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Thread: Economy Fundamentals

  1. #1
    Cyburbian Duke Of Dystopia's avatar
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    Economy Fundamentals

    My question is an economic question.

    When economists and money people on the cable business channels discuss "The Fundamentals", what the hell are they actually talking about? I am sure that a trained workforce is one part of the fundamentals, but I am also pretty sure that its not how McCain tried to backtrack and describe it yesterday.

    So what are some of the basic fundamentals of the economy? Is it the age of manufacturing facilities? Available work force? Available credit for business operation? "Economic Fundamentals" are going to be an important buzzword, so what exactly are they?
    I can't deliver UTOPIA, but I can create a HELL for you to LIVE in :)DoD:(

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    Cyburbian Cardinal's avatar
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    I think the problem is that there really are no defined "fundementals." What is important will vary according to the question you are being asked. Want to be general? Maybe it is unemployment, inflation, and change in GDP. Specific? Gross income, changes in income, poverty rates, disposable income, CPI. Or maybe it is productivity, balance of trade, cost of goods sold, and margins. It all depends on the question that is asked.
    Anyone want to adopt a dog?

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    Cyburbian zman's avatar
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    The word "Fundamentals" is just distraction from what they really should be saying:

    "THE G**DAMN PLANE IS CRASHING INTO THE MOUNTAIN!!!!!
    You get all squeezed up inside/Like the days were carved in stone/You get all wired up inside/And it's bad to be alone

    You can go out, you can take a ride/And when you get out on your own/You get all smoothed out inside/And it's good to be alone
    -Peart

  4. #4
    Cyburbian hilldweller's avatar
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    So... all these banks/financial institutions are failing or being swallowed up by bigger banks like Bank of America.

    Is this really bad news or what, are we all screwed? What does it mean for the little guy/average joe?

    The media reports haven't really explained it all in a way that is easy to understand, at least for someone rather ignorant in financial matters like myself.

  5. #5
    Cyburbian CJC's avatar
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    I agree with Cardinal's answer. There are just so many different measurements that can be used. One other thing I might throw in is relative strength compared to the rest of the world, which I think we might shortly have.

    My personal belief is that right now the fundamentals of our economy are unknown at the moment. This is undoubtedly the biggest credit crunch and banking crisis that we've had since the Great Depression, but exactly how bad remains to be seen. Until we see whether a couple more big banks will fail or be bailed or bought out (Wachovia, Washington Mutual), whether AIG can find a way to survive, and what the full effect of Lehman's $600 billion+ bankruptcy and the Fannie/Freddie mess has on the world market, I don't think anyone knows.
    Two wrongs don't necessarily make a right, but three lefts do.

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    Cyburbian zman's avatar
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    Quote Originally posted by hilldweller View post
    Is this really bad news or what, are we all screwed? What does it mean for the little guy/average joe?
    Read my first comment.

    I would start tilling up your yard for your own food supply and begin hitting the army surplus auctions for heavy artillery.
    You get all squeezed up inside/Like the days were carved in stone/You get all wired up inside/And it's bad to be alone

    You can go out, you can take a ride/And when you get out on your own/You get all smoothed out inside/And it's good to be alone
    -Peart

  7. #7
    Cyburbian Duke Of Dystopia's avatar
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    I thought I might start a list in order to help build an effective view.

    General Fundamentals
    unemployment
    inflation
    change in GDP
    relative strength compared to the rest of the world
    credit availability

    Specific Fundamentals
    Gross income
    changes in income
    poverty rates
    disposable income
    CPI (Consumer Price Index)
    productivity
    balance of trade
    cost of goods sold
    margins
    I can't deliver UTOPIA, but I can create a HELL for you to LIVE in :)DoD:(

  8. #8
    Cyburbian mgk920's avatar
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    Another - available 'money' (actually 'value') in the economy - if your don't have it, you cannot spend it. ALL attempts to spend it when you don't have it will ultimately end up in disaster. The latest case is no different, invested money was being thrown around in places where it never should have and would never re-emerge and yes, government interference played a part in it (one example - bad loans that were made to keep the bank in line with 'fair lending' laws, another - government promising taxpayer backing of lenders' loan portfolios, eliminating the motivation of potential failure from the front-office decision-making process).

    Mike

  9. #9
    Cyburbian Duke Of Dystopia's avatar
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    Quote Originally posted by mgk920 View post
    Another - available 'money' (actually 'value') in the economy - if your don't have it, you cannot spend it. ALL attempts to spend it when you don't have it will ultimately end up in disaster. The latest case is no different, invested money was being thrown around in places where it never should have and would never re-emerge and yes, government interference played a part in it (one example - bad loans that were made to keep the bank in line with 'fair lending' laws, another - government promising taxpayer backing of lenders' loan portfolios, eliminating the motivation of potential failure from the front-office decision-making process).

    Mike
    Is that the FDIC insurance of banks or some other program you are referring to?
    I can't deliver UTOPIA, but I can create a HELL for you to LIVE in :)DoD:(

  10. #10
    Cyburbian mgk920's avatar
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    Quote Originally posted by Duke Of Dystopia View post
    Is that the FDIC insurance of banks or some other program you are referring to?
    More like the federal bailouts of Freddy/Fanny, etc. I applaud the GWB administration for saying "no" to Lehman and the rest, though.

    FDIC protects the depositors, NOT the banks/institutions nor their shareholders (except from potential depositor 'runs').

    Mike

  11. #11
    Cyburbian boiker's avatar
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    I believe it was Stephen Colbert who summed it up last night:

    "The fundamentals are sound, we are still exchanging money for goods and services. We haven't regressed to bartering yet."
    Dude, I'm cheesing so hard right now.

  12. #12
    Cyburbian CJC's avatar
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    Quote Originally posted by mgk920 View post
    More like the federal bailouts of Freddy/Fanny, etc. I applaud the GWB administration for saying "no" to Lehman and the rest, though.

    FDIC protects the depositors, NOT the banks/institutions nor their shareholders (except from potential depositor 'runs').

    Mike
    What are your feelings on the Bear Stearns bailout?

    The problems with Fannie/Freddie should have been dealt with long ago (by any one of several Republican and Democratic Administrations). The bailouts are purely the product of lax regulation that allowed incredibly weak balance sheets, an implicit government guarantee, and waaaaay too much lobbying by the GSEs.
    Two wrongs don't necessarily make a right, but three lefts do.

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    Super Moderator kjel's avatar
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    I will write a novel later....late for class
    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

  14. #14
    Cyburbian Tom R's avatar
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    fundamentals

    Quote Originally posted by hilldweller View post
    Is this really bad news or what, are we all screwed? What does it mean for the little guy/average joe?
    "Them thats got shall get
    Them thats not shall lose...."Lady Day
    WALSTIB

  15. #15
    Cyburbian mgk920's avatar
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    Quote Originally posted by CJC View post
    What are your feelings on the Bear Stearns bailout?

    The problems with Fannie/Freddie should have been dealt with long ago (by any one of several Republican and Democratic Administrations). The bailouts are purely the product of lax regulation that allowed incredibly weak balance sheets, an implicit government guarantee, and waaaaay too much lobbying by the GSEs.
    I was opposed to all of those bailouts. All they do is not add the factor of the 'potential to fail motivation' to the lending decision-making process and they only delay the inevitable corrections that have to happen, making them ultimately worse than they otherwise would be.

    Again, if you don't have it, you cannot spend it.

    Mike

  16. #16
    Cyburbian CJC's avatar
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    Quote Originally posted by mgk920 View post
    I was opposed to all of those bailouts. All they do is not add the factor of the 'potential to fail motivation' to the lending decision-making process and they only delay the inevitable corrections that have to happen, making them ultimately worse than they otherwise would be.
    I agree.

    Again, if you don't have it, you cannot spend it.
    I don't understand this statement. How else do we have economic growth? I agree with the sentiment, and there have to be limits on how leveraged we allows companies, banks, etc to become, but...
    Two wrongs don't necessarily make a right, but three lefts do.

  17. #17
    Cyburbian craines's avatar
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    We are all floating on theroy, hope and luck...........ever since they took away the gold and silver standard for money. Its only worth something now because as a society we believe it to be so.
    Looking for Sanity
    In this Crazy Land Of Ours

  18. #18
    Cyburbian Brocktoon's avatar
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    Quote Originally posted by Duke Of Dystopia View post
    I thought I might start a list in order to help build an effective view.

    General Fundamentals
    unemployment
    inflation
    change in GDP
    relative strength compared to the rest of the world
    credit availability

    Specific Fundamentals
    Gross income
    changes in income
    poverty rates
    disposable income
    CPI (Consumer Price Index)
    productivity
    balance of trade
    cost of goods sold
    margins
    I would add:
    performance of the S&P 500 (the Dow is amateurs)
    Money Supply both M1 and M2
    Change in manufacturers orders
    Consumer expectations
    Prime Interest Rate
    Building Permits issued year over year
    Orders for new plants and equipment
    Unemployment Claims
    "If you don't like change, you're going to like irrelevance even less" General Eric Shinseki

  19. #19
    Cyburbian Duke Of Dystopia's avatar
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    Updated List

    General Fundamentals
    unemployment
    inflation
    change in GDP
    relative strength compared to the rest of the world
    credit availability
    Consumer confidence polling data (?)
    Consumer expectations
    performance of the S&P 500 (Under General because of legitimate market adjustments and other issue make it a general guide OR should it be in specific?)
    performance of the DOW (Under General because of legitimate market adjustments and other issue make it a general guide OR should it be in specific?)

    Specific Fundamentals
    Gross income
    changes in income
    poverty rates
    disposable income
    CPI (Consumer Price Index)
    productivity
    balance of trade
    cost of goods sold
    margins
    Money Supply both M1 and M2 (Wat is this more exactly?)
    Change in manufacturers orders
    Prime Interest Rate
    Building Permits issued year over year
    Orders for new plants and equipment
    Unemployment Claims

    Any objections, please reply, and we can fix it. At least we are starting to get a detailed picture.
    I can't deliver UTOPIA, but I can create a HELL for you to LIVE in :)DoD:(

  20. #20
    Cyburbian Plan-it's avatar
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    21st Century Socialization

    The US is now an 80% owner in the worlds largest Insurance Company. We are on sound economic footing I am sure . Hopefully, politics does not get in the way of running this new business that tax payers now primarily own.
    Satellite City Enabler

  21. #21
    Cyburbian zman's avatar
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    Quote Originally posted by Plan-it View post
    The US is now an 80% owner in the worlds largest Insurance Company. We are on sound economic footing I am sure . Hopefully, politics does not get in the way of running this new business that tax payers now primarily own.
    I read that this morning.... all I could think of was captured in this smiley:
    You get all squeezed up inside/Like the days were carved in stone/You get all wired up inside/And it's bad to be alone

    You can go out, you can take a ride/And when you get out on your own/You get all smoothed out inside/And it's good to be alone
    -Peart

  22. #22
    Cyburbian Mud Princess's avatar
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    What about the personal savings rate? Last I heard, it was negative for the first time in many decades.

  23. #23
    Cyburbian CJC's avatar
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    Quote Originally posted by Plan-it View post
    The US is now an 80% owner in the worlds largest Insurance Company. We are on sound economic footing I am sure . Hopefully, politics does not get in the way of running this new business that tax payers now primarily own.
    Technically the Fed (unlike Fannie/Freddie where the Treasury took over) only holds "warrants" to 80% of AIG that can be exercised if certain conditions of the loan are not met. If everything works out, the government will make a tidy profit and never take an ownership stake in AIG.

    I don't at all agree with this move by the Fed (I think that we have bankruptcy courts for a reason, and they work remarkably well when not "tinkered" with), but AIG is a different story than most of the other companies that have failed. The vast majority of AIG's businesses are sound and bringing in profit, but the credit markets have seized up so much that they couldn't find any short term liquidity. It's unlikely that they will not be able to repay the loan.
    Two wrongs don't necessarily make a right, but three lefts do.

  24. #24
    Cyburbian Duke Of Dystopia's avatar
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    Updated List

    General Fundamentals
    unemployment
    inflation
    change in GDP
    relative strength compared to the rest of the world
    credit availability
    Consumer confidence polling data (?)
    Consumer expectations
    performance of the S&P 500 (Under General because of legitimate market adjustments and other issue make it a general guide OR should it be in specific?)
    performance of the DOW (Under General because of legitimate market adjustments and other issue make it a general guide OR should it be in specific?)

    rate of personal savings

    Specific Fundamentals
    Gross income
    changes in income
    poverty rates
    disposable income
    CPI (Consumer Price Index)
    productivity
    balance of trade
    cost of goods sold
    margins
    Money Supply both M1 and M2 (What is this more exactly?)
    Change in manufacturers orders
    Prime Interest Rate
    Building Permits issued year over year
    Orders for new plants and equipment
    Unemployment Claims

    Any objections, please reply, and we can fix it. At least we are starting to get a detailed picture.

    Added personal savings rate
    I can't deliver UTOPIA, but I can create a HELL for you to LIVE in :)DoD:(

  25. #25
    Cyburbian WSU MUP Student's avatar
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    Was McCain perhaps channeling Herbert Hoover?

    Quote Originally posted by President Herbert Hoover, Thursday, October 24, 1929
    The fundamental business of the country, that is, production and distribution of commodities, is on a sound and prosperous basis.
    "Where free unions and collective bargaining are forbidden, freedom is lost." - 1980 Republican presidential candidate Ronald Reagan

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