Economics

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Dotini

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CR80_Shifty
Great Depression levels of economic conditions are setting in to stay for up to 10 years, I've read.

Currently, US Internal Revenue Service tax filing has been reset to July 15th. But now it may de delayed until after the election.

It would be interesting to see it ended completely. How long can a central government exist without tax revenues? Maybe forever?
Thanks to the miracles of economic engineering coming from the brightest minds of the Ivy League, can debt now be ignored and deficits expanded at executive necessity?

https://www.nbcnews.com/politics/wh...sures-boost-economy-without-congress-n1202246
 

Danoff

Who is John Galt?
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It would be interesting to see it ended completely. How long can a central government exist without tax revenues? Maybe forever?

Tax filing is not when they get revenue. Tax filing is when they give it back - at least that's the case more often than not. The government would love it if nobody filed. They could just over-collect indefinitely.
 

Dotini

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Tax filing is not when they get revenue. Tax filing is when they give it back - at least that's the case more often than not. The government would love it if nobody filed. They could just over-collect indefinitely.
Well, with unemployment nearing 20% and whole industries shut down, salvation by overcollection is almost proof of God. Make it infinite as well as indefinite, and I'm a believer. :rolleyes:
 

ROAD_DOGG33J

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holyc0w1
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Makes sense. Prices are propped up by "free" money. Unfortunately for those who have been saving, their money will be devalued. Doesn't seem like there will be a downturn in housing prices. Greatest economy ever
 
8,724
United States
Marin County
Makes sense. Prices are propped up by "free" money. Unfortunately for those who have been saving, their money will be devalued. Doesn't seem like there will be a downturn in housing prices. Greatest economy ever

So big dollar assets will continue to inflate, consumer goods will become more expensive, and I'm guessing wages are not going anywhere. If this doesn't completely decimate the middle class, I don't know what will.

Well, if you were a homeowner before the pandemic, congratulations, you are enshrined in the winners corner. That is until there are no more buyers left able to afford the extravagant life style of...you know having a roof over your head.
 

FPV MIC

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GT-MIC
And yet here in Australia the house prices are falling, and predicted to keep falling for a while yet. Crazy times!

Average discounting ranged from 8.2 per cent in Darwin to 3.7 per cent in Melbourne.

In Sydney, vendors dropped their asking prices by 4.3 per cent on average, while Hobart vendors were willing to cut asking prices by 5.2 per cent.

Brisbane vendors slashed their prices by 4.3 per cent, Adelaide by 3.9 per cent and Canberra by 3.4 per cent.
https://www.afr.com/property/reside...o-fall-as-discounting-doubles-20200515-p54tb3
 

Danoff

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Makes sense. Prices are propped up by "free" money. Unfortunately for those who have been saving, their money will be devalued. Doesn't seem like there will be a downturn in housing prices. Greatest economy ever

So big dollar assets will continue to inflate, consumer goods will become more expensive, and I'm guessing wages are not going anywhere. If this doesn't completely decimate the middle class, I don't know what will.

Well, if you were a homeowner before the pandemic, congratulations, you are enshrined in the winners corner. That is until there are no more buyers left able to afford the extravagant life style of...you know having a roof over your head.

This situation kinda screams "pull out of the stock market, put into the real estate market". Stocks are puffed but housing isn't... yet.
 
9,397
Australia
Western Sydney
mustafur
If mass job layoffs are inevitable I dont see how house prices hold, even with low interest rates, most people need their jobs to pay their home loans.
 
8,724
United States
Marin County
If mass job layoffs are inevitable I dont see how house prices hold, even with low interest rates, most people need their jobs to pay their home loans.

2 Things:

Big money is becoming more and more invested in single family residential. If firms like Berkshire are unloading their warchest on the market, it's going to hold a floor on prices.

Banks don't have much interest in foreclosing on their borrowers. I'd guess that missing income from deadbeat borrowers is peanuts compared to the enormous upside of a constricted housing supply that they can control by...not foreclosing on their borrowers. Remember part of the GFC/Mortgage crisis last decade was caused by a flood of foreclosed homes on the market and the subsequent depreciation it caused - I think banks are wary of that happening again. There's evidence that some borrowers have not paid a dollar to their mortgage in years in some parts of the country.
 
9,397
Australia
Western Sydney
mustafur
2 Things:

Big money is becoming more and more invested in single family residential. If firms like Berkshire are unloading their warchest on the market, it's going to hold a floor on prices.

Banks don't have much interest in foreclosing on their borrowers. I'd guess that missing income from deadbeat borrowers is peanuts compared to the enormous upside of a constricted housing supply that they can control by...not foreclosing on their borrowers. Remember part of the GFC/Mortgage crisis last decade was caused by a flood of foreclosed homes on the market and the subsequent depreciation it caused - I think banks are wary of that happening again. There's evidence that some borrowers have not paid a dollar to their mortgage in years in some parts of the country.
So it's a banking crisis linked to the houses then?

If large numbers of people don't pay the banks how does that produce a different result?, even with bailout money it sounds like Zombie banks reminiscent of the Japanese bubble.
 

Danoff

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The stock market continues to plow ahead with blinders on. As best I can tell, the federal government printed money, and people ran to stocks to avoid getting stuck with inflating cash (and because our president is clearly attached to policies that help the stock market). As a result, we're having some level of deflation.

This has to be one of the craziest markets ever.
 
9,397
Australia
Western Sydney
mustafur
The stock market continues to plow ahead with blinders on. As best I can tell, the federal government printed money, and people ran to stocks to avoid getting stuck with inflating cash (and because our president is clearly attached to policies that help the stock market). As a result, we're having some level of deflation.

This has to be one of the craziest markets ever.
I never really thought of the inflation occurring in the Stock market and somewhat outside Cash, but it really does look like it, and the bailout strategy of the government does make it look like this is what is happening.

It's strange though as usually the stock market reacts to bad and good news in a similar fashion, but now it simply only seems to react to good news and that just sounds dangerous to me.
 

Dotini

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CR80_Shifty
I never really thought of the inflation occurring in the Stock market and somewhat outside Cash, but it really does look like it, and the bailout strategy of the government does make it look like this is what is happening.

It's strange though as usually the stock market reacts to bad and good news in a similar fashion, but now it simply only seems to react to good news and that just sounds dangerous to me.
The market is "priced to perfection". If you are wealthy, confident and bold, you can get rich beyond your wildest dreams in America.
 
8,724
United States
Marin County
The stock market continues to plow ahead with blinders on. As best I can tell, the federal government printed money, and people ran to stocks to avoid getting stuck with inflating cash (and because our president is clearly attached to policies that help the stock market). As a result, we're having some level of deflation.

This has to be one of the craziest markets ever.

Ironic as I'm sure deflation is the Fed's #1 fear. The stock market looks like one big fat Ponzi scheme right now. The Fed's purpose is so clearly to inflate asset prices via all tools available at this point. Really though...what else do you do with your money? I have a laughable 1%APY currently on my "high yield" savings account. Bonds are basically zero. The Fed has created an environment in which the only course of action is to either buy expensive stuff with borrowed cash or invest in a wildly volatile market. Is this the only way to keep the economy going? It's clear that it has no momentum without being juiced. Is Japanification coming to the entire global economy? Why? Why are we becoming fundamentally unproductive? I have a theory that many sectors of our finance-based economy have become ultimately unproductive even if they produce net returns for their owner. How productive is the middle man?

I'm starting to look a lot more seriously at taking the leap into home ownership. Things have tapered off in price, mortgage rates seem to be as low as they are gonna get, and real estate seems to be one of the few assets that will weather this storm....
 
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Danoff

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The S&P is trading at early December levels. December. Unemployment was 3.5% in December. Today it is 14.7% (super rough number there). Yet we think that the economic outlook for earnings/profits etc. lines up with December? Companies are missing their quarterlies left and right... some are folding... December!?!

This is either pure insanity or huge inflation.
 
5,671
Simcoeace
The S&P is trading at early December levels. December. Unemployment was 3.5% in December. Today it is 14.7% (super rough number there). Yet we think that the economic outlook for earnings/profits etc. lines up with December? Companies are missing their quarterlies left and right... some are folding... December!?!

This is either pure insanity or huge inflation.

So, turns out my financial advisor was right when he strongly recommended "staying the course", something you vehemently criticized at the time. I went mostly to cash the day after the markets jumped up 10% in one day. This has turned out to be a very bad move that has cost me tens of thousands in my retirement funds. Of course, it could have gone the other way ... & still could. I agree with you, but have idea where to go from here ... :indiff:
 
8,724
United States
Marin County
The S&P is trading at early December levels. December. Unemployment was 3.5% in December. Today it is 14.7% (super rough number there). Yet we think that the economic outlook for earnings/profits etc. lines up with December? Companies are missing their quarterlies left and right... some are folding... December!?!

This is either pure insanity or huge inflation.

On an unrelated note, here's a photo of a nice chap called Charles Ponzi

255px-Ponzi1920.jpg


@Biggles I'm in a somewhat similar boat...but I still believe we're gonna see dow <19,000 again.
 

Submerged

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UK
So, right now, if you were to start a stock market purse, where and what would you aim for?

For me, it would to be looking towards a 10 - 15 year profit increase in terms of above inflation, lets say 1-5% considering the economy has tanked completely so far beyond expectations after this coming Christmas.

For me, personaly, everything I am seeing is.... everything is risky. House prices will rise eventually, but when from above the price you paid for it?

Living cost will eventually always rise. Job payment will always need to rise to match that too! Everything has a serious knock-on effect
 

Danoff

Who is John Galt?
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So, turns out my financial advisor was right when he strongly recommended "staying the course", something you vehemently criticized at the time.

I still do. That hasn't changed.
 
5,671
Simcoeace
I still do. That hasn't changed.

As it stands, his advice although predictably simplistic, based on longer term historical precedent, was absolutely correct. Where the stock markets are right now makes little sense to me, but they would have to undergo a major correction now to leave me with anything to show for my earlier decision.
 

Danoff

Who is John Galt?
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Mile High City
As it stands, his advice although predictably simplistic, based on longer term historical precedent, was absolutely correct. Where the stock markets are right now makes little sense to me, but they would have to undergo a major correction now to leave me with anything to show for my earlier decision.

"The market can stay irrational longer than you can stay solvent." - Keynes

All you can do is make the best decision based on information available in each circumstance.

Edit:

I think I might sell some more today.

Edit 2:

Yup, sold.
 
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