Pinatas Never Had it This Bad

Hed is someone's blog comment on this:

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 1

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 2

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 3

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

I would say this was painful to watch, but not as painful as losing half of my net wealth in the past five months.

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The Stock Market is Bullshit

I had this realization more than a year ago and regret I didn't do anything about it. Like many Americans, most of my retirement fund is in stocks. I bought into the myth that the market always goes up over time and it's the only way to build your nest egg.

I understand business, but I don't really understand stocks, because I am not a good gambler. Buying stocks is gambling, simple and pure. So, I depended on a broker and most of my money is in mutual funds.

But while stocks represent ownership in companies and to some degree do better or worse based on the performance of the company, they are also subject to emotional trading, and they are in themselves a commodity.

As America transitioned from company pensions to 401ks, a lot of new money entered the market. Thus there was greater demand for the available stock, and that makes prices go up.  So the 401k effect in itself was a bubble. Add that to the realities of today's economy and you have a crash.

While the market may continue to drop, at this point I don't feel like I have any real choice but to leave my accounts alone and hope they rebound before retirement. But when the S&P returns to about 1,500 (probably 5-7 years), I'm out. I doubt I'll actually be retired then, but if I do invest, it will be in something I understand, and something not likely to rise or fall on emotion.

No more gambling for me.

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Don't Show Me the Money

All of a sudden, everyone -- the president, congress, every major candidate -- is on board with the idea that we need an economic stimulus package. Hey, I'd love to get a check as much as the next guy. The last time Bush did this, I contributed all of it to NARAL and the ACLU.

Except, with all the talk about recession, neither the White House nor any key economic analyst is predicting negative growth -- much less two consecutive quarters of it, which defines a recession. Most predict in the range of 2-3% positive growth. See this chart.

Does that mean there aren't people who are hurting? Of course not, but that's the result of structural changes to our economy and tax policies engineered by the Republicans. Won't be undone with just one check.

All the attention to the housing crisis neglects the fact that housing and constructions represents just 5% of our total economy. Other segments of the economy are doing quite well.

You hear retail is in trouble? If so, it's not because people are spending less; it's because retailers have built stores at a higher rate than the increase in spending and so have too many dollars invested in real estate and inventory. of course, when they slow up building and move inventory rather than buying more it will increase unemployment, but unemployment has been at historically low levels for some years. Also, higher exports due to the weak dollar provide new markets for manufactured goods that will make up for some of that.

Everyone talks about consumer confidence. And it's true, if people are worried about the future they might tend to spend less, especially if they are having trouble getting ridiculously high credit limits on their MasterCards as they did in the past. But their confidence is based on what the news media and politicians tell them. If that doesn't mesh with reality we have a problem.

Wouldn't Bush just love to take credit for putting cash in the hands of the electorate this spring?

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Insurance

The typical argument against any kind of environmental quality policy or legislation is that it's bad for business and will hurt the economy. Here's an excerpt from a letter to the editor published in Business Week's March 12 issue that addresses and answers that argument:

If the scientific concensus on the human impact on global warming is totally wrong and we spend billions of dollars reducing carbon dioxide emissions needlessly, the effect will probably be a modest slowdown in global economic growth.

If we do nothing about CO2 emissions and the scientific consensus is correct, the result will be global catastrophe. Choosing the former over the latter isn't a hard choice to make. We do it every day in business. We call it insurance.

- James A. Wirth, Pittsburgh

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