I Think I See Dow 14,000 Nearby.

This week, the Dow Jones Industrial Average came within inches of 13,000. Over the week, it dropped back to about 12,600, but the trend is generally upward. Why is 14,000 important? Because it is the all-time high reached back in 2007, before the Bush Administration's policies caused the deep crash to a low of about 6600 in early 2009.

Why does it matter? Because the Dow reflects the optimism or pessimism of the corporate world, and like it or not, that corporate world is the primary source of jobs in this country. Not always the first source, but what happens in that world is reflected by small business, too.

If optimism in the economy returns us to a level that matches the 2007 peak, then things are bound to pick up, economically, across the board.

The Dow's current level is already double that of the bottom. That cannot be bad.

Many may disagree with this assessment, and that's OK with me. From my perspective, though, I can only see the upward curve as a generally positive indicator.

http://www.amazon.ca/Dow-36-000-Strategy-Profiting/dp/0812931459

:rofl:

K&R

Sid

You know, before the Republicans took control of everything ... as I recall it, they were saying "If you think the Republican-controlled House and Senate made this Clinton economy great, just watch when we have the Presidency, too!"

hahahah hahahahahahah

Remember in the crash of 2008? That was precious.

Yep, I'm loving Dow 14,000, not that I own any of the dow companies but there really is a fairly close relationship for daily movements and a lot of the companies I do buy stock in.

Some do, no doubt. Some probably would welcome Dow 4,000, since they want everything to crash so they can have their mythical revolutionary change. I simply discount all such nonsense. My only connection with the Dow is as an indicator. I have zero holdings in any equities, except my house.

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Or, if we get jeb or neil bush, or newt for president.

You can't be serious.

fiscal austerity is the wrong choice. we need a prolonged period of economic expansion.

An ECRI spokesman is interviewed http://www.businesscycle.com/news/press/2171/

I think we'll see >10,000 again before the 2012 election. That's how the repubes will be able to argue that the economy hasn't improved.

HIDE!

teachers are continually cut from payroll. One Rhode Island town fired its entire teaching staff in March, and has thus far only recalled 75% of teachers for next year. The other 25% is not counted as unemployed since they are still currently working for the rest of the school year. Expect another increase in August numbers.

Many of the manufacturing jobs we used to have are gone now. I think an unemployment rate of about 9% is going to be the norm from here on out.

Don't kill the messenger.

Don

riots on the streets. Most political theorists agree, and history pretty much bears this out, that it takes 9% of the population to induce radical change in government. How the public goes about that change can be varying by several degrees. It might be through a simple political process like elections, it could be violent revolt, or somewhere inbetween (plenty of room for variance). Personally, if it's going to happen, I would prefer the way Egypt recently did it.

I'm interested in whatever research you might know about that relates popular dissatisfaction/desperation to social change. I assume this number comes from historical examples or something.

Chomsky
H W Brands
Steve Coll
Kirstoff

But a great book to read, and highly suggest, From Dictatorship to Democracy by Gene Sharp.

But to be fair, it's not good enough to have 9% of the population disgruntled, you need 9% of the population to be activists in one role or another.

I think I have Gene Sharp's book already downloaded but haven't read it yet. THANKS for that reminder. It's very timely.

The thought strikes me that Wisconsin is either nearing or may have crossed that threshold. State pop=5.5 mil; hard to count the activists, but the number is much larger than the 2-300,000 who protested in Madison. There were many more who took part in local protests, who campaigned for Kloppenburg, who collected recall signatures, etc. 500,000 would be the Magic Number here.

Don't think I want to do it the way Egypt recently did it.

Don

bloodshed on the streets. I'd support a peaceful demonstration of unified support. I do hope that we would end up with a more peaceful outcome in the end.

itself.

Egyptians have chosen a democracy, and this is the transitional period.

Corporate headquarters are based in US PO boxes, but their factories and warehouses are offshored for tax and low labor cost purposes. If you can get a job and raise your family and live etc. in another country, why not move?

Other countries have to be willing to accept you. Countries are not interested in taking in unemployed people. I know of no country that will take in unemployed people with few assets. You can't move to a country just because you want to.

But we are in effect, indentured servants. Born into slavery.

bearing on the average person.

An indicator - nothing more.

number is probably double that.

Put that aside for a moment, and think about how many tens of millions of people are living below the poverty line, whether they have a job or not. Then add the tens of millions of people who are living above the poverty line, but still in poverty. Then take the tens of millions that are living paycheck to paycheck.

The average person isn't doing all that well at the moment.

You can argue all you want but the fact is that the stock market does have an affect on everyone who has a job and everyone who buys products. Period.

success of the market has no bearing on the average person's life.

You can argue all you want that the market is a barometer of the economy, but if you look at history you will notice that the market is often wrong. The market skyrocketed for several years under Bush, but that didn't equate to a healthy economy.

I.e., it tends to look good when in an upward channel, but so does falling off a cliff before the landing.

Aside from a psychological or contrarian viewpoint, I would look at the underlying health of the system. With rock bottom interest rates for years, staggering national and personal debt, $1.4T deficits, a falling real estate market for the foreseeable future, eliminating the home equity ATM machine,..., it doesn't seem like the right conditions for economic growth. Something has to give as we're balanced between inflationary recession and deflationary depression. I think the worse evil is inflation. If that happens, sure, a 14,000 DOW is possible, but it won't be worth that in e.g. 2007 dollars, probably half that. Look at the price of gold the past 8 years to see what has become of the dollar. Having said that, I think the dollar goes up from here and all else goes down, imho of course.

do with the stock market. This is something most neophytes don't understand.

The notion that the economy has nothing to do with the stock market is very interesting. We can
see this playing out now--with the middle-class becoming more poor and even the upper-middle class
cutting spending and not doing as well. Unemployment is high. However, the stock market is inching
upward.

I find that fascinating. I'll admit, I know less than I would like to know. I only have a minor in
economics--which gives me a basic understanding of economic dynamics and the vocabulary.

I'm quite intrigued by the fact that the stock market seems to be operating independent of how the
middle class and upper-middle class is faring. That seems odd. If Walmart stock is rising we
can assume (and I'm open to my assumptions being wrong) that their sales are increasing. Aren't
sales contingent upon consumer demand/purchases?

Seems to me, this would hold true whether the company is General Motors, Target, BP, Alcoa, Microsoft, etc.

If the middle and upper-middle classes aren't thriving or spending as much--how can the stock market thrive?
How can the two NOT be inextricably intertwined?

That' the intriguing part--that the stock market is steadily rising, but consumers are sinking. I've often
said that they've figured out how to thrive without us. However, I don't get HOW.

If anything, increasing sales at Walmart would probably indicate things are getting worse in the economy, more trading down, but it would cause quite a boost to the DJIA (a flawed index in itself, but that's for another time).

Better industries to look at are things like automobiles and housing. The multinational industrials, Alcoa Caterpillar etc are levered to China in a BIG way. And we all know how China's doing.

I guess what I'm trying to say is that the stock market is intertwined with the growth of the middle class, it just isn't America's middle class.

for most the economy is about jobs, and consumer spending. So the Dow is fairly meaningless information in terms of real world issues for most Americans. This makes it a risky talking point, as does the natural movement of the market. Not wise to point at the ups in a market that could easily drop that day, and that day is all that matters in political messaging. "The fundamentals of the economy are strong" taught many politicians a lesson about pointing at things that have actual metrics and are by nature in flux.

either. When I look at the Dow, I look at the 1-year and 5-year picture, so I can see long-term trends. Right now, that trend is steadily up. Short-term fluctuations don't mean a thing to me.

As I said, I see it only as an indicator, and a leading one, at that. It's just one metric.

that the Investment Class, who now control most of the wealth in our country, are doing very well.

I see it only as a leading indicator.

if you're unemployed, but it's impossible to predict anything based on it, since it only reflects conditions from the past. The Dow is a leading economic indicator, and changes in it over time influence things in the future.

Unemployment (and employment) lag behind economic changes.

Fed led recession, it is very much a lagging indicator. When the Volker eased, unemployment went down. This recession is very different and the disconnect between the Dow and employment is much greater.
I think we are looking at a jobless recovery.

I'm seeing increased hiring among the small businesses I serve with website content services. Their business is up and they're hiring new employees or rehiring laid off employees.

Best example is a swimming pool builder. Their orders for this season are double what they were at this time last season, so they've hired several people. Same result for a local fence company.

Part of the reason, of course, is that their revamped web site is bringing in more leads, but they had the confidence to pay for that site revamp. It's paying off. I think the job recovery is beginning. It's late, but I think it will respond to an improving sales record. Small businesses are wary of hiring until they have some evidence that it makes sense. Increased sales are that evidence.

and thus built to almost always present a happy ending.

It's a symptom of mass mental sickness that this is the indicator we hear every day as a measure of the country's prosperity.

Feb 2011 DJIA 12630 - U3 unemployment 9%, with a population of 311,307,168, or about 4 million more people (and since we just hit a new 8 month high for unemployment applications there is considerable doubt about significant decreases in unemployment - I mean, how many can McDonalds hire?). And with the new highest total ever of about 44 million people on food stamps". "America is now the land of the free, home of the brave, of whom 14.3% can’t afford to eat, even with all the new jobs created". And while we had "only" about 350,000 foreclosures in March of this year, that number is expected to rise again as the "robosigning" debacle is swept under the rug.

And since most people don't own stock, and a full third retire with NOTHING other than social security, it is pretty clear that paying people shit wages, shipping millions of good-paying wealth-creating jobs overseas, and swapping tens of millions of other jobs for wages that are a half or a third of what the person used to bring in benefits only a few at the expense of everyone else:

Only 20% of the people own approximately 85% of _all_ private wealth, and as one goes up the ladder of inequality in wealth "income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. (See Norris, 2010, for more details).

So it might be that seeing the DOW go up is not good for everyone.

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
http://www.businessinsider.com/44-million-in-the-us-use-food-stamps-143-of-population-2011-3#ixzz1LgLHZpG7


..

My response to all stock market pumping is in this thread:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5092269

Many of us have 401K plans and this is good news for our retirement savings. Also, the stockmarket doing well is a vote of confidence in Obama's handling of the economy. And a healthy stockmarket makes it easier for companies to raise capital, expand, and hire more people, ultimately reducing unemployment.

If you think of the stock market as something akin to an electorate, well then that's a problem, not a solution.

Thousands of buyers and sellers determining the worth of companies. Good analogy.

Furthermore, an electorate is a legitimate means for choosing a government. A market is not.

It will also be helpful to those with 401Ks.

And you are right, it's an indicator of broad optimism. The republicans will have a hard time selling that Obama is an awful President if the Dow is doing very well.

and that type of financial product..and if I remember correctly less that 15% of people have a defined pension available to them now.. this is GOOD NEWS!

2/3rds depend on it for more than half of their retirement income.

only 1/3 of workers benefit from 401ks & pensions benefit to any significant degree.

The wealth of most Americans is tied up in real estate. Housing values are much more important to their retirement picture, and home prices continue to collapse, despite the bailouts and false promises that these bailouts would stabilize the real estate market.

Here's some information to ponder. Keep in mind that this data was collected before the financial crisis.

that are dominating the government as their servant, generating economic crisis and destroying the basis for human civilization on earth, all because profit is their sole command? It's very nice that some people will get nice pensions through the stock market, assuming they're not screwed again once the latest run ends (as is likely), but not so nice that their interests therefore are tied up with the likes of General Electric and Goldman Sachs. It's a pretty sophisticated device for getting people to identify with the predators of capitalism. If Goldman Sachs were to be dethroned from its pernicious hegemony over the financial sector and the government itself, if justice were to be done and it were shut down for its crimes against humanity (no exaggeration, given the effects of their speculative strategies in oil and food futures), would you consider it a bad thing because this meant its stock price would follow the same trajectory as that of Lehman and Bear Stearns? 401(k)'s are another device by which the corporations make people dependent on them for their very survival.

The market has been on a slow, steady climb over the past two years...and it's hard for someone whose out of work or not "in the game" to feel positive about. Understandable. The market reflects some ugly sides of capitalism...company earnings that have increased due to outsourcing or downsing for example and it also now reflects international rather than domestic activity.

There are many who are pissed at the record earnings of an Exxon/Mobil and rightly demand for not only the elimination of their subsidies and a windfall tax on the massive profits based on the rise of oil prices. That said, that earnings statement means a big dividend for its stock holders which drives up the market. If you have Exxon stock in your portfolio it will kind take the sting out of the price increases...a way the market does benefit some (including many on pensions and elderly living off of their investments). Does it mean more jobs? No. The market long detached from Main street a long time ago.

Marking 14,000 is also a psychological marker and a political one. Within weeks of President Obama taking office the market hit its bottom and has been recovering ever since. His "massive spending" that kept the economy from cratering is a major accomplishment he deserves credit for but won't as long as this is a jobless recovery and the cost of living rises. The corporates don't see red, white and blue...only green. It's not until the consumer economy completely vaporizes that their earnings will take a hit...and if that happens we'll have a lot more economic woes to deal with.

Right now the rising oil prices do have me concerned as its like a massive tax hike on all. Money that goes toward driving the consumer economy end up going into gas tanks and the higher costs of food and other essentials. A slow down due to rising prices rippling across the economy could slow or even lead to another downturn.

It's possible. I think we are inching closer to a second, much deeper stage of the financial crisis. This time, the dollar is less likely to be viewed as a safe haven. Clearly, our government lacks the political will to do what's necessary to restore balance to the economy. With that in mind, currency revulsion is a real possibility. It's not likely that investors would embrace US equities under this scenario, but many Dow component stocks are sufficiently globalized.

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The stock market needs some hormone treatments or something.

If history has shown us anything, it could also mean another crash is just around the corner.

In the mean time, lets give credit to potus for fixing the economy and lifting us out of the second greatest depression.