Le freak, c'est chic
"A key difference between the theories animating the work of Obama's economists and the theories behind the Levy-Kalecki formula are that the former assume people will act rationally in accordance with government prodding and the latter consider the possibility that people will freak out.
Contrary to mainstream economics beliefs that people operate with perfect knowledge, Levy-Kalecki assumes that economic participants -- families, officials, workers, investors and executives --
grope about their lives in an atmosphere of uncertainty, develop false beliefs and make mistakes, especially when surprised.
While mainstream economics argues that markets and people tend toward a harmonious equilibrium that can be guided by didactic government action, Levy-Kalecki suggests behavior instead tends toward disequilibrium. The difference in policy that must be developed in each case is profound, for the former tends to rely on inflexible formulas while the latter would seek to constantly adjust.
The rubber meets the road now in two views of how individuals will react to incentives embedded in the stimulus package. ...
Without directly creating private jobs via public-works projects to give laid-off workers new income streams -- and thus help people stop obsessing about a bleak future -- the Levy-Kalecki model forecasts the next year will feature a steep climb in saving, plunge in spending, wipeout in corporate earnings and disintegration of the stock market. " <<
the public works project that worked last time was material production from WW2, most of the previous Depression make work projects just prevented starvation, but couldn't overcome inertia because they didn't really increase GDP. * inserted>>
Anticipating a collapse
One Levy-Kalecki adherent who runs a credit portfolio at a New York investment bank told me he believes that complacent policymakers don't seem to realize the nation faces a grave financial crisis on par with war. If people react to weakening job prospects by stiffing their credit card and mortgage lenders in order to save at a level that will let them survive a financial meltdown, he sees the potential for $6 trillion in lost spending over the next two years."This is what commodity, bond and stock markets are trying to price in right now," said the manager, who asked not to be identified. "Investors gave up waiting for the government to act effectively and are taking down the value of everything in anticipation of collapse."
"If the wealthy are taxed at higher rates, as currently contemplated by the Obama administration, and savings rates go to 10% per annum, the formula suggests corporate profits will be cut in half from their peak two years ago. Because earnings at the companies that make up the S&P 500 totaled $84.70 a share in 2007, that would mean forecasts of the stock market need to start with the assumption that earnings will sink to about $42 per share.
If investors are confident that a decline to that level is just a temporary aberration, they will apply a price-earnings multiple similar to what we see today, around 18, and then you get a forecast of 755 for the S&P 500, which is a little higher than where we are now. But if investors fear earnings will continue to slip, then they'll cut the multiple to as little as 9 or 10, as they did in the 1970s, and if you do the math you get a projection of 420 for the S&P 500,
or around Dow 4,000."
<excerpted and resequenced, emphasis added>
http://articles.moneycentral.msn.co...how-savers-could-doom-the-economy.aspx?page=2
I'm going to meet with a client this morning who asked for loan from his retiremen account.
He wanted a loan from his retirement account, with which to pay off his credit cards, in case his wife lost her job in the private sector (he's IT director for public school). The investment carrier bungled the paperwork, and his loan amount decrease by a $1000 in like three business days.
i got a fourth back order out of stock notice from SGO for an item i ordered in November
So the kSB BBBBIx is moved to $3000 + $9
the only reason it's no higher is that the price of 50 lbs. sacks of rice went from $29 at Sham's club to $22
(it was $4.98 in 1998)
Guys, your missing it; go get a metal trash can from TSC and a couple of 50 lbs. bags of rice (400 units of food /servings); it's about $60 or less than one case of MREs.
PS your preps are a source of wealth and that wealth is increasing in value right now
