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Author Topic: Are we heading for a market crash?  (Read 5621 times)

kphoger

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Re: Are we heading for a market crash?
« Reply #100 on: November 21, 2018, 06:25:02 PM »

Pro-Conservatives

What is a pro-Conservative?  Is that different than a Conservative?
No, most people on this forum are on the Left.
But Trump is still a ra.……………………………..
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abefroman329

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Re: Are we heading for a market crash?
« Reply #101 on: November 21, 2018, 06:27:17 PM »

Then tell me what number is unreasonably high and why it's unreasonably high.
And that’s the “shifting the burden of proof” fallacy.
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kalvado

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Re: Are we heading for a market crash?
« Reply #102 on: November 21, 2018, 06:28:26 PM »

Please tell me you understand that it's not a linear, "more is better" sort of thing.
I'm not the one saying more is better.

But it's not really arguing in good faith to put some ridiculous number out there—one that I assume you're mentally competent enough to understand why it would never work—and then suggest that the whole idea is rubbish.

The whole point of minimum wage is to set a bottom level, a floor, for wages. A level where one is at least able to live from, if frugally and modestly. That hasn't been the case for a number of years now.
So what are the good numbers? I can see good reasons for $3-4/hour cuts across the board, but why 25 or 300 is more ridiculous number than 15?
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Tonytone

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Re: Are we heading for a market crash?
« Reply #103 on: November 21, 2018, 06:30:42 PM »

Pro-Conservatives

What is a pro-Conservative?  Is that different than a Conservative?
No, most people on this forum are on the Left.
But Trump is still a ra.……………………………..
Meaning they are extremely right, im actually happy you said that kp. I was expecting a different answer


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abefroman329

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Re: Are we heading for a market crash?
« Reply #104 on: November 21, 2018, 06:31:10 PM »

So most of the people on the forum are Pro-Conservatives?


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I would say so, yes. It IS a roads forum, after all.
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Tonytone

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Re: Are we heading for a market crash?
« Reply #105 on: November 21, 2018, 06:35:13 PM »

So most of the people on the forum are Pro-Conservatives?


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I would say so, yes. It IS a roads forum, after all.
Explains why we have so many threads, left unfinished


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US71

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Re: Are we heading for a market crash?
« Reply #106 on: November 21, 2018, 06:36:58 PM »

The average CEO makes $13.8 Million a year, which is about $37,800 per day which works out to around $1575 an hour.

https://www.glassdoor.com/research/ceo-pay-ratio/
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NE2

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Re: Are we heading for a market crash?
« Reply #107 on: November 21, 2018, 06:55:51 PM »

So most of the people on the forum are idiots?
Yep. Robert Moses wannabes too.
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Tonytone

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Re: Are we heading for a market crash?
« Reply #108 on: November 21, 2018, 06:57:50 PM »

So most of the people on the forum are idiots?
Yep. Robert Moses wannabes too.
Omg, NE2 you don’t have to fire these people up like this. They already deal with it when they eat unseasoned food.


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Rothman

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Re: Are we heading for a market crash?
« Reply #109 on: November 21, 2018, 08:17:29 PM »

Wow.  Thread still ain't locked.

It is sort of like what Mitch Hedberg said about Pepperidge Farm bread:  You lock it and it still ain't locked.
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Duke87

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Re: Are we heading for a market crash?
« Reply #110 on: November 21, 2018, 08:20:39 PM »

Then tell me what number is unreasonably high and why it's unreasonably high.  I have yet to hear anybody AT ALL explain why minimum wage should be $15/hour but not $40/hour.  Every argument I've heard in favor of the former should work for the latter—and every argument I've heard against the latter should apply to the former.

Because, as with your prior allusion to Goldilocks, there is a balance to be struck. Increases in the minimum wage increase both the available spending money of anyone working and the burden on employers to pay their staff... but the impact of the former diminishes as the minimum goes higher because once people have enough to make ends meet, they start saving up money instead of spending it, which diminishes its benefit to the present economy. The impact of the latter, meanwhile, increases as the minimum goes higher as employers start to exhaust their options to offset higher labor costs with savings elsewhere or reduced margins.

I can't argue in favor of a specific value as I lack the data to assert where the ideal balance point is. It's not a single answer either - it will be different in different places, varying with the local cost of living, strength of the local labor market, etc.

Recent experiments with raising the minimum locally, however, have not generally resulted in significant negative impacts on employment rates, which suggests that the current federal minimum is likely below the sweet spot in most places.

It doesn't matter that much whether someone gets $20M or $28M per year; they're still really rich. On the other hand, decreasing $34K even to $32K (an increase from 15% to 20% tax) would make it harder to live, and there are many more of those people.

This sort of math puzzles me.  Nobody would take $1 from someone who is down to his last $10.  Hardly anyone would suggest taxing an extra $2000 out of someone who earns $20,000 a year.  But, for some reason, taxing an additional $500,000 out of someone who earns $5 million a year is fine and dandy.  Why is the person who works hard to earn $20,000 a year somehow more entitled to what they've earned than the one who built a business empire and earns substantially more?

For exactly the reason 1 states - because the impact of someone losing X% of their income does not scale linearly with the magnitude of said income. And this is true of the impact both to their own financial health and to society at large.

Look at it this way - someone who earns $20,000 a year after taxes is going to spend every penny of it because they have to just to keep their bills paid... if they can even afford to keep all their bills paid. Someone who earns $5,000,000 a year is extremely unlikely to spend all of it because they have no particular need to. They will be squirreling a substantial chunk of it away in various accounts and investment vehicles, which doesn't provide the same benefit to the economy as money that is actually getting spent. That money would be put to better use supporting projects and programs that benefit the public (or paying down the ever-growing national debt) than it is just sitting in someone's private assets.



As for the original subject at hand, the biggest threat I see to the economy currently is our president's insistence on starting and escalating trade wars. Come January a whole plethora of imports from China will be subject to tariffs of 25%, with numerous American exports to China also becoming subject to tariffs of 25% in retaliation.

The percentage of goods sold in the US that are made in China, or that are assembled in the US but have some of their components or raw materials sourced from China, is quite high. These tariffs are going to be extremely disruptive to the supply chains many manufacturers and retailers rely on, which will cause significant slowdowns in business and the stock and labor markets will reflect this.
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Takumi

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Re: Are we heading for a market crash?
« Reply #111 on: November 21, 2018, 08:28:26 PM »

Ignore his spew.
I'd ignore yours if the ignore function still worked.
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Takumi

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Re: Are we heading for a market crash?
« Reply #112 on: November 21, 2018, 08:33:21 PM »

Pro-Conservatives

What is a pro-Conservative?  Is that different than a Conservative?
No, most people on this forum are on the Left.
But Trump is still a ra.……………………………..
Meaning they are extremely right, im actually happy you said that kp. I was expecting a different answer


iPhone
It's about even. I'm a centrist myself.
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Tonytone

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Re: Are we heading for a market crash?
« Reply #113 on: November 21, 2018, 08:34:13 PM »

Pro-Conservatives

What is a pro-Conservative?  Is that different than a Conservative?
No, most people on this forum are on the Left.
But Trump is still a ra.……………………………..
Meaning they are extremely right, im actually happy you said that kp. I was expecting a different answer


iPhone
It's about even. I'm a centrist myself.
Yes, as I am also a moderate. But sometimes I can get a little Lib.


iPhone
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US 41

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Re: Are we heading for a market crash?
« Reply #114 on: November 21, 2018, 09:22:21 PM »

My vote is yes. The assumption right now seems to be that the market is doing really good. IMO it's a bad time to invest because eventually the market is going to go back down again (maybe not crash). Everyone keeps trying to get me to invest, but I don't want to right now because I don't have much confidence that the economy is going to keep improving. The best time to invest is when the economy is doing poor. Then once it gets good again you pull out. At least that's my understanding, which could be completely wrong   :-D.
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J N Winkler

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Re: Are we heading for a market crash?
« Reply #115 on: November 21, 2018, 09:29:39 PM »

Because, as with your prior allusion to Goldilocks, there is a balance to be struck. Increases in the minimum wage increase both the available spending money of anyone working and the burden on employers to pay their staff... but the impact of the former diminishes as the minimum goes higher because once people have enough to make ends meet, they start saving up money instead of spending it, which diminishes its benefit to the present economy. The impact of the latter, meanwhile, increases as the minimum goes higher as employers start to exhaust their options to offset higher labor costs with savings elsewhere or reduced margins.

I can't argue in favor of a specific value as I lack the data to assert where the ideal balance point is. It's not a single answer either - it will be different in different places, varying with the local cost of living, strength of the local labor market, etc.

Recent experiments with raising the minimum locally, however, have not generally resulted in significant negative impacts on employment rates, which suggests that the current federal minimum is likely below the sweet spot in most places.

A traditional macroeconomic test for too-high minimum wage is whether inflation is also high.  I tend to agree that even in low-cost cities, there is some scope for raising the minimum wage without contributing to inflation.  (Wichita has some special problems Kyle does not mention, such as hemorrhaging young college-educated women.)

Employers can respond to increases in the minimum wage by substituting capital for labor:  in other words, bringing in machines to replace the human employees.  Their ability to do this is constrained both by what is technologically possible and by high up-front costs for automation.  However, since ongoing R&D keeps pushing the frontiers of technological possibility ever further outward, and the initial costs of automation drop as hardware and software becomes commoditized, keeping minimum wages artificially low to maintain high employment is not sustainable in the long term.  I believe it also imposes heavy costs in terms of human dignity.

For exactly the reason 1 states - because the impact of someone losing X% of their income does not scale linearly with the magnitude of said income. And this is true of the impact both to their own financial health and to society at large.

Look at it this way - someone who earns $20,000 a year after taxes is going to spend every penny of it because they have to just to keep their bills paid... if they can even afford to keep all their bills paid. Someone who earns $5,000,000 a year is extremely unlikely to spend all of it because they have no particular need to. They will be squirreling a substantial chunk of it away in various accounts and investment vehicles, which doesn't provide the same benefit to the economy as money that is actually getting spent. That money would be put to better use supporting projects and programs that benefit the public (or paying down the ever-growing national debt) than it is just sitting in someone's private assets.

This is what economists mean when they talk about the diminishing marginal utility of income.

All of this said, however, there is one serious objection to the "eat the rich" strategy.  Sometimes there are scale effects such that large returns are possible only with large initial investments made by an unitary entity with an incentive to seek profit.  This is a good reason to be cautious about dispossessing the wealthy.  On the other hand, an investor class that is oriented toward portfolio capitalism (trading on financial markets) rather than entrepreneurship is a sign that large investments are being foregone.  It is also true that while there are private investors who take a very long view, in many cases the government is better positioned to initiate a string of initial investments that lead to payoffs that are both very large and very late; the Internet is the classic example.

As for the original subject at hand, the biggest threat I see to the economy currently is our president's insistence on starting and escalating trade wars. Come January a whole plethora of imports from China will be subject to tariffs of 25%, with numerous American exports to China also becoming subject to tariffs of 25% in retaliation.

The percentage of goods sold in the US that are made in China, or that are assembled in the US but have some of their components or raw materials sourced from China, is quite high. These tariffs are going to be extremely disruptive to the supply chains many manufacturers and retailers rely on, which will cause significant slowdowns in business and the stock and labor markets will reflect this.

I also tend to think that the prospects of "victory," however defined, are rather dim because the Chinese have the capability to respond to the tariffs by redirecting much of their production to a needed expansion of domestic consumption.
« Last Edit: November 21, 2018, 09:33:05 PM by J N Winkler »
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kphoger

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Re: Are we heading for a market crash?
« Reply #116 on: November 21, 2018, 09:37:44 PM »

( a lot )

Thank you for actually attempting to explain the position.  What you say makes sense to me.  Really, I appreciate you taking the time to type that reply.

I do disagree with your assertion that someone who earns $20,000 a year has to spend every penny of it just to pay the bills.  I have a family of five, and our combined income isn't a whole lot more than that—maybe $30,000 or something like that.  And, by the way, I've never earned $15 an hour (although I think.  I'm not saying we have a bunch of extra money to throw around—no, we have to watch what we spend—but I'd say we're far from what any reasonable person should consider to be the minimum standard of living.  We own a car, we have a house in decent condition in an average neighborhood, we can buy our children birthday and Christmas presents, we give to the church and to charity, we travel……  Now, we don't really have any savings or an emergency fund, but that being true is a far cry from living in poverty.



Wichita has some special problems Kyle does not mention, such as hemorrhaging young college-educated women.

And a local economy largely dependent on building things that wealthy CEOs tend to buy.
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US71

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Re: Are we heading for a market crash?
« Reply #117 on: November 21, 2018, 09:47:01 PM »



And a local economy largely dependent on building things that wealthy CEOs tend to buy.

Yachts, aircraft, lawyers, politicians....
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vdeane

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Re: Are we heading for a market crash?
« Reply #118 on: November 21, 2018, 09:48:18 PM »

Another point is that, back in the era of high taxes, the way businesses would avoid socking their shareholders and/or CEO with a large tax bill was instead giving the money to their employees, in the form of higher wages/benefits and increased hiring.  That effect is now gone - businesses now have no reason to hire anyone unless the amount of money that employee makes for the company is more than the cost to pay them.  That's one of the reasons why well-paying jobs are harder to find these days, and why "do more with less" is the current name of the game.
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kphoger

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Re: Are we heading for a market crash?
« Reply #119 on: November 21, 2018, 09:54:39 PM »


And a local economy largely dependent on building things that wealthy CEOs tend to buy.

Yachts, aircraft, lawyers, politicians....

Aircraft.  We design and build a lot of private jets in this city.  It would be hard to find someone in Wichita who doesn't personally know multiple people employed in that industry.  Rich CEOs buying private aircraft is what keeps this town going.
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Re: Are we heading for a market crash?
« Reply #120 on: November 21, 2018, 10:20:28 PM »

Just my opinion, but I believe the minimum wage should be set high enough that you can easily live on it, but low enough that you don't have too much disposable income, i.e. you will spend what you have instead of saving it.

If you're making 20,000 a year and get a raise to 25,000 a year, you will almost certainly spend that extra 5,000 on things you've always wanted, improving your standard of living, and so on. If you are suddenly making 80,000, all of that money will not flow to the economy. You will start thinking in terms of saving - and so will your employer. Meaning less money feeding back into the economy. So there is a balance, but that balance is certainly at a higher point than where it is now. Around $11-12 per hour seems sustainable. Importantly, I think it should be lower for enrty-level workers. The full federal minimum should not take effect until you are at least 21 if not older.

@kphoger, your open-ended parenthetical has me curious now.
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Re: Are we heading for a market crash?
« Reply #121 on: November 21, 2018, 10:48:08 PM »

So most of the people on the forum are Pro-Conservatives?


iPhone

This forum has a liberal majority. However, most don't mention their beliefs unless it's on topic or the beginning of a thread).

ending parenthesis without beginning one is intended
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kalvado

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Re: Are we heading for a market crash?
« Reply #122 on: November 21, 2018, 11:00:05 PM »

Just my opinion, but I believe the minimum wage should be set high enough that you can easily live on it, but low enough that you don't have too much disposable income, i.e. you will spend what you have instead of saving it.

If you're making 20,000 a year and get a raise to 25,000 a year, you will almost certainly spend that extra 5,000 on things you've always wanted, improving your standard of living, and so on. If you are suddenly making 80,000, all of that money will not flow to the economy. You will start thinking in terms of saving - and so will your employer. Meaning less money feeding back into the economy. So there is a balance, but that balance is certainly at a higher point than where it is now. Around $11-12 per hour seems sustainable. Importantly, I think it should be lower for enrty-level workers. The full federal minimum should not take effect until you are at least 21 if not older.

@kphoger, your open-ended parenthetical has me curious now.
Wages in general should be such that economic output covers purchasing capacity of those funds.
This is not currently the case, as US has huge trade deficit - in other words, population is able to buy more than same population produces. It is partially covered by Wall street sucking money, partially - by debts. In either case, desired consumption level should be no factor here, but productivity should be.
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Duke87

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Re: Are we heading for a market crash?
« Reply #123 on: November 22, 2018, 12:03:31 AM »

I do disagree with your assertion that someone who earns $20,000 a year has to spend every penny of it just to pay the bills.  I have a family of five, and our combined income isn't a whole lot more than that—maybe $30,000 or something like that.  And, by the way, I've never earned $15 an hour (although I think.  I'm not saying we have a bunch of extra money to throw around—no, we have to watch what we spend—but I'd say we're far from what any reasonable person should consider to be the minimum standard of living.  We own a car, we have a house in decent condition in an average neighborhood, we can buy our children birthday and Christmas presents, we give to the church and to charity, we travel……  Now, we don't really have any savings or an emergency fund, but that being true is a far cry from living in poverty.

You also live in Wichita. In New York City, $30k a year (which incidentally is just a hair under $15/hr if you work 40 hours every week and never work overtime) would have you living in squalor. Hell, you could double that and you'd still have a lower standard of living than you do in Wichita with a family of five. This is why the ideal minimum wage varies from place to place.

Regardless, general point holds - once people's incomes start to climb high enough that they start saving or investing some of their earnings rather than spending all of them, there are diminishing returns to the economy from increasing their wages - which is why it is bad economic policy to raise a minimum wage past this point, and good economic policy to make people who have earned their way past this point contribute a greater percentage of their income in taxes.

This also means that tax brackets really ought to vary from place to place depending on the local cost of living, but alas I do not see congress ever opening that can of worms.
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tradephoric

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Re: Are we heading for a market crash?
« Reply #124 on: November 22, 2018, 11:58:41 AM »

My vote is yes. The assumption right now seems to be that the market is doing really good. IMO it's a bad time to invest because eventually the market is going to go back down again (maybe not crash). Everyone keeps trying to get me to invest, but I don't want to right now because I don't have much confidence that the economy is going to keep improving. The best time to invest is when the economy is doing poor. Then once it gets good again you pull out. At least that's my understanding, which could be completely wrong   :-D.

If i was 22 years old i would definitely invest some money into the market - even if it's only $500.  Open an account and go through the process of buying and selling equities. If you put some money into the markets and it proceeds to crash 50%, you are going to learn invaluable investing lessons that you can apply the rest of your life.  In 20 years, $500 will mean nothing to you.  Maybe don't invest your entire inheritance, but at least get into the game.

The old adage is that bull markets don't die of old age but rather get killed off by the fed.  With the fed raising interest rates over the past 2 years the bull run may indeed be peaking.  However, while we are currently in one of the longest bull markets in history, this has also been one of the shallowest (suggesting this bull run could continue for another 2 or 3 more years).  Even the rise in interest rates by the fed has been relatively slow compared to the lead up of previous recessions.  It feels like this entire market cycle has been going on in slow-motion.

« Last Edit: November 22, 2018, 12:00:54 PM by tradephoric »
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