The Dow keeps speaking

Methinks, you beat me to it. Thanks.

Wall street specifically is the reason the middle class has seen a relative decline in their standard of living.

You'r enothing more then a shill for the crime syndicate that is Wall Street.

The expense of empire, bureaucracy, corporate subsidies, etc., all brought to us by government have no impact on our take home income?

Did you not know that Wall Street and Pennsylvania avenue are partners in crime?

See, it all begins with central banking.

Have you any idea how the FED came to be?

Who wields the guns?

You are SOOOO wrong here. You are under the delusion that Wall Steet provides an equivalent amount of value for all they extract.

Moron,

As Mesa and I have clearly shown, you don't even understand your own profession, let alone anything else. You are a complete waste of space on this planet.

Don't pretend to know women. I am one and I know plenty more than you do and on a much more intimate basis. You're too dumb to figure out that income mobility is very high in countries where the income distribution is flatter, so moving from quintile to quintile is much less meaningful. Who cares if moving from the bottom quintile to the top quintile means an extra $2K per year? I know that your single digit IQ hasn't a hope of wrapping itself around such an advanced concept. Now, go wrap your idiocy around something you have a hope of understanding. Start with Leggos and work your way up to Play-do, Moron.

ANOTHER thing muir's graph does NOT account for is WAGE mobility.

Posted by: MWG

Which is lower for Americans then any other developed nation.

Thanks ME,

ANOTHER thing muir's graph does NOT account for is WAGE mobility.

MWG, I wouldn’t bother with the idiot, but here’s some more evidence that you’re correct:

American Budgets Have More to Spare for Home, Cars Than in 1955

"So your point would be that the average hard working middle class person should NOT expect an improved quality of life even though average worker productivity is increasing?"

-Muir

To the contrary. You show a graph citing biased data (biased in that it isn't adjusted for PPP, and excludes many other important factors) in order to say that we (the middle class) have gotten no where in the last 30 years. I'm saying that in terms of standard of living you're wrong. The average member of the middle class lives a hell of a lot better then they did 30 years ago. Do you dispute that?

"It's NOT Wall Street's fault mom and dad require so much more than they did in the 60s.

Posted by: MWG

"You are SOOOO wrong here. You are under the delusion that Wall Street provides an equivalent amount of value for all they extract.""

-Muir

Perhaps you misunderstood. It's not Wall Street's fault that mom and dad require two cars, cell phones, air conditioning, dinners out, computers, a larger home, ect. ect...

"MWG... you know my economic position. I'm curious as to yours. Do you work on Wall street? Are you wealthy, uper middle class... where do you fit?"

-Muir

Even though this is completely irrelevant to the current debate I will tell you that I do NOT work on wall street and I'm welling to bet you salary is considerable higher than mine.

Muirgeo,

re;"...a system of obvious oppression..."

I agree that such a system exists. I look at my pay statements and I can see that all the positive amounts are from my capitalist employers and all the negative amounts are going to the political exploiters. That is, I've got solid evidence as to who the oppressors are. All you've got to counter it is a mystical assumption that inequality is inherently unjust.

Professor Roberts was a day early on this post.

The Obama Economy

...

Americans have welcomed the Obama era in the same spirit of hope the President campaigned on. But after five weeks in office, it's become clear that Mr. Obama's policies are slowing, if not stopping, what would otherwise be the normal process of economic recovery. From punishing business to squandering scarce national public resources, Team Obama is creating more uncertainty and less confidence -- and thus a longer period of recession or subpar growth.

The market as referendum for Obama's performance so far has returned a grade of "F" as in Fail.

It's NOT Wall Street's fault mom and dad require so much more than they did in the 60s.

Posted by: MWG

You are SOOOO wrong here. You are under the delusion that Wall Steet provides an equivalent amount of value for all they extract.

Wall street specifically is the reason the middle class has seen a relative decline in their standard of living.

You'r enothing more then a shill for the crime syndicate that is Wall Street.

MWG... you know my economic position. I'm curious as to yours. Do you work on Wall street? Are you wealthy, uper middle class... where do you fit?

It's NOT Wall Street's fault mom and dad require so much more than they did in the 60s.

Posted by: MWG

So your point would be that the average hard working middle class person should NOT expect an improved quality of life even though average worker productivity is increasing?

To me if they are contributing to an increasing productivity they should in theory be able to afford at least some of the nice new amenities of modern life with out a need to have to work more hours.

The top 1% aren't working any more hours then they used to and now they can afford 5 vacation homes instead of 3.

Why should all the productivity benefits go to a small minority?

It's bizarre to me that people think such a system is OK. It's like you've been inculcated to think you are a bearer of liberty while you justify a system of obvious oppression with out any notice of the contradictions in your position.

In your convoluted itty bitty little mind the fact that women had fewer choices in the 1960's is a good thing. Your mother was tethered to you like a slave. And what was happening to blacks in the South in the 1960's, dimwit?

Posted by: Methinks

Regarding itty-bitty brains I think I mentioned the need for nuance on this issue. Being unable to differentiate the issues of womens rights and black civil rights from the fact of a need for two parents to HAVE to work to "stay afloat" is a nuance beyond you're capability as I correctly predicted might be the case for some of the replies I anticipated.

I talk to working middle class women every day and most don't feel they have a choice but need to work if they want a house, a car and savings for the kids college.

It's closer to indentured servitude then liberty for them and their families. But what the hell would you know about such nuanced issues.

Muirgeo,

The primary reason that so many women have gone to work outside the home in the last few decades is... because they can.

I was feeling magnanimous, MnM.

"she clearly beat you about the head one too many times."

Just one too many? Methinks, you want the long or the short on that one?

"The rest of your drivel isn't worth addressing. It's all been refuted ad nauseum over the long period that you've polluted this blog."

-methinks

Damn! Why did I write so much. I should have just said what you said.

"So yeah the average middle class 6 month old baby's standard of living has gone to shit in this time frame while both parents toil away just to stay afloat and they have been falling further and further behind going from saving as much as 5-10% of their incomes at the beginning of my graph to saving NONE toward the modern day end of my graph."

-Muir

If the average couple wants to give up their computers, toss their cell phoneS, go back to driving one car with a fraction of the perks, give up their "middle class" home for one half the size with no central air, give up going out to dinner twice a week, forget buying boats and jetskis, go back to road trips instead of flying, give up their plasmas for the old box style tv, ect, ect, then the mom can stay at home all day and watch the children while dad's at work.

It's NOT Wall Street's fault mom and dad require so much more than they did in the 60s.

You may have like your mother, but your mother obviously didn't like you very much, Morongeo, because she clearly beat you about the head one too many times.

In your convoluted itty bitty little mind the fact that women had fewer choices in the 1960's is a good thing. Your mother was tethered to you like a slave. And what was happening to blacks in the South in the 1960's, dimwit?

The rest of your drivel isn't worth addressing. It's all been refuted ad nauseum over the long period that you've polluted this blog.

Question: By showing this graph are you saying that in the past 28 years the average person in the US has not seen a rise in their standard of living?

Posted by: MWG

Basically yeah I would say so. But of course a proper answer requires more nuance then you're likely to be able to tolerate and more then I'm likely to bother wasting my time detailing.

But lets just start with kids.

If you were to be a kid born to a middle class family would you rather be born to a mother from the 1960's or a modern day mother.

If you chose 1960 you would more likely NOT be shipped off to Day Care at the age of 6 months. Instead you would likely be home with your mother right up until you started preschool or kindergarten. I liked my mother.. we had lots of good times when i was a toddler in the 60's. Sure glad she didn't have to ship me off.

So yeah the average middle class 6 month old baby's standard of living has gone to shit in this time frame while both parents toil away just to stay afloat and they have been falling further and further behind going from saving as much as 5-10% of their incomes at the beginning of my graph to saving NONE toward the modern day end of my graph.

Keep pushing MWG and you'll push these babies too far. They'll throw down their Binky's in revolt and have A Boston Style Milk and Formula Party Revolt. These babies will only take so much before they crash the gates of the Wall Street thugs who have indentured their mothers... keep pushing MWG....

"Obama has been in office for a little over a month. This problem has been brewing for 28 years."

-Muir

Muir, You are an idiot. You have made this claim in the past and it has been soundly refuted. The graph you show does not include a number of important details. Firstly, it's NOT adjusted for PPP. Secondly, it does NOT include benefits such as healthcare, contributions to 401ks, paid leave, ect, ect...

The fact that you bring this up again shows that you are little more than a pathetic TROLL.

Question: By showing this graph are you saying that in the past 28 years the average person in the US has not seen a rise in their standard of living?

Muirgeo,

If markets had not been "regulated", and major sectors of the economy "corporatized", and major elements of society "socialized", in the 1930s and 40s, we would not be in the situation we are now in. Those who lost faith in "Wall Street" after the crash of '29 would never have bought back in. Modern business would be organized for competition rather than protection. People would still be building homes instead of purchasing investment properties. And the soon to be major intergenerational problems of Social Security and Medicare would not even be issues.

rpl, if you're under the impression that Morongeo understood a single argument from which he stupidly parsed bits and pieces, you're hugely mistaken. So, if you're agreeing with him, you're agreeing with the splatter of an idiot. I guarantee that he didn't understand a word of your argument.

rpl,

I don't disagree. I think I only talk in term of people who create value and those who steal value as opposed to talking in terms of companies.

And I would suggest we meet a common point when we say capitalism has not failed. For I too believe in capitalism. What the Wizards of Wall Street do is indeed nothing to do with capitalism. They steal, they defraud, they lobby, they cheat, they lie, they hide value, they hide cost, they collude, they privatize profits, they socialize cost... they do everything in their power to avoid the markets such as Adam Smith would write of, they do so to avoid competition and to create wealth without producing a thing and yet are some how seen as the creme de la creme of capitalism... they are the supposed symbols of capitalism itself with their huge tin cups shaking at the government purse.

Indeed their failure is not a failure of capitalism but I would also not call it a failure of government. Maybe a failure of corporatism... the hideous too close mingling of corporations and states.

Muirgeo,

I agree that many of the comments you quoted are kind of weak, particularly the one that pined for the good old days of the Bush administration (who, let us not forget, started this whole bailout business).

However, regarding what *you* posted, the fact remains that companies that "actually make things" (your words) are the ones taking a beating; meanwhile, the companies that have destroyed value, driven themselves into insolvency, and are now standing in line to grab government handouts, those are the ones that are doing well (relatively speaking). Do you dispute any of this? And if not, then how is the problem "capitalism" or "the market" rather than the policy of government handouts to businesses that have comprehensively failed?

I offer no analysis of the following quotes...(well except in a few instances were refrain was impossible)... but otherwise I offer no rebuttal but only would remind you that I am muirgeo a parody of myself....

"... this is beginning to look very serious.... This is not good."

Posted by: Mesa Econoguy

posted on March 2... not 2006... not 2007.... not 2008 but 2009

"What we're seeing in the market is the cumulative result of a collection of idiot's..."

Methinks

"Speaking only for myself, it took about a month for me to go from thinking that Obama had to be better than Bush to wishing that Bush was back in office."

Dirty Mac

"Sure, it's not infallible and it's not the only indicator one should consider, but the current level makes me seriously concerned for the next 6-12 months."

Posted by: Jack Lovell

( yeah because 2 months ago before Obama got in every one assumed then next 8-14 months would be GREAATTTTTTT!)

"indiana jim - it would seem that every 25-30 years Americans need a reminder about what unbridled socialism does to the economy. "

Posted by: Crusader

" But if the market continues to fall it will have unpleasant effects on Obama's mood and his policy freedom.

Russ Roberts

" I would have had to consider revising all my lectures on the wealth enhancing impacts of unencumbered markets, private property, taxation, and economic freedom if it had been otherwise in the face of Obama's election ..... Thankfully, my lectures are still as good as gold;

Indiana Jim (written 1 month after President Obama's inauguration...but 8 years after Bush''s massive tax cuts)

" I don't know to what degree regulatory risk is being priced in, but everyone in the industry expects additional rash regulation to choke off liquidity."

Posted by: Methinks

Yeah because Wall Streeters are so good at pricing in risk...HA ha hahahahahahahah...... amazing. But don't mind me... I'm just a parody of myself.

http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

The stock market spoke in 1929 also. I'd call this crash the Slot Machine Crash of 2009. The way a slot machine works is based on behavioral psychological principles. If you lost your money after every pull of the one-arm bandit, the machine would lose its reinforcing effect, the gambler would quickly get discouraged and move on to some other, more pleasant, activity. So for every 3 dollars you put in the machine it will kick back 1 dollar on average, but the end result still is that you lose all your money. The fact that you win some of the time is considered the fun part, along with breathing all that cancer-causing 2nd-hand smoke. We are witnessing a newish phenomenon, the Las Vegasizing of the economy. Well maybe it's not so new, Marx argued that sooner or later the jig would be up for the capitalist greed-theft system. Has that time finally arrived?

It also never ceases to amaze me that human nature is such that a scapegoat always seems to figure into any type of bad situation. It is something to be weary of at least. Hitler blamed the Jews for everything bad that ever happened to Germany. I met a girl from Poland once who was taking a class in Jewish history of all things. I told here that some 3,000,000 Polish Jews were exterminated during World War II. She said, "Yeah, and people still don't like them very much." Man's inhumanity to his fellow man is one of the reason corrupt corney captialism must be defeated along with right-wing fascists that run amok in this Rush Limbaugh loving sick country.

Craig,

That is hands down the best analysis I've ever read.

"the market has been reacting mostly to news out of washington regarding redistribution of wealth from taxpayers to shareholders"

Let's ignore for the moment that those two groups consist in large part of the same people (which illustrates its futility).

I'd sooner think that the market has been reacting to the redistribution of wealth from taxpayers to corporate sewers which are extinguishing it faster than Washington can shovel it.

Mesa,

The problem (okay, maybe not THE problem) is that Treasury and the Fed are trying to simultaneously recapitalize the banks and remove the devalued assets. The problem is that if you buy $1 of assets for a $1, you've just removed $1 of capital. Thus to simultaneously recapitalize the banks and remove the devalued assets from the balance sheet, the government has to overpay for the assets. I don't know why (but, I have my suspicions) government can't allow distressed debt hedge funds to buy the devalued assets and work solely on recapitalizaton. Instead, the Treasury and the Fed have instigated inaction by market participants as they wait for the greater fool (the government) to overpay for assets and then the same Treasury and Fed whine about "lack of liquidity" and "frozen credit markets". It's so annoying.

So wait a minute. Someone actually PAYS muirduck to teach economics?

What we are seeing in the market is the reaction of those who have made easy money speculating off the real productive economy.

Posted by: muirgeo | Mar 2, 2009 4:38:08 PM

Wrong, moron, what we are seeing is the complete and total failure of the people who supposedly would “fix” this problem, never mind they caused most of it.

A complete failure of people like you.

The equities market functions like a forward/futures market, projecting economic conditions 6 months – 1 year out.

Given that we’ve just lost another 25% on value over the past 2 weeks, with no end in sight, this is beginning to look very serious, and is definitely not a ringing endorsement of anything Obama, et al. have said or done. In fact, Geithner is beginning to look like the guy who will kill the banks for real, which should scare the hell out of everyone.

Instead of creation of a market venue for pricing the assets at the root of the problem, and getting them off the books as everyone knows needs to be done (and letting market forces work their way thru the system, or what’s left of it), Mr. Geithner appears content to sit around and play tinkerer, because he knows better (he knows nothing).

The Dow, admittedly a very narrow gauge for the overall market, lost another 300 points today (I did not see NY volume). We are in free fall, and no one has any inkling of how low this could go, nor is there currently any useful way to gauge corporate earnings.

This is not good.

Indiana Jim,

"...lots of great examples to bring into the classroom about governmental policies destroying wealth."

Every cloud has a silver lining, eh. You may be onto something. I can't think of anything that could be better in the long run for the idea of the value of free markets than a truly audacious failure by its enemies.

What we are seeing in the market is the reaction of those who have made easy money speculating off the real productive economy..blah blah blah...

What we're seeing in the market is the cumulative result of a collection of idiot's with IQ's as low as Morongeo's using the power of the state to endlessly screw with markets for their own personal political gain.

Don't bother explaining anything to him as he is incapable of understanding his own profession, let alone a profession that he is not a part of. It's less frustrating repeating yourself to an Alzheimer's patient. At least they understand briefly before they forget you ever said anything.

I think we should stop feeding the troll. I'm as guilty of it as anyone, but rpl is right. He's a parody of himself.

You are too taken up with political labels.

Here's the math: "My side good, your side bad".

And people accuse libertarians of being simplistic.

Obama has been in office for a little over a month. This problem has been brewing for 28 years.

You are quite mistaken, "this" problem has been brewing for a little over a century.

muirgeo,

that last one was an exercise in randomness.

What we are seeing in the market is the reaction of those who have made easy money speculating off the real productive economy. They know their days of creating phantom money off the backs of people who actual make things and provide services are going away.

Meanwhile, do you know who was up for most of the day and finished up even for the day?

(wait for it)

That's right, AIG. And why were they up? Well, because they just got promised $3x10^10 of taxpayers' money, of course. No, muirgeo, quite the opposite. Today was a terrible day for people who make actual goods and services, and a great day for the scavengers.

What we are seeing in the market is the reaction of those who have made easy money speculating off the real productive economy. They know their days of creating phantom money off the backs of people who actual make things and provide services are going away.

That the Scavengers on Wall Street aren't happy with their future prospects is good news to me. The real productive economy is what matters. Those who contribute to it have gone nowheres and are working or ready to work and willing to work.

This will sort out and soon enough I'll have more data for my graph to wave in the doubters faces.

Speaking only for myself, it took about a month for me to go from thinking that Obama had to be better than Bush to wishing that Bush was back in office. Others are expressing the same sentiment with their investment dollars.

Obama has been in office for a little over a month. This problem has been brewing for 28 years.

Ironman - the POTUS & Congress' #1 priority is consolidating their power. Any other thought is delusion.

The decline in the expected growth rate of dividends in the future is directly driving stock prices lower. Today's decline is directly due to announced dividend cuts at General Electric (GE), International Paper (IP) and PNC Financial Services (PNC), two of which are major Dow components.

I'm afraid the President and leadership of Congress simply have other priorities when it comes to the economy than addressing the needs of businesses to have economically stable operating conditions.

"I don't think the Dow is a very good measure of the economy's prospects."

Sure, it's not infallible and it's not the only indicator one should consider, but the current level makes me seriously concerned for the next 6-12 months.

indiana jim - it would seem that every 25-30 years Americans need a reminder about what unbridled socialism does to the economy. Thus, the stupid cycle will continue forever.

The combination of near-zero liquidity and growing class envy = recession as far as the eye can see.

Now, will somebody please tell Bernanke that the stock market is not the economy.

The stock market is limited to predicting the future profitability of public companies. That may be a large component of the economy (I don't know how large), but it's not the whole economy.

Disturbingly and predictably, the market has been reacting mostly to news out of washington regarding redistribution of wealth from taxpayers to shareholders, followed by an acceptance of the inevitable until the next redistribution promise begins to circulate in the news. I don't know to what degree regulatory risk is being priced in, but everyone in the industry expects additional rash regulation to choke off liquidity.

Russ,

The worse is Obama's mood as a result of observing the impact of his policies, the better. Many in the academy may be perplexed about why the stock market is tanking, but I see it as confirmation of veracity of basic economics. I would have had to consider revising all my lectures on the wealth enhancing impacts of unencumbered markets, private property, taxation, and economic freedom if it had been otherwise in the face of Obama's election (based on promises to usher in increased levels of socialism in the USA) and his post-election actions, plans, and statements that confirm many of the worst case scenarios. Thankfully, my lectures are still as good as gold; in fact, like gold the value is rising.

I'm told by a colleague who was teaching econ when Jimmy Carter was President that the best thing about it was that there were lots of great examples to bring into the classroom about governmental policies destroying wealth. It seems to me that this too may be the best thing about the Obama presidency.