Post #46,091
7/19/02 1:41:16 PM
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Welcome to the slaughterhouse
The author, quoting himself from a prior article-
"A national association of accounting firms has called on the Securities and Exchange Commission to require all publicly held corporations to report real GAAP earnings. The return to ethical accounting standards would mean that, in order to reflect the current valuation of the Dow Industrials, the average would fall to 5825. In order to reach the historical norm based on GAAP, the Dow would decline to 3300."
[link|http://www.buzzflash.com/contributors/2002/07/19_Slaughterhouse.html|URL]
"...the problem with the French is that they don\ufffdt have a word for entrepreneur."
George W. Bush in an aside to Tony Blair about the lack of receptivity by Jacques Chirac to Dubya's peddling of Texas-style economics.
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Post #46,095
7/19/02 2:56:48 PM
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That's pretty gruesome...
Do you know what degree of credibility the author has?
I've never heard of him, but then I don't read the financials that much.
Awfully scary scenario, though. Very worrying.
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Post #46,139
7/19/02 6:47:27 PM
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Credibility not bad I'VE been saying 6500 for years :)
."Once, in the wilds of Afghanistan, I had to subsist on food and water for several weeks." W.C. Fields
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Post #46,096
7/19/02 3:06:11 PM
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Hmm, couple of things
An enduring economic recovery will not occur until the elimination of the tremendous corporate inventory overcapacity that was built up during the acquisition frenzy. This looks like my point about what we're going to do when no one needs to work. "Inventory overcapacity" means we're able to make too much stuff. More stuff than people can buy. So we need to make less stuff. Which you can only do by reducing efficiency (not going to happen) or massive layoffs. Which means fewer people able to buy anything, which means more "overcapacity," which means ... Damn, we need to find a new model in a hurry. Here's a thought: Reduce work hours, without reducing pay. Capacity goes down, warehousing costs go down, raw materials costs go down, but people are still able to buy stuff. Sounds better than layoffs to me. According to a report by the Federal Reserve, foreigners are now withdrawing their funds from this country at a greatly accelerating pace. The reason is simple \ufffd they do not share the parochial view that George W. Bush is doing a great job. Foreign money managers invested large amounts in America during the mid to late 1990s, when they had confidence in the intelligence and skill of a capable president. After almost two years of watching Bush in action, they are now voting with their cash. Whoah there. I'm not saying this might not contribute to the timing, but if the market was really as overvalued as this guy is saying, it's been getting there for longer than the last two years. This looks like blaming Bush for being there when the bubble happens to burst. Of course, since a Ponzi scheme is all a confidence game, it lives and dies on ... well, confidence. Anyone trying to lay all the blame at his feet is just pissed that he wasn't able to sustain it until they cashed out. ===
Microsoft offers them the one thing most business people will pay any price for - the ability to say "we had no choice - everyone's doing it that way." -- [link|http://z.iwethey.org/forums/render/content/show?contentid=38978|Andrew Grygus]
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Post #46,098
7/19/02 3:18:09 PM
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Re: Europe cash leaving because of Bush
I don't quite accept this one. A factor perhaps, but I doubt it is *the* reason for the foriegn cash drain.
OT, an interesting little factoid I ran across the other day. Guess how much stock Greenspan has in his portfolio.
Give up?
Absolutly none. I don't know if it's a job requirement or just common sense not betting against the house.
"...the problem with the French is that they don\ufffdt have a word for entrepreneur."
George W. Bush in an aside to Tony Blair about the lack of receptivity by Jacques Chirac to Dubya's peddling of Texas-style economics.
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Post #46,162
7/19/02 9:45:15 PM
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Watch out you you will become a Keynesian :-)
Seriously, there is a dynamic which happened in the Great Depression that may come back. It is the question of what happens when under the mattress is a sensible investment policy.
In that case you get into an underinvestment equilibrium. People won't invest money in anything. Which means that there aren't new opportunities forming, jobs opening up, etc. Which means that things continue going to shit, encouraging people to stay away from investing in droves.
In the Great Depression things were great if you had money. About 20% of the population was better off than they were before. Things were dirt cheap, people were grateful for anything you gave them, etc. Life sucked for the other 80%...
Cheers,
Ben
"... I couldn't see how anyone could be educated by this self-propagating system in which people pass exams, teach others to pass exams, but nobody knows anything."
--Richard Feynman
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Post #46,328
7/22/02 2:47:29 AM
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gold standard?
(* Seriously, there is a dynamic which happened in the Great Depression that may come back. It is the question of what happens when under the mattress is a sensible investment policy. In that case you get into an underinvestment equilibrium. People won't invest money in anything. *)
I once heard that a bunch of economists came to the conclusion that sticking to the gold standard was the problem.
But, if you are right, then one solution may be to not tax bank savings, at least not during low times. If you do that, than people will put more money in banks, and the banks can then invest it.
BTW, why doesn't the gov just print more money? F inflation worries for now.
(* In the Great Depression things were great if you had money. About 20% of the population was better off than they were before. Things were dirt cheap, people were grateful for anything you gave them, etc. Life sucked for the other 80%... *)
My grandfather was a dentist during the depression, and did relatively well. Teeth go bad no matter what. If you want a recession-proof career, pick fixing something that people need regardless of the economy. Programming is the opposite because about 40 percent of it is new development I estimate. That means that roughly 40 percent of all programmers may get canned during bad times.
________________
oop.ismad.com
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Post #46,344
7/22/02 8:09:13 AM
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Oh you're funny. :-)
Printing more money is, at the very least, an extremely controversial solution. You don't want to print too much too fast because that puts too much in circulation - and that reduces its value. Inflation again.
Wade.
"Ah. One of the difficult questions."
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Post #46,352
7/22/02 9:08:52 AM
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I missed that class
I don't know enough about Keynesian theory to even know what part of my post you were referring to. Care to give me a Cliff Notes version?
===
Microsoft offers them the one thing most business people will pay any price for - the ability to say "we had no choice - everyone's doing it that way." -- [link|http://z.iwethey.org/forums/render/content/show?contentid=38978|Andrew Grygus]
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Post #46,432
7/22/02 8:04:52 PM
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It just sounded familiar...
the idea of getting into a self-reinforcing dynamic where everything was individually working like traditional economics says that good dynamics should, but the result is that everything gets and stays shitty.
I did give the nutshell version of part of the theory. For a better treatment you will have to Google, if for no other reason than the fact that I know I will get it wrong, and neelk or kmself will get to laugh at me for it. :-/
Cheers,
Ben
"... I couldn't see how anyone could be educated by this self-propagating system in which people pass exams, teach others to pass exams, but nobody knows anything."
--Richard Feynman
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Post #46,150
7/19/02 7:32:27 PM
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I'm curious
Where is he pulling his figures from for how much various companies are overstating earnings?
I am not going to say they are wrong. I just want to know where you would get the figures to even make a guess at that.
As for the rest of it, well I disagree with details here, I am not sure I would make various assertions there. But it matches what I have thought for a few years now.
Cheers,
Ben
"... I couldn't see how anyone could be educated by this self-propagating system in which people pass exams, teach others to pass exams, but nobody knows anything."
--Richard Feynman
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