Is this economy strong or just another dot com bubble?
It is just another dot com bubble only much, much worse. It is worse because:
1) more stocks and assets are involved verses just tech stocks, stocks across many assets classes and overseas stocks as well, and the most seriously overvalued asset, houses. For example, here in California only 14% of the population can afford the average priced house. That means that a young adult can not afford a house only after, maybe, decades of saving money or of course getting help from the parents.
2) the dollar index is 30% lower now then it was in 2000, 80 now vs 120 in 2000.
3) the bond market is involved as well, that is, huge amounts of money are being borrowed to drive up stock prices, and real estate prices. A few methods used by Wall Street include Subprime loans, CDOs, private equity, and stock buybacks. For example, a company buys back stock, which reduces the number of outstanding shares and in turn boosts earnings per share, not because of company growth, but simply because they are using their cash to buy back stock vs opening new stores or plants.
4) We are more leveraged now than before. Our Federal Gov is more leveraged, $5 trillion in debt in 2000 compared to $9 trillion now. And consumers are more leveraged. Just look at how well Master Card company is doing.
5) We are much closed to the first baby boomers retiring, which means more Fed obligations each year and every year until the last boomer retires in 2030.
6) Inflation is a real problem now, just look at energy prices, food prices, commodity prices, house prices, health care costs, etc. since 2000. They have all gone through the roof. Furthermore, the Fed, Bernanke, etc. are not seeing it. Granted, I yield to the fact that some products are getting cheaper because of $2 a day labor charges in China. But, the vast majority of products and services we use everyday are going up much faster than the Fed claims of 2% a year. Copper is up 24% just this year alone. Unleaded gas is up almost 50% just this year alone.
Once the Chinese decide they are no longer going to loan us anymore money, watch out.
If the Yen which supports the carry trade that finances a lot of investments worldwide, starts to climb against the Dollar, watch out.
Moreover, there is nothing the Fed can do at this point. If they raise interest rates to support the dollar and take on inflation, the housing market will collapse.
If they lower interest rates to try and keep some sound ground under housing, the dollar will tank, and inflation will skyrocket.
My best guess is about another year at most, and then it will all implode just like the dot.com bubble, but like I said, it will be much worse because more assets will be involved and we are in debt much worse now than back in 2000.
As far as unemployment, just look at the history. Unemployment is always the lowest BEFORE a recession. When was the last time unemployment was this low? 2001.
I believe our economy is crashing in. People on the lower end of the totem pole see it first, and I'm seeing it! My husband drives a semi for a very well known company, and the freight is way down. Like 37 percent! And has been. Drivers at the bottom of the board aren't even getting to work. People are just not buying like they used to. Virtually everything you buy get there by truck at some point. When freight is down for this long, that's bad. People are starting to see it with all the foreclosure and gas prices and such. Well, this is my opinion.
Pretend that you have accompanied your pregnant wife to her doctor's appointment. Observe closely. The doctor listen's to your wife's heart and frowns. Then, he whispers to the nurse who dashes off for a special diagnostic tool. The doctor turns around to you and smiles in a MOST reasurring way. Two nurses return and ask you to leave. You stand in the hallway and the doctor comes out talking urgently to someone on his cell phone and whizzes right past you. You hear him say your wife's name. He goes into his office and closes the door. Suddenly, one of the nurses emerges from your wife's room and hurries to the doctor's office, casting you the fakest smile you've ever seen in your life. She enters his office and closes the door like a mortician, ever so softly. You peek into your wife's room and your wife is weeping. Before you can move, the doctor and nurse come back into the hallway and you hear someone quietly calling for an ambulance. Is it for your wife? You grab the doctor by his arm and ask what's happening. Is my wife OK? He smiles MOST reasurringly at you and says, "Oh, sure. Why don't you go have a seat in the waiting room?"
Now, what would YOU think? Would you believe what the doctor just told you or would you rely on the signs of trouble that you just observed? Economics is like that. Never believe what an economist tells you MOST reasurringly. Observe the peripheral signs and judge for yourself.
certain sectors crashes, others rises. where theres a boom theres a bust.
Are you working ? What is your definition of a "strong economy" , a "weak economy" , or just an "average economy" ? The unemployment figure for the USA in June was 4.5% ? Search for another country that you had rather be in with a lower unemployment rate ? I mean that`s a really great number, considering we aren`t counting the 20 million Illegals that are here working , so if our economy supports those facts , then evidently we are booming !
US economy is on solid fundamentals to rise in the near future. Elections are coming, unemployment is low, stocks are undervalued; there's no bubble right now.
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