Why Stocks Are Surging as Jobs Disappear

Percolator Economics

In order for the economy to recover money needs to move through it. While bailing out the banks was necessary the real cure is to get money to the people at the bottom. Not a $25 unemployment "stimulus" - throw the dogs a bone. Absolutely worthless to the economy when unemployment only pays about 1/2 your basic necessities. When the folks at the bottom get discretionary cash we will buy the things we need/want. For example, if I can go buy a car, that will benefit the salesman, the dealer, the manufacturer, the transporter, state taxes, the DMV, gasoline stations and insurance companies. All will make more money and thus spend more money causing a positive domino effect. Giving the money to the banks and auto dealers resulted in extremely limited cash flow. They invested it or paid million dollar bonuses to millionaires while the cars and other merchandise still sits on the lots or shelves. Increasing revenue and stock dividends while sales are flat or falling causes a negative domino effect and can not possibly endure. It's a false profit!

For long term economic growth and to make America competitive it is absolutely imperative to control greed and force the people at the top to take less because the majority of people making less than $20K/year simply can't cut expenses. Housing and rents, in particular, have absolutey no realistic relationship to the average worker's wages. Speculators drove housing prices up by 200% during the last decade and now they're trying to sell that dropping the prices by 25% is a good deal? Sorry, but our wages are still basically the same as they were 15 years ago. Energy and heath costs also increased astronomically. Meanwhile California is tapping the workers for an extra 10% income taxes. Please tell me how taxing people who already can't meet their monthly expenses will help the economy. Both the number of public employees and the size of their salaries are way too high. There's your problem.

I could go on but Ross Perot, Lou Dobbs and millions of people like myself have been trying to warn everyone about this for at least a couple of decades and many of them are still advocating "Free Trade". Maybe when we are all living on the streets they will begin to wake up.

George of CA @ Nov 15, 2009 15:14:18 PM

Bad Foundation

Comparing the stock market to a casino is a more realisic comparison - the stock market and the economy are no longer inter connected. The fact remains that 60-70% of our economy is based on consumer spending and over 10% (or 17-20% if you adjust the unemployment figures) of our consumers aren't working with the remaining taking pay cuts, reduced hours, not getting pay raises, increases in benefit contributions, facing higher local taxes or are in fear of losing their jobs. Reports of a recovery just don't add up.

Most disturbing are banks that are borrowing from the fed at near 0% interest and turning around and buying US bonds to yield 15% returns. Everyone wonders why their is no credit out there to spur growth. As a banker would you take a gamble on a startup or would you go after a guaranteed 15% yield. Duh....

Hanna Greene of MN @ Nov 15, 2009 08:09:25 AM

Kingdoom

Why are the economies of Asia, Euprope (Eastern not Western), and South America doing relatively well now? Because that is where American companies have exported all our well paying manufacturing jobs. Now with the coming National Healthcare debacle and the Carbon Tax on business there will be even less incentive to hire workers and produce in America. Until we as a nation find ways to incentivize business to produce products in this country we will continue to bleed jobs and this recovery (which is artificial in the first place as it was produced through government deficit spending not actual private sector growth) will eventually fail. At that time our nation will come crashing down as there will be no money left for the government to borrow and the dollar will be worthless.

Craig of AZ @ Nov 14, 2009 13:19:10 PM

Great Work Rick

Great Work Rick. The Truth is a like fresh air!

Kerry of TX @ Nov 12, 2009 11:20:13 AM

Chaos theory economics

I still fail to see how anyone thinks the 'Stock Market' has any real ties t..o the immediate rise of this economy. It's like living in a neighborhood near a horse race track. People go to the track and bet yet the neighborhood doesn't change if any horse wins or loses unless the track itself becomes so popular its richest patrons invest in living nearby. Today's market serves a global economy. GE makes money from our war and aircraft with manufacturing (jobs) overseas etc. Microsoft et. al. The Dow is top loaded with global firms that may do well outside US market, as the US Economy lags behind or never rises. Therein lies the disconnect. The stock market can rise with the US economy cut out as being a player. We are watching new housing starts created by government called new jobs and signs of economic recovery, when it is tax dollars paying for work projects to maintain employment levels while business's continue to collapse.. I call 'Chaos theory' economics..

Bat of MS @ Nov 12, 2009 09:59:42 AM

economy 101

No jobs, nobody buys anything. Factory reduces its overheads by reducing its staff. Staff have no jobs. Nobody buys anything...

That's the cycle. The new game is to make profits without making anything. That's for clever people. Tinkling on the computer to make money. Legalize pot. Make new pot farms, farmers, new pot industries...rainbow colored sprinkled donuts for all...elcome to the noveau-asia...what a dump... aint it grand...

david of CA @ Nov 12, 2009 01:42:14 AM

SHOULD BE ITS OWN COUNTRY

BEATS MAKING IT CONSTITUTIONAL TO ALLOW ANY MORE TEXANS IN OUR GOVERNMENT. HMMM IF WE SOLD TEXAS BACK TO MEXICO, IT COULD END THE RECESSION THOUGH.

RON of NJ @ Nov 11, 2009 13:35:13 PM

The Economic Model from Texas

Mateo of OH wrote:

When will Texas become its own country again?

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This is from a state that has one of the highest unemployment rates in the country. Here in Texas we have had one recession since 1980 how many has Ohio had?

Texas loves it when people mock us out from the unemployment line.

TFF

90c2cab of TX @ Nov 10, 2009 16:28:02 PM