In 1929, my father was 17 and was working on the homestead with my grandparents, who had managed to tuck away money with a Calgary feedlot. My grandmother was a tough and skeptical woman, but even she was caught up in the irrational market exuberance that marked the last three years of the 1920s.

According to my uncle, bad news came to their farm in 1930. The feedlot was under foreclosure. When my grandparents arrived in the city, they discovered that one of the largest feedlots in Southern Alberta had been shuttered and permanently closed. They hired a lawyer but to no avail. Creditors during the earliest stages of the Great Depression had foreclosed on the feedlot and taken her and my granddad’s $10,000. That equates to $80,000 in today’s money: a lifetime of savings for my grandparents.

My grandparents owned the land they farmed, so they barely squeezed by during those depression years. But never again would she trust her life to the fortunes of others. She hid cash and was suspicious of banks, a tradition that was passed on to my dad and his children. I know my children don’t share that sentiment because they are willing to buy Big Board stocks even though I have tried to discourage them. I can understand their willingness for risk. I’ve witnessed six bear markets in my time, and they have not experienced any (as of this writing).

My father told me how he remembered the stock market crashing in 1929 and that there was a final washout in 1937. It took four decades for the next bear market to beset U.S. stocks. It is understandable that investors in the early 1970s thought risk had been eliminated from the stock market. What is amazing is that right now investors can’t even remember the crash that happened five years ago.

March Madness

The Dow Jones industrial average’s rise above 14,000 points is incredible when you consider that since President Barack Obama was elected to his first term the Dow was 9,000. In fact, the Dow has climbed 15 percent since Thanksgiving. And the charts also show that the Dow is likely hitting a triple top. The first two were in 2000 and 2007.

American stock prices have not soared on bedrock fundamentals. Consider the following:

  • On Friday, the Federal government was forced to implement its $85 billion “sequester” spending cuts, which are already impacting jobs and confidence in the economy.
  • The unprecedented easing by the Federal Reserve (Fed Chairman Ben Bernanke’s idea of priming the pump at your house would be to run Niagara Falls over your property).
  • An intractable unemployment rate hovering just below 8 percent or not far from where it was when the Dow started to take off. (Consider the chart below, which shows the price of the Dow measured on the left and the U.S. unemployment rate on the right.)
Dow Jones Industrial Average vs. U.S. Unemployment Rate

How is it even possible that these fundamentals don’t add up? The truth is, it wouldn’t be possible with even a modicum of common sense. This bubble exists because investors have become speculators and are rabid to profit off the last dollar — a dollar whose value, by the way, is eroding considerably each and every year for the past 12 years.

Tripping Point

When I was in my early 20s, I was at a party with all my old friends from high school. One of our buddies thought he could drink with impunity. That was until he stepped around the bar and tripped over an ice chest, falling flat on his face. In the 35 years since, I have never seen him drink in excess again. So there is hope.

On the other hand, Wall Street is nothing right now but excess. My fear is that when Wall Street trips, it is going to take the rest of us down with it.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

John Myers

is editor of Myers’ Energy and Gold Report. The son of C.V. Myers, the original publisher of Oilweek Magazine, John has worked with two of the world’s largest investment publishers, Phillips and Agora. He was the original editor for Outstanding Investments and has more than 20 years experience as an investment writer. John is a graduate of the University of Calgary. He has worked for Prudential Securities in Spokane, Wash., as a registered investment advisor. His office location in Calgary, Alberta, is just minutes away from the headquarters of some of the biggest players in today’s energy markets. This gives him personal access to everyone from oil CEOs to roughnecks, where he learns secrets from oil insiders he passes on to his subscribers. Plus, during his years in Spokane he cultivated a network of relationships with mining insiders in Idaho, Oregon and Washington.

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  • Jeremy Leochner

    The stock market is a casino and Wall Street is Las Vegas. Its built on the desire for quick cash. Now there is nothing wrong with gambling if its done with good judgement. It can be fun and if lady luck is on your side you can make it big. And if not you can pull out not to worse for ware. The problem is all too often judgement goes out the window in the pursuit of money. The stocks sky rocketed in the 20s. Suddenly it was the roaring 20s and people were loaning and investing like there was no tomorrow. But then when a few lost the whole system collapsed. The measures that were implemented to prevent another such disaster created a malaise during the next economic recession. Yes there was recovery but it was slow and uneven. Reagan the champion of free enterprise and opponent of government came in and began the process of deregulation to free up companies and improve job creation. This helped lead to the 90s economic boom. The deregulation begun under Reagan culminated in the repeal of the Glass Steagall Act. Bush Jr. then helped by introducing the tax cuts that now bear his name. This further freed up companies to invest and acquire more wealth and create more jobs. But sadly just as in the 1920s success went to everyone’s head. Mortgage companies began focusing on profits regardless of actual worth. They started selling floating mortgages to unsuspecting people who figured a low rate was too good to be true. Well it was. But that didn’t stop mortgage companies from selling said mortgages back and forth to each other. So the buying and selling of these worthless assets drove stock prices through the roof. Banks like Bank of America saw the stock prices rising and got that old gambling fever that says “You got 20, so what hit it”. And with Glass Steagall no longer around to stop them they got in on the stock party. But than something happened. Someone suddenly realized that all these mortgage companies and banks were buying and selling worthless mortgages and said so. And in a domino effect the mortgage companies began to collapse and the banks who had so unwisely invested in their sub prime mortgage scheme got taken down too. But then Uncle Sam came to the rescue. Because all these companies combined either employed tens of millions of Americans or controlled their life savings through stocks or through the money people had put into the banks.These companies were too big to fail. And so the government “had” to help them by giving this company a billion dollars, that company a billion dollars and pretty soon everyone was getting billions of dollars. And this in no ways ransom money was given with no stings attached. Because heaven forbid these CEOS had to pay for their own terrible decisions. So now, here we are attempting to climb back from this disaster. We have history as our guide for what to do. I personally believe we need to bring back Glass Steagall and other regulations. We need to be more restrictive of Mergers which can easily result in companies becoming “too big to fail”. We need to cap CEO pay and repeal the Bush Era Tax Cuts. We need to reduce spending in areas like defense once we can get the troops home from Iraqi and Afghanistan as well as in Foreign Aid and in subsides to oil companies. I am open to discussions of further spending cuts. Above all we must take a lesson from the roaring 20s, the great depression, the 90s and the great recession. Reaganomics or Trickle Down Economics or whatever name it is called has both good and negative results. It can result in massive and rapid economic expansion, recovery and job growth. But it is ultimately a boom and bust system. It provides for over indulgence and abuse. And it provides little to no safety net in case of a downturn. I do not deny that the roaring 20s and the 90s were exceptional times economically. But the fact is that the policies that made such times possible also made possible the two most infamous economic disasters in our nations history.

    • Warrior

      And so, you win the argument. We do need LESS GUBMINT!

      • http://www.facebook.com/darwan.winkler.3 Deerinwater

        Hmm? Win? ~~ What was the argument again?

      • dan

        Cap CEO’s ….excellent idea. Start with the one in the White (er…) Big House !

      • eddie47d

        Corporate CEOs are as greedy as the Banksters and they are all out for themselves. Love of America?…Bull crap! There’s an old saying that “sometimes you are the statue and sometimes you are the pigeon”. Wall Street has made sure they are always the pigeon and we remain the statue. Hedge Fund managers win even when they lose and the roulette wheel keeps on spinning!

      • Jeremy Leochner

        No warrior. Wall street cannot regulate itself. We need more and better government.

        • Bob666

          Jeremy,
          While I agree with many of your post, we are going to disagree on this one.

          Less and more effective Government

      • Motov

        How do we regulate Government? they are just as evil as the wall street people!

      • Jeremy Leochner

        Motov we can do it by getting people more politically involved. By encouraging people to sign petitions and to get out and vote. By inviting people to rallies against corruption and stupidity. We need to harness the passion of the Tea Party and Occupy Wall Street. We need such things to happen more often. We also need to keep our own tempers under control with things like Jon Stewart and Stephen Colbert’s Rally to Restore Sanity. We need people to know their State Senators and their Local Representatives. Instead of sending petitions to the White House we should send them to our local politicians. We the people need to push for campaign finance reform and lobby reform. We need to demand that candidates speak and have clear positions on those issues. This is a government of, by and for the people. We the people just need to remind our leaders whose boss.

      • http://gravatar.com/plfprime GALT

        Just to see if you who are on the right track……DO YOU KNOW THAT…..?

        while an item may be “budgeted for” which is a little weird all by itself, since
        we don’t actually seem to have a budget……….this doesn’t mean that the money
        is actually available………

        for example…the money required to impliment Dodd Frank, was cut to 20%
        of the funding needed…….

        the money needed for immigration enforcement was also gutted……..which makes
        your president’s ploy to get a whole bunch of illegal’s
        to register on a “promise” was actually pretty clever…….since we don’t have the
        “funding” to actually deport them…….

        You are being played for “fools” in so many ways……

    • Paul B.

      While you specifically mentioned Reagan and Bush, and their contributions to the market and subsequent collapse, you cleverly omitted the fact that it was CLINTON who repealed the Glass-Steagal Act. Was that an intentionally omission. It has always been a misconception that deregulation occured due to Republican policy.

      You seemed to find pleasure in trashing Republican policy, but failed at all to discuss the part Dem policy, with the CRA, the main culprit of the collapse, aided and abedded by Fannie and Freddie, started under, were promoted and expanded by, as well as leveraged as compassion, heavily under Democratic adminstrations.

      Funny how the media and histroy seem to be rewritten to exclude most of those facts.

      Facts are a funny thing and too often avoided when confronted with responsibility and blame, especially in the political arena and expecially by the liberal media and education system.

      Lest we never forget the facts…….

      • Jeremy Leochner

        You know what Paul your right. I am sorry. I should have mentioned that it was Clinton who repealed Glass Steagall Act. That was a terrible over sight on my part. I assure you my desire is not to bash Republicans.

        In regards to CRA I would like you to look at this link:

        http://mediamatters.org/research/2008/11/25/hannity-baselessly-blamed-democrats-cra-for-fin/146314

        For my part in omitting Clinton I fell into the blame game and for that I apologize. The 2008 economic melt down is not an issue of blaming a particular party. Policies enacted by both Republicans and Democrats contributed to the reckless behavior that caused the recession.

        Paul I disagree with you about the media and even more so about our educational system. I admit that MSNBC is blatantly liberal and for Obama. But they are an exception rather than the rule. Most of the media only cares about making everything seem sensational rather than supporting liberal politicians. Here is an example: http://www.thedailyshow.com/watch/mon-march-4-2013/sequest-out—sci-fi-sacrilege

        As for education I have heard this argument of a liberal bias time and again. Yet never has anyone provided evidence. Not to omit anything I am a product of the public school system from elementary to college. But I am open to discussion. People tell me I have been brain washed by government propaganda. Well if that is the case please point out the propaganda.

      • nc

        Paul B, lest we forget the fact that Fannie Mae was involved in the process of thousand and thousands of Americans in the successful purchase of their homes from the 30s through the turn of the century when bush was campaigning on the position that there was no reason that low income folks could not own a “nice” home> He can be seen in a video two years into his first term PRAISING FANNIE AND FREDDIE for their assistance in low income folks WITH BAD CREDIT HISTORIESgetting into the housing market! Those became the most toxic of all the mortgages and bush was all for Fannies and Freddies help! Look it up! Just type in “Bush praising Fannie and Freddie “and listen to a non liberal Democrat pushing the program! Don’t forget that as late as 2004 bush pushed for and signed HIS bill to use TAX PAYERS MONEY to make the down payment on some low income loans.

        LEST WE FORGET THE FACTS , AS YOU SAY, THESE WERE REPUBLICAN POSITIONS AND POLICIES. WATCH THE KOOL AID, PAUL!! IT WILL PICKLE YOUR BRAIN!

      • http://www.facebook.com/darwan.winkler.3 Deerinwater

        Let those without sin cast the first stone

        http://www.npr.org/2011/11/15/142349076/why-did-freddie-mac-pay-newt-gingrich-300-000

        Good posting by all ~ kick back the darkness lilting one candle at a time.

      • Right Brain Thinker

        “Lest we never forget the facts……”, says Paul, and then he proceeds to present and interpret the “facts” rather loosely in order to support his biased political viewpoint. He also takes the obligatory parrot-talk swipes at the media and the schools, thereby reinforcing the impression of bias..

        “with the CRA, the main culprit of the collapse, aided and abedded by Fannie and Freddie”? Nice try, Paul, and you will score points among the ignorant with that, but the fact is that the deregulation bias and deliberate “look the other way” policies of the Republicans under Bush are what caused the meltdown. CRA and the F’s were not proximate causes. The repeal of Glass-Steagal opened a BIG door for the likes of Goldman Sachs to walk through—-they would not have done so without the tacit approval of Bush and the general mindset of “Republicans” going back to Reagan and before. I put quotation marks around Republicans because there were many bought-and-paid-for Democrats who went along with the game—-that’s the only reason it succeeded, in d=fact.

        In my opinion, the very worst thing Clinton did during his eight years was to allow the repeal of Glass-Steagal (he DIDN’T repeal it, by the way, rather he failed to veto the act that did the repealing—there’s a difference). If he deserved impeachment for anything, it was that failure.

        And Jeremy, please stop apologizing so abjectly when one of these folks catches you in an error—-you make far fewer errors than they do, and they have seldom even admitted error when you have “caught” them, never mind apologized to you. Be strong!.

      • Jeremy Leochner

        I appreciate your concern Right Brain. I believe its the mark of an honest man to admit when he has made a mistake. I don’t always realize my mistakes. But if I do it is only right that I admit to them. I think I am plenty strong regardless.

      • Bob666

        Yo Paul,
        Clinton signed the Glass-Steagal Actinto law, what party controled the house and senate that crafted that bill?

        You are correct, the Glass-Steagal Act did major damage and Slaick Willie did sign it into law.

    • TML

      In terms of banking institutions I would agree that regulation is required, up to and including abolishing the Federal Reserve (the private central bank) whose policies can be shown as a direct causation to economic disasters. I think that is the source of the boom/bust scenario – expansion (inflation) and contraction (deflation) of the money supply. I think that deregulation of the private sector (less government) would be a strongly beneficial and stable policy, as it allows more businesses and thus jobs to be created, while also inviting capital back from companies who went overseas to avoid heavy taxation.

      Ultimately I think one of the biggest economic problems with this country is that there is no separation of corporation and state, and such is needed as badly as the separation of church and state was needed for a free people to prosper. That’s why Jefferson even said that banking institutions are more dangerous than standing armies.

      “The policy of the American government [should be] to leave their citizens free, neither restraining nor aiding them in their pursuits.” –Thomas Jefferson to M. L’Hommande, 1787

      • Capitalist at Birth

        Called Fascism.

      • Jeremy Leochner

        I can agree with you TML that we need to rein in the Reserve. Where we disagree is that I believe that deregulation allowed for the irresponsible financial choices that lead to the collapse. Many of the wall street tycoons who were hauled before congress even said that one of the reasons they did what they did was because it was allowed. Everything needs rules if it is to run effectively. My feeling is if corporations are people than they need to be governed like people. People need rules and restrictions. Otherwise they can abuse their freedom. Like wise corporations need to have regulations to prevent them from abusing their freedom.

        I agree completely that we need to separate corporate and state. I believe we need lobby reform and campaign finance reform. I believe Robin Williams had a great idea. We should require all Congress people to wear banners like Nascar drivers with their sponsors on them. That way we can understand why they vote the way they do.

        As for Jefferson I think its a reasonable position. The only area where I would deviate is that The Declaration recognizes our unalienable Rights of Life, Liberty and the Pursuit of Happiness. It then states “That to secure these rights, Governments are instituted among Men”. So there is a connection between government and securing ones right to pursue happiness. How precisely does a government secure ones right to pursue happiness. I do not know. People define happiness in different ways. And I am sure people would differ on how precisely can ones rights be secured by government. The best I figure is to try and provide as much as possible a level playing field. To have government serve as a check to corporate influence and the potential problems they might bring. And like wise free enterprise can serve as a check against a populist mob. Its about finding a balance between regulation and incentive.

      • TML

        Jeremy Leochner says “Where we disagree is that I believe that deregulation allowed for the irresponsible financial choices that lead to the collapse. Many of the wall street tycoons who were hauled before congress even said that one of the reasons they did what they did was because it was allowed.”

        I talk about economic deregulation, I mean it in the sense of the good ol’ fashioned American entrepreneur business owner.

        I certainly do not agree that corporations are people, and agree with corporate regulation, of course, since a corporation is by definition a separate legal entity, established through legislation, which have legal rights and liabilities that are distinct from their shareholders.

        Jeremy Leochner says “I believe Robin Williams had a great idea. We should require all Congress people to wear banners like Nascar drivers with their sponsors on them. That way we can understand why they vote the way they do.”

        LoL! Hadn’t heard that one, but yeah, that’s what I mean by separation of corporation and State.

        Jeremy Leochner says “The only area where I would deviate is that The Declaration recognizes our unalienable Rights of Life, Liberty and the Pursuit of Happiness. It then states “That to secure these rights, Governments are instituted among Men”. So there is a connection between government and securing ones right to pursue happiness. How precisely does a government secure ones right to pursue happiness. I do not know.”

        He gave the answer to that as well.

        “A wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned. This is the sum of good government.” – Thomas Jefferson

        “The legitimate powers of government extend to such acts only as are injurious to others.” – Thomas Jefferson

        “Rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add ‘within the limits of the law’ because law is often but the tyrant’s will, and always so when it violates the rights of the individual.” – Thomas Jefferson

        In other words, if it does not hurt anyone physically or financially, then the government has no rightful place to act on it either in aid or restraint. This would automatically mean no stimulus, or subsidies for corporations, etc.

        When it concerns the private business sector of small business owners, and the regulation thereof, the government’s role should be limited to upholding contracts and protection of property (that would automatically include legitimate enviromental concerns, etc.)… and even then, the federal government’s role is rightfully limited to interstate and international commerce.

        I think it’s more about the government abiding by certain principles eloquently spelled out in the founding era, rather than trying to micromanage various facets which no one in government is competent to do.

      • http://gravatar.com/plfprime GALT

        Thomas Jefferson was an agrarian elitist slave holding dead beat………this
        gives one time to “reflect” on many things………

        What you quote is clearly “self serving”……..and has a much validity as citing
        Warren Buffet as having any value to society…….he is a boring, old, foolish and
        clueless man with zero talent who has nothing to offer anyone…….except his DEATH,
        which is LONG OVERDUE.

        Do you think “his secretary” is in his will?

        I mean he did claim to feel really BAD that her tax rate was higher than his?

  • http://gravatar.com/plfprime GALT

    As Dow Sprints to New High, the Middle Class and Manufacturing Languish

    It’s hard to fathom the celebratory mood in the US markets, save that the moneyed classes are benefitting from a wall of liquidity reminiscent of early 2007, when risk spreads across virtually all types of lending shrank to scarily low levels. Then the culprit was not well understood, although Gillian Tett discerned that CDOs were a huge source of leverage, and in April 2007, an analyst, Henry Maxey at Ruffler, LLC, did an impressive job of piecing together how levered structured credit strategies were driving market liquidity.

    Now it’s a lot easier to see what is afoot. The Fed has been trying to reflate asset values to goose the real economy. What it has done instead is goose the incomes of the top 1% while everyone else is on the whole worse off. But the central bank is suffering from a very bad case of “if the only tool you have is a hammer, every problem looks like a nail” syndrome. It’s unwilling or unable to admit that its program is working only for a very few. It has convinced itself that if it just keeps on the same failed path long enough, things will turn around. As we can see from Japan, “long enough” can exceed 20 years, and it is not clear that the latest Japanese pump priming will finally pull the economy out of the ditch.

    Matt Phillips fleshes out how badly ordinary Americans have fared. From the Atlantic (hat tip Ed Harrison):

    The stock market alone hasn’t repaired the damage done to American household finances in recent years. In many ways Americans are still sucking wind after the gut punch they suffered in 2008. Here’s a look.

    These haven’t gone anywhere but down since the recession hit. Real median US household income — that’s “real,” as in “adjusted for inflation” — was $50,054 in 2011, the most recent data available from the US Census Bureau. That’s 8% lower than the 2007 peak of $54,489.

    Yes, it’s true that those 2011 data are pretty old. But if consumer expectations are any reflection on income levels, it doesn’t look like the pay has gotten anywhere back to normal pre-crisis levels. And while the US economy has gotten back on track, workers’ pay has been a progressively shrinking piece of total GDP since the recession hit.

    So the new high on the Dow appears mainly to be a reflection of the way corporations have been able to squeeze workers, even after the biggest economic upheaval since the Depression. So all the market giddiness is really about how secure the have feel in their advantaged position.

    Yet despite all the talk about how great earnings are, actual S&P 500 quarterly earnings per share peaked in the first quarter of 2012 and were down in the following two quarters (the 4Q actual should be out shortly).

    And a new report by MIT on innovation and production (hat tip Marcy Wheeler) has an almost desperate undertone. It starts by pointing out how the data understate how bad the competitive erosion is:

    One of the key danger points identified in these reports is the declining weight of the U.S. in the global economy. Even though the U.S. share of world manufactured output has held fairly steady over the past decade, economists have pointed out that this reflects good results in only a few industrial sectors. And even in those sectors, what appear to be productivity gains may be the result of underestimating the value of imported components. A close look at the composition of a worsening trade deficit shows that even in high-tech sectors the U.S. has a deteriorating picture. While the output of U.S. high tech manufacturing is still the largest in the world and accounted for $390 billion of global value added in high-tech manufacturing in 2010, U.S. share of this world market has been declining, from 34 percent in 1998 to 28 percent in 2010, as other countries made big strides ahead into this market segment.

    Jobs are another huge concern. The great spike in unemployment over the past five years was disproportionately due to loss of manufacturing jobs. And as the economy revived, such jobs were very slow to return. In fact it is clear that many of them never will.

    It makes clear how far hollowing out has gone in the manufacturing sector, and how the economy has lost so many components critical to innovation that it isn’t clear how to restore them. The researchers went beyond the venture capital darlings to find what it called “Main Street Manufacturers.” It found they were at a serious disadvantage due to the lack of firms with complimentary know-how in their ecosystem. After quoting the experience of one firm, the authors noted:

    But in this company as in most of the others in this category that we interviewed in the U.S. all growth depended on their internal resources. They were not finding any complementary capabilities they could draw on in the industrial ecosystem as they tried to develop new components: no outside funding, no connections with community colleges, no trade associations, no research consortia (all regular fixtures, we would discover, on the landscape of German companies in the same industrial sector.) As we wondered why the contributions to innovation of the Main Street manufacturers did not lead to greater profits and faster growth, the comparison with Germany was inevitable. An Ohio machine toolmaker is not going to take off like Microsoft or Facebook, but we saw underexploited possibilities. How could we galvanize more innovative activity within Main Street manufacturers, a faster uptake of new technology, and a tighter enabling connection with new start-ups across the economy?

    I suggest you read the MIT report in full. It is short, informative and extremely important. One important discussion is of the model for manufacturing in the US in its heyday resulted from internal integration. The authors dare voice doubts about the new approach of fragmentation of tasks across firms and geographies:

    The possibilities for innovators and designers to draw on the manufacturing capabilities of the entire world has stimulated a huge wave of new enterprise creation both in the U.S. and in the developing economies. On the face of it, this is an enormously positive outcome. What we do not know, though, across different industries—and particularly for emerging new high-tech domains—is whether the separation of innovation from manufacturing will allow innovation to continue full-bore at its original home, or whether separation comes at the price of learning and creation of capabilities that might produce future innovation at the original home base. Separating innovation and manufacturing—in different companies, or in different locations—might make it unlikely that a firm would gain full advantage from implementing technological advances within manufacturing, for example, from learning how to accelerate the scale-up of a biotech drug from test tube to mass production or learning how to fabricate semiconductor chips at lower volume, higher value, and lower cost to run the medical devices that aging generations of baby boomers will need to keep them healthy and functioning at home and out of hospitals.

    It has long looked like outsourcing and offshoring are not about improving flexibility and innovation, but about what managers usually say it is about: lowering labor costs. But it’s actually a form of looting, just not the financial kind. The reduction in manufacturing floor costs is partially offset by an increase in managerial coordination, so it’s actually a transfer from blue to white collar workers, particularly the very top executives. And it increases risks of the enterprise. Look at how even master logistician WalMart has experienced major supply chain screw-ups. And what would happen, say, if all that saber-rattling in the Middle East finally leads to a hot conflict with Iran? If oil prices shoot up, the economics of transporting intermediate products around the world might not look so hot.

    It’s perverse that stock market averages are treated in the business and popular media as a proxy for the health of the economy. They are now the indicator, at most, of the well being of the wallets of the wealthy, which is coming more and more at the expense of everyone else.

    Read more at http://www.nakedcapitalism.com/2013/03/as-dow-sprints-to-new-high-the-middle-class-and-manufacturing-languish.html#SyLJqWog6F3YdOK3.99

    • Right Brain Thinker

      A comment I just posted on the “Sock Market Bubble” thread may have some relevance here—to repeat it,

      Right Brain Thinker says:
      March 6, 2013 at 10:08 am

      Devil#Bob says “we have gone from an investor’s market into a speculator’s market”. Beg to differ, Bob. It has not been an “investor’s” market in the old sense for quite some time. What we have now is the 1% pumping up a bubble, convincing the ignorant to come in and “invest” (as we now see happening—the “small investor” is coming back in droves and driving this DJI increase), and then the 1% taking their profit and leaving the little guy holding the bag. The net result is always the same—-the transfer of of wealth from the 99% to the 1% and the decline of the living standard of the middle class. And it’s not really “speculation”, it’s the suckers who have swallowed the koolaid who are buying the overinflated stocks—-they truly believe that the “American Dream” still exists.

      Some numbers of interest (from the Who Rules America website)

      Wealth ownership in the USA

      The top 1% own 35% of all stocks, 64% of all financial securities, 33% of all trusts, and 61% of all business equity.

      The next 19% own 57% of all stocks and the bottom 80% own just 8% of all stocks.

      The top 1% have a mean net worth of $16 million, the top 20% (which includes the 1%) have a mean net worth of $2 million, and the group from 60 -80% have a mean net worth of $100,000 (1/10 of a million—–that’s 1/20th of the top 20% and 1/160th of the top 1% figures)

      The bottom 40% have a NEGATIVE mean net worth of ~$10,000, meaning that what they owe exceeds their assets by that much.

      PS In actuality, the top 10% of the top 1% owns most of the top 1%’s share. Something like 400 families own more than the bottom 90%, and they don’t “create jobs” with it or “invest it”—-they play financial paper games with it and just make more wealth for themselves with very little of it trickling down. The 1% have bought stocks only to run up their prices—-they will “hide” that money somewhere else as they ride the bursting bubble—-they make money on the way up, on the way down, and when it is “flat”—-all the lawyers and accountants and lobbyists they employ and the congressmen they own make it work that way for them.

    • Capitalist at Birth

      Another long boring diatribe that I will not read.

      • Right Brain Thinker

        Capitalist at Birth says, “Another long boring diatribe that I will not read”

        Does he refer to GALT’s comments, or mine, or both. In either case, he proves to all that he is one of the “willfully ignorant” by his refusal to look at something that MUST be a “long and boring diatribe”. How does he know that? Perhaps he just looks at the authors and rejects comments on that basis?—who wrote them? Sounds about as intelligent as Frank Kahn.

        Please, CAB—-at least look at the numbers I cited in the last part of my comment and tell us what, in your infinite wisdom, they should tell us.

      • eddie47d

        RBT; He can’t and he won’t for he is a complainer not a problem solver.

      • http://gravatar.com/plfprime GALT

        Hard to say with w.i.f.i.’s like C.A.B.,…….examining the “evidence” would suggest
        that response was to Yves Smith…….as he could have hit the “reply” button under
        your post……..rather than my linked reblog from “naked capitalism”, still the
        “mushrooms” do tend to salivate when stimulated, and we have “induced” a
        double stimulus to invoke the response, with a symbol and the four upper case
        letters……….old C.A.B. seems to be the final holdout, from the DavidH pack, and so
        he deserves to be reminded of what happened…….and how it was done.

        a brief excerpt from the book Econned.

        “In 1776, Adam Smith published The Wealth fof Nations. In it he argued that the uncoordinated actions of large numbers of individuals, each acting out of self interest, sometimes produced , as if by “an invisible hand,”results that were beneficial to broader society. Smith also pointed out that self interested actions frequently led to injustice or even ruin. He fiercely criticized both how employers colluded with each other to keep wages low, as well as the ” savage injustice ” that European mercantilist interests had “commited with impunity” in colonies in Asia and the Americas.

        Smith’s ideas were cherry picked and turned into a simplistic ideology that now dominates university economics departments. This theory proclaims that the “invisible hand” ensures that economic interest will always lead to the best outcomes imaginable. It follows that any restrictions on the profit seeking activities of individuals and corporations interfer with this invisible hand, and therefor are “inefficient” and nonsensical.

        According to this line of thinking, individuals have perfect knowledge both of what they want and everything happening in the world at large,and so they pass there lives making intelligent decisions. Prices may change in ways that appear random, but this randomness follows predictable and unchanging rules and is never violently chaotic. It is therefore possible for corporations to use clever techniques to reduce and even eliminate the risks associated with their business. The result is a stable productive economy that represents the apex of civilization.

        This heartwarming picture airbrushes out nearly all of the real business world.”

  • FreedomFighter

    I would get gold and silver, food an ammo(if you can), water purification and other needed stockpiles of goods. then get as debt free as you can and have some cash on hand.

    On the other hand, Wall Street is nothing right now but excess. My fear is that when Wall Street trips, it is going to take the rest of us down with it.

    Ohh and dont forget to get some paracord.

    Laus Deo
    Semper FI

    • Robert Smith

      Booze. Relatively small space requirement, rapidly increases in value when supplies diminish, and it’s good if you consume it yourself.

      Rob

      • Gary L

        I agree Rob. Booze would be a valuable commodity. Good for trading or drinking.

      • dan

        Scotch and duct-tape….it’ll be like going camping

      • STEVE E.

        Cigarettes also.

      • dcjdavis

        Never crossed my mind. I don’t use it myself, but it keeps well and would make good trade. Also make good medicine in a pinch.

      • Vigilant

        Heirloom seeds will be worth MULTIPLES of their weight in gold.

    • Barry Faltesek

      Laus, with no disrespect, other than the gold and silver part you are so right. I hate to say it but, money would be a lost cause and gold is heavy and must be guarded if it still has any value. When people are hungry they what food or something of great need like guns, ammo and water. The only heavy metals I trust in are iron, steel, brass and lead. Don’t forget the 100 mph tape and JB Weld.
      What rights have the liberals ever given up when they’ve taken so many way from us?
      On Target

      • nc

        Barry, what rights do Liberals have that you don’t have? What right do you need that you don’t have? Is there a separate military protecting the special “rights” of Liberals not held by non Liberals? What right were you born with that only Liberals have today? What Liberals took it away?

        • Barry faltesek

          Can’t argue with liberals, they only hear the voices in their head and what their fuhrer Obama tells them.
          There is only one winner when there is a compromise and it seems the only ones who compromise are the foolish conservatives, so, the liberals win. When the conservatives do not compromise they are made out to be the bad guys. Obama!
          Look at the gun control issue? The liberals let the criminals and nut cases walk the streets. Criminals will never obey the law. Conservatives have come up with many ways to reduce crime but the liberals don’t go along with these. They do little to nothing to defend our children and families but demand more control of our god given rights. Gun control has nothing to do with public safety, it’s about people control. Armed people are free people, disarmed people are subjects. Read the federalist papers.
          The liberals and unions control the auto makers with their rules and laws. So, for the owners and stock holders to make any money they build plastic junk parts that don’t last very long. The liberals forced the use of ethanol to be added to gasoline and it destroys older engines, gas tanks and fuel lines.
          Liberals have a goal of controling every part of our lives using Global Warning, Climate Change, Public Health, and so-on to get what they want. The liberals give up nothing to get what they want so, they don’t see it as a lose of a right or freedom. Liberals have no morals, values and use the 1st amendment to lie, deceive and cheat for whatever they want. Liberals are forcing us to pay for devices that have yet to work such as battery powered cars, solar panles and windmills.
          Liberals want to ban smoking, sodas, fat, sweets, and control ever part of our lives. They control the schools, and where in the consititution is the word education, so the federal government should not be doing anything about education, that is a local issue.
          Long ago I took an oath to the consititution to defend this nation and I still stand by that oath today and for as long as I can hold a gun to do so. I can see when someone is blowing smoke up my ass. Try to control my arms and we are at war.

      • Vigilant

        “Is there a separate military protecting the special “rights” of Liberals not held by non Liberals?”

        You bet your sweet bippie there is. It’s called the United States Government.

      • Jeremy Leochner

        What exactly are these “special rights” that liberals have but non liberals don’t Vigilant. I am a liberal and I have never heard of them.

      • Jeremy Leochner

        I am a liberal Barry and I will be happy to argue with you. To start I want to address a few of your points.

        I am willing to compromise. A persons political ideology and their ability to compromise are unrelated.

        I don’t let criminals walk the streets. I agree with some proposals of conservatives like focusing on the illicit trade of guns and having moderate gun control. As for protecting families I fully support people keeping a few guns in the home. I just think good locks, an alarm system and a dog would also protect the family. People have the power to speak. If you think disarmed people are subjects ask Gandhi, Martin Luther King, Rosa Parks and the Little Rock Nine and the Tiananmen Square protestors what they think.

        Unions need to be regulated. I admit that. But please bear in mind Unions prevent the scale from swinging to the other extreme. There needs to be a balance.

        If ethanol in gas is bad okay I will agree with you. All that matters to me is creating fuel efficiency and getting us on a different fuel source.

        I don’t want to control people. I just want to live in a decent society. I follow the golden rule like everyone else. And if I am asked to sacrifice for my beliefs I intend to make it.

        I don’t want to force anyone to buy anything. I just want those things to work.

        I don’t want to ban smoking or sodas or fats or sweets. I just want people to be aware of the possible problems of over indulging. People want to smoke and drink and eat go ahead.

        I am a product of Public Education. I am grateful to it. It has given me tools to help build my career. As my dad always says an education is something no one can take from you. If you disagree with our educational system I will be happy to discuss it. Just know that it is a system that I had a good experience with.

        I am not blowing smoke up your ass Barry. And I am not coming for your gun. I appreciate your service and look forward to your response.

      • Vigilant

        Jeremy says, “What exactly are these “special rights” that liberals have but non liberals don’t Vigilant. I am a liberal and I have never heard of them.”

        Try the “right” to deprive a man of the fruits of his labor by force in order to redistribute it to the poor. Such is neither a “right” under Natural Law, nor a Constitutional “right.”

        Preservation of private property rights (true rights) is one of the most sacred of rights under the Constitution. John Locke considered the protection of private property to be the MAIN function of government.

        Madison warned in Federalist #10 of the dangers of democracy (as opposed to a republic):

        “The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.”

        And, “Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions.”

        Madison, the Father of the Constitution, understood the evils of socialism long before the progressives democratized the nation.

      • Karolyn

        Without compromise, we are left with only one side winning all the time. If there were more compromise and cooperation in the world, we wouldn’t be in so much turmoil. But, no, everybody is so sure that they’re right that others suffer for their lack of compromise and cooperation. Especially republicans.

  • Bob666

    Well,
    Myers finally got one correct.

  • Hedgehog

    I am 71. I have come to the conclusion that the human race is individually and collectively insane! Just for the fun of it, take one or more of the sanity tests online and see how you make out. We keep on doing the same things over and over again and expecting better results. That is the definition of insanity. A prime example is the way we keep electing thieves, mountebanks and con men of various stripes as our political leaders when we should be decorating lamp posts with them! We trust our hard earned money (another con game) to bankers (more con men) who proceed to lie cheat and steal and return our capital with interest to us. The only problem is that our money is now worth less in purchasing power through the magic of inflation! I’m sure you can add to the list: Lawyers, Judges, Doctors, civil servants, etc., etc.. The only bright spot on the horizon is that in the not too distant future I will be dead! But with my luck I’ll be reincarnated and get to do it all over again! Don’t even bother to look it up, my form of insanity is paranoia. Enjoy you voyages of self discovery and remember reality is the biggest con game of them all!

    • dan

      I’d bet you didn’t learn that from a professor of economics (con -man)

    • Right Brain Thinker

      Speak for yourself, hedgehog! I’m nearly 73, so I have the advantage of a bit more time and accumulated wisdom, which I’ll share with you. I agree that the human race is collectively “insane” by many definitions of that word, but the paradox is that individually many of us are NOT—-we just don’t know how to fight the collective insanity.

      PS I have it on good authority from the “voodoo girls”—-Jana, Steph, Alondra, etc,—-that you are coming back in your next life as a toad—-enjoy!

      • Hedgehog

        Hey Right Brain Thinker, life as a toad would be great! Nothing to do all day but loaf around basking in the sun, scoffing down food provided for free, hibernating when the weather is cold, making bufotinine (a hallucinogen), oh yeah man lead me to it. Sounds like the kind of life 47% of Americans are enjoying right now! Biggest difference I can see is at least I’d be “towed”, not “driven”.

      • Bob666

        Yo RBT,
        Alondra is actually an Obama Girl.

      • Right Brain Thinker

        Bob666 says:

        Yo RBT,
        Alondra is actually an Obama Girl.

        REALLY ???!!! I don’t read her stuff because when I do, my eyes blur, my testicles begin to hurt, and my bowels liquefy—and those are only the symptoms I can mention on a “polite” site like PLD.. Thanks for cluing me in.

        A question—–assuming you’re right and she IS an “‘O’Bama girl”, it’s because she has no clue about what O’Bama has ever said or believes, right? It’s just something that “happened” to her but she couldn’t tell you why if you asked her?

        • Bob666

          [comment has been removed]

  • ToughGuy1

    The Prez. Obama thinks he’s Mr. “Road Show” Wall Street!

  • nc

    John, companies being able to sell their stocks is what created the money for their growth from “Mom and Pop” stores to the industries that made us great. That selling of stock is what created the stock “market”! Find us a billionaire not connected to the stock market! I don’t find it surprising that conservatives are scared to death of anything you can’t cover with a tarp!!
    You want a great tip to a good stock market to invest in? Just look to the White House! If there is a Democrat residing there jump right into the market! You want proof of that??
    Go to the “BULLS, BEARS, DONKEYS AND ELEPHANTS” and study that “study” done of the markets under our two major parties. If you have the guts to go look there will be your answer!

    WALL STREET LOVES THE DEMOCRATS BECAUSE HOOVER, NIXON AND “daddy’s boy” bush WERE ALL REPUBLICANS!!

    • momo

      That would explain the stock market when Reagan was in office…NOT!

    • Vigilant

      [comment has been removed]

    • speedle

      No nc, the stock market doesn’t particularly love democrats. It loves the government pouring billions of taxpayer dollars into it to keep it going. Now because it is democrats that typically do this I suppose you could say Wall Street favors the democrat statists. But the real business of America (the entrepreneurs who actually create jobs, not bubbles) despise the democrats and their policies. These are the facts nc.

      • nc

        Speedle, keeping the stock market going is what the free market is about!!!! Describe what this country will be if there ceases to be a stock “market”??? If the government can make it grow so much better for us!! One of it’s biggest movers is the GOVERNMENT MILITARY unless there is another military I don’t know about! Then there is insurance and medicine and software. All things that the government must purchase. Do you have any idea how much GOVERNMENT Social Security payments stimulate small town small businesses??? No one thing does it more!!
        To hate the government just because your 2% does not get to run it is not very smart when it is the best in the world!

      • speedle

        NC, listen carefully and I will try to explain. No, the government spending taxpayer money to prop up the stock market is “not good”. Taxpayers, if they were allowed to keep their own money would invest it themselves, and most would avoid economic black holes like green energy. The government needs to be the hell out of the economy, period. stop thinking like you are a ward of the state without the capability or will to make your own way in life. You are not a subject of the government.

    • Vigilant

      As for “Wall Street loves Democrats,” the idiotic contention on that statistical “analysis” is based on a number of faulty assumptions, and leaves out more relevant factors than it actually uses. It is a classic case of lying with statistics, intended to sway simple minds like yours into believing the propaganda without question.

      Here are the faulty assumptions:

      It assumes that the president has magical powers to wave a wand and thereby affect the stock market. He has not. A myriad of factors affect the stock market in a capitalist economy, which are beyond the capacity of a president to affect. In the government-managed economy YOU would like to see, the chief executive would have much greater powers to effect change. Currently he has not.

      It assumes that changes in economic direction due to administration policies have immediate or short term effects on the stock market. They do not. The economy is grindingly slow in responding to policy changes by the government. Thus, Clinton rode on the successes of Reaganomics, which brought us the longest sustained period of business prosperity in US history.

      It tries to convey the glaringly false assumption that the health of the stock market is a barometer of the nation’s economic health in general. It is not. By your reckoning, the rebound of the markets under Obama would point to a booming period of prosperity. How’s that working for you? Tell your tale to the unemployed, the record numbers of those on food stamps and welfare recipients.

      It goes wildly wrong in discarding one of the most important factors, the party which is dominant in Congress. Your “statistics” would “prove” something quite different than you assert if that influence were taken into account.

      • nc

        Vigilant. a party is dominate in Congress only if it has enough votes to override the veto of the President who does not approve of the policy they want. How often in modern times has that occurred? Why should Reagan not have a strong economy? He had the blessing of the people to build up the military and no wars to finance with a past administration that had set a four year record for creating jobs, the life blood of a strong economy! Nancy could have handled that and probably did!!
        You say that the stock market is not a barometer of our economy but I remember reading stories about October of 1929 when it rained stockbrokers out the windows of Wall Street when the MARKET CRASHED AND GUESS WHAT!! AN A$$ BUSTING DEPRESSION FOLLOWED!! We, who were born into that depression, tend to connect the two!! The fall of the market in 2007 and the recession of 2008 seen to have the same mother, don’t ya think???

        Maybe your dislike of Obama may be the reason you will not recognize the improvements in our economy and the market!!

      • Vigilant

        nc says, “You say that the stock market is not a barometer of our economy but I remember reading stories about October of 1929 when it rained stockbrokers out the windows of Wall Street when the MARKET CRASHED AND GUESS WHAT!! AN A$$ BUSTING DEPRESSION FOLLOWED!! We, who were born into that depression, tend to connect the two!!”

        Thank you, nc, for proving my point. You just confirmed what I said about “the glaringly false assumption that the health of the stock market is a barometer of the nation’s economic health in general.” A record high market in 1929 OBVIOUSLY wasn’t representative of a healthy economy.

        BTW, study your history. It did NOT “rain stockbrokers out the windows of Wall Street.” That’s pure myth.

        “The fall of the market in 2007 and the recession of 2008 seem to have the same mother, don’t ya think???” Of course they do…and you can lay it squarely on the Democrat control of both houses of Congress from 2007-2011.

        “Maybe your dislike of Obama may be the reason you will not recognize the improvements in our economy and the market!!”

        You crow about the job creation during Carter’s administration, but you are strangely silent about (or ignorant of) the fact that Obama presided over the first 4-year record of net job LOSSES since Herbert Hoover. And you call that “improvements in our economy?”

        • Bob666

          Yo Vigilant,
          “you are strangely silent about (or ignorant of) the fact that Obama presided over the first 4-year record of net job LOSSES since Herbert Hoover”

          Your statement was partially correct. Job losses were setting records before the election with the largest monthly increases in the unemployment rate. While you will get no argument on the lack of job gains during Obama’s first four from me, that ship had a bunch of momentum before the election and would have continued if McCain was elected.

          The only question would have been; when would it have stopped and we will never know the answer to that question.

  • Average Joe

    Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so.
    Douglas Adams

    AJ

  • http://www.facebook.com/darwan.winkler.3 Deerinwater

    Never been one to gamble with money that I couldn’t afford to lose. It’s scary enough to invest in bucket truck with the hope you can employ it and keep it busy.

    Never understood the attraction of Wall Street or National team sports.

    A fishing pole, a can of night crawlers and nice day is the extent of my luck.

    You swim with sharks, swim with friends.

    I don’t want another mans money or his problems, I want to keep mine.

  • dan

    Wall Street is best left to profesional gamblers….the odds are better in Las Vegas (lost wages)
    or Atlantic City

  • dave nugen

    I’m investing in precious metals, lead and copper, which in turn will get me gold and silver, water, food, shelter, whatever I need!!!

  • jopa

    I made money in the stock market and I know there would have been no way I could have saved that amount in a savings account.The company I worked for would match up to a certain per cent of the stock we bought in our own company and it was a win win situation .It was nice over the years to watch my 401k go up in leaps and bounds and I did get out before one of the crashes due to health reasons.Most people don’t get out in time but there came a point I could not afford to lose what I had.I guess i would call it unlucky lucky.The sad thing about todays record DOW is the top 5% own 51% of the stock and these vast fortunes are not going to help our economy one bit.This money will not be used for jobs but merely stored offshore for tax dodges.The middle class will be poorer and pay the taxes to run this country for the rich.Welcome to America.

    • Capitalist at Birth

      On what facts to you base your contention that the top 5% own 51% of the stock market? Hmm? Are you just making things up to fit your idiotic imagination?

      • Right Brain Thinker

        Ignoring the question of what exactly we could make of “idiotic imagination” and what it means, CAB should go look at the FACTs before he denies them. The “5% owns 51%” doesn’t ring a bell with me but the FACTS are even more disturbing. Did you not see these? Or was it me you were referring to when you said you “wouldn’t read” a comment.

        Some numbers of interest (from the Who Rules America website) AND THEY ALL COME FROM GOVERNMENT DATA AND OTHER RELIABLE SOURCES

        Wealth ownership in the USA

        The top 1% own 35% of all stocks, 64% of all financial securities, 33% of all trusts, and 61% of all business equity.

        The next 19% own 57% of all stocks and the bottom 80% own just 8% of all stocks.

        The top 1% have a mean net worth of $16 million, the top 20% (which includes the 1%) have a mean net worth of $2 million, and the group from 60 -80% have a mean net worth of $100,000 (1/10 of a million—–that’s 1/20th of the top 20% and 1/160th of the top 1% figures)

        The bottom 40% have a NEGATIVE mean net worth of ~$10,000, meaning that what they owe exceeds their assets by that much.

        PS In actuality, the top 10% of the top 1% owns most of the top 1%’s share. Something like 400 families own more than the bottom 90%, and they don’t “create jobs” with it or “invest it”—-they play financial paper games with it and just make more wealth for themselves with very little of it trickling down. The 1% have bought stocks only to run up their prices—-they will “hide” that money somewhere else as they ride the bursting bubble—-they make money on the way up, on the way down, and when it is “flat”—-all the lawyers and accountants and lobbyists they employ and the congressmen they own make it work that way for them.

        IF YOU CONTINUE TO REFUSE TO OPEN YOUR EYES AND LOOK AT TRUTH, CAB, WE WILL HAVE TO START CALLING YOU “IGNORANT AT BIRTH” (AND INSISTS ON REMAINING THAT WAY).

    • Capitalist at Birth

      That is the way the “progressives” planned it. Lincoln, Grant, Teddy, Wilson, Hoover, F.D.R., Truman, Johnson, Nixon, Ford, Carter, G,H.W. Bush, Clinton, G.W,, and now the king of them all Obama.

    • eddie47d

      Seems like Capitalist is coming up with his own “idiotic” complaints to suit his immagination. Where are your valuable facts or percentages?

  • jopa

    The Chinese are going to build Titanic !! ? I thought the only ships they built were called Junks.I won’t be on that voyage to the bottom of the sea.

  • http://wildeyguns.com The Christian American

    For many many people today there is no eternal hope so they have to get it all and do it all, now. The must satisfy the flesh but there is no satisfaction of the flesh. Life to them is like Elvis Presley and many others like him. Materially they have it all so they have to dull their minds with drugs. Hugo Chavez thought he had it all, until cancer ravaged his body and then he started looking beyond this life and went to his church. At the massacres at Sandy Hook and Columbine, all of a sudden people were scrambling to go to a church. At 9/11, all of a sudden church mattered. Living life as if God mattered always is a better way in my opinion. Then the insanity of trying to buy it all will not enter the mind because “all” will reached into eternity. Sure we want to achieve as much as we can in this life but putting it in the right perspective tells people who we really are. Look at me. What, is that cover you? Let’s look at the inside at the real person, the one that makes the cover tick. In the movie Titanic the people were depicted singing church songs as they sank. How much better if they were singing church songs when they entered the ship. Those people spending millions to sail on the Titanic in a way depict the American voter on both sides. They voted for a person that promised them all and their “all” is like a ticking bomb on all fronts.We’ve scraped our Constitution, except the parts that can satisfy our own needs, and still expect it to do what it was written to do. Read and believe John 3:16. You’ll come to realize that departing here only opens the door for all eternity.

    • JUKEBOX

      Obama was compared to Nero the other day, “Playing golf while America burns”. We are quickly following the path of the Roman Empire, seeking self gratification and entertainment, glorifying people like the Kartrashians, and making evil good and good evil.

  • eddie47d

    Since “tough guy” and Larry got their anti-Liberal digs in and think they are walking on cloud nine because of it then how do they feel about Conservatives who attempt to screw the economy with trickery. How about their insistence that pension funds should be tied to the Stock Market? They say that Social Security is a ponzi scheme yet everyone should pour their money into that stock market and reap greater “rewards”. Some of you are as crazy as the Liberals you bash! Are you asking yourself if Wall Street is gambling and will the market burst?

    • Capitalist at Birth

      And how is F.I.C.A. not a ponzi scheme, pray tell? If it was truly VOLUNTARY, who in their right mind would invest their retirement savings with the Government? Not I. Would you?

    • eddie47d

      SS is for the most part guaranteed. Sure the stock market can make you wealthy but it can also make you very poor. Some investments are losers and those loses are sometimes deducted on taxes so the government is covering your gambling debts.

    • JeffH

      Ahhhh yes, and then there is eddie…still wildly frollicking in the childish “payback” games all the while openly confirming why most everybody laughs at him and makes fun of him.

      One can only wonder what would be said if “conservatives” were as thin skinned as eddie(and his messiah Obama).

      MOTHER make him stop! LMAO :)

  • http://nuosras.wordpress.com Lawrence Sarsoun

    I’m also buying food. Still looking for the perfect food to hoard. Must last a long time. Got any ideas?

    • Hedgehog

      Beans and brown rice. Together they are close to a perfect food. Add different spices and scraps of locally available meat, (small birds, squirrels, rabbits, etc.), endless variety of dishes. Eat hearty Lawrence!

    • Old Henry

      Lawrence:

      Take a look at Peggy Layton’s site. She does an areticle here every second Monday.

      You can find her past articles under the Survival & Self-Sufficiency tab at the top.

      Or, go to peggylayton.com She sells long-term storage food from GoFoods. It stores up to 25 years and yo get free samples to try before you buy. It is good stuf.

  • Ken10

    The US stock market returned over 10% between 1982 and 2001 after inflation. Boy George pretty well took care of that.

    • Capitalist at Birth

      Did “boy George” create the false rise in housing values by creating MBS? If you check the facts you will find that the so called housing bubble (which had to burst), was created by Bill Clinton and the underhanded illegal enforcement of the CRA from 1993 thru 2000. The market was effected by the creation of MBS, which was illegal until revocation of the Glass Steagall Act in 1998 or 1999. I can remember arguing with the ignorant patrons of my establishment and warning them of the coming housing bust. I paid $ 128K for my house in 1991 with 20% down. In 1997 it was appraised at $ 200K. In 2005 it was (according to Zillow) was valued at $ 285K. There is no way I could have afforded to buy my house. What would make me think that anyone else would even qualify to purchase it at that price. I warned my friends and neighbors to borrow no more than 60% of the value of their properties if refinancing. They ignored my advice, resulting in numerous foreclosures, and much pain. Yes George W. thought that it was a wonderful goal for more and more Americans to own their home and continued the idiocy to a lesser degree. I think that Rhinos and Democrats should be banished to Cuba or Venezuala.

      • jopa

        Capitalist: Your numbers are right on the money.I have exactly the same scenario going on right now.I bought at the same price when you did my numbers went crazy high for a while and now it seems as though we are being ripped off by selling for $185,000. I am just glad we have a buyer now and it took about three months to sell and soon as it was locked in someone else wanted to put a bid in.I paid cash for my new mountain home so this will be a little fun money anyway.Happy days are finally here again.

    • Capitalist at Birth

      And I think the record high occurred during G.W,’s term (2007) Care to prove me wrong?

      • jopa

        Capitalist;(2007) May have been the exaggerated high but when it comes to Zillow you can’t really go by their numbers.What they do is use the average market value in a given area and not the actual value on one particular home.My new home Zillow has it listed way above what I feel I could sell it for.I like simple living and I think they have me living in a mansion.

  • Vigilant

    “American stock prices have not soared on bedrock fundamentals…This bubble exists because investors have become speculators.”

    “Gamblers” may be a better term. The market is sizing up to be a replay of 1929, contrary to the claims of the ignorant and myopic who would have us believe that the rise of the DJIA is testimony to Obama’s “success.” It is very far from that.

    Investment is a long term financial technique that uses as its guidelines the fundamentals of company performance. Such an approach looks at debt to equity and price to earnings ratios, as well as “defensive” stocks which continue to thrive during times of inflation and recession, and a company’s consistent ability to post healthy earnings and issue dividends.

    The speculators are likely to ignore the fundamentals of a stock, preferring to make the quick buck by gambling on the technical performance of the stock (DJIA and other market indicators). It’s more like betting on the horses than it is wise and responsible.

    It finds a recent analogy in the bursting of the housing bubble. When toxic derivative packages of mortgages were bought and sold without any regard for the fundamental lack of soundness of the bundle, purely because they could be offloaded at tremendous profit, the debacle that resulted was an entirely predictable event, and in fact was predicted by a number of economists.

    • Capitalist at Birth

      When the QE and student load bubbles burst, the housing market may finally hit bottom, which has been artificially prevented by the continuous QE program. At some point the devaluation of the currency will begin to effect economic activity. It should have already happened in the third quarter of 2012. A retraction in economic activity is inevitable. If you want to throw fuel on the fire, raise the minimum wage, then we can really have a bonfire.

    • Right Brain Thinker

      Vigilant and I are in agreement here. Look to my comment at another place on the thread for my thoughts on how we need to extend our thinking beyond speculation into what it really confronts us, a type of Ponzi scheme by the greedy rich that allows them to steal wealth from the 99%.

    • Bob666

      Yo Vigilant,
      “When toxic derivative packages of mortgages were bought and sold without any regard for the fundamental lack of soundness of the bundle, purely because they could be offloaded at tremendous profit, the debacle that resulted was an entirely predictable event, and in fact was predicted by a number of economists”.

      I took three courses in derivatives many years ago when I got a degree in finance and I still don’t fully understand them. What I do know, when you buy derivatives valued on a box of rocks-you own a microscopic portion of a box of rocks and at the end of the days, it is still a box of rocks.

      • Vigilant

        You’re correct. The biggest problem with the mortgage derivatives was that they were always an unknown quantity. Initial face value of the bundle was based on a mix of good mortgages with mortgages that could never be repaid, all based on a housing bubble that was terribly inflated and unsustainable. The actual value was never known.

        Fannie/Freddy knew it, the Wall Street financial hustlers knew it, The Dems and Republicans knew it, but NO ONE took energetic action to halt it.

    • JeffH

      Vigilant says ““Gamblers” may be a better term. The market is sizing up to be a replay of 1929, contrary to the claims of the ignorant and myopic who would have us believe that the rise of the DJIA is testimony to Obama’s “success.” It is very far from that.”

      Hmmmmmm, per chance are you referring to the “Bulls & Bears” anologist?

      • Vigilant

        BINGO!

        nc pulls the old canard out evrey few months, until I bat him back down with logic and history. Funny, he keeps trying it, and I expect we’ll see him try to get away with it again when he thinks things have cooled down…and I’ll bat him down again.

      • Vigilant

        Make that “every.”

  • ibcamn

    We all know what’s gonna happen…the second the feds stop printing money,those who had money to invest wil hear from or see all the senate seat warmers pull their money out!(insider trading by gov’t workers)so in turn all the big investers will start yanking all their money making stocks and bonds and whatever else they have in the game,and all of a sudden,you will have panic!boom,thats the sound of the market hitting the bottom!the feds will print till the dollar is worthless and the country will be circling the drain when the vaulchers will swoop in and put us(regular traders,civilians) out of our misery!and that’s when Obama will come in with a big sheet eating grin and,wait for it………..”I am declaring a state of emegancy!”,…but that can only happen after Obama and his henchmen get our guns!unless Obama figures some other way around the gun grab(which he is hard at work on),and if he does,that’s when it will happen(feds will have to print until then)

    The only thing that’s holding the economy up and running is the feds and their printing,Obama calls it QE,and keep in mind that Obama has his sights set on our 401′s,savings accounts,pensions and retirement funds!that’s what he thinks he can take to pay the debt!but only when he says those 7 little words that he can’t wait to utter!(he’s probably got a little speech written up for the occasion)to make us feel better about giving him our money to the future of this new leadership!OOPS,did i say leadership?!that’s what it will be and that’s what he wants!(to be king)state of emergancy gives him complete power!!remember thaat!

    Just like the Titanic,history will repeat itself because of no common sense!wake up people!!

  • Doug

    While I agree about stocks, I think calling the Titanic a “pinnacle of human stupidity” is a bit harsh. I think the essence of the fascination with the Titanic is the fulfillment of human aspiration and nostalgia for a time of great optimism in the great ship of all Human endeavors I tend to think its not a great metaphor for State stupidity as say , for example the Concorde was.

    • http://wildeyguns.com The Christian American

      At the time of the Titanic there was a race on to see who could cross the Atlantic. The actual time a ship took became the thrust of a companies advertisments. This motivated the ships owners to take chances. They saw more gold if they won that race. How does the bible say it? For the love of money is the root of all evil.

    • John Myers

      Dear Doug,
      I doubt that if you were on that ship you would think I was harsh.
      Thanks for reading and for your comment.
      John Myers

  • Nadzieja Batki

    If you think of humans as suckers, you are correct. To verify how stupid humans can be go to a Homeowners Association meeting, the one planned for yearly attendance and not the ones that are done by the Board chieftains.There are two assortments of homeowners attending, the ones that see things as they are and are realists and are honest, the other bunch that live in a la la land and are gullible as h–ll and love to be used as suckers by the con men with glib tongues.
    So if anyone wonders why politicians get elected and nothing ever changes go to one of the meetings and watch the rah rah group fawn at the Board chieftains.

    • Thomas Potts

      And I thought the Association Boards I belong to were unique. I guess they may be all alike. Herders leading the cattle.

  • Neal

    I have seen no discussion on this, but did you stop to think that if there is now, say, 3x as much money as there was a few years ago, then 14,000 is still low for the Dow and 40,000 would be a bubble?

    I agree that this depression is not over, but I see a lot of really cheap stocks out there. I AM hedging the bet, though, with half of my assets in gold and silver. They have not done well, but they are showing signs of getting ready to leap.

  • Fedup

    Jeremy, “save America – CLOSE the government!”

  • Old Henry

    “On Friday, the Federal government was forced to implement its $85 billion “sequester” spending cuts”

    There are NO cuts!!!

    Stop it!
    Stop it, now!

    There is only a MINISQULE reduction in the INCREASE in the budgets!

    Sheesh!

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