Some of the market averages have rallied to recent highs in reaction to ramped-up net spending (Treasury outlays minus Treasury receipts) through the 14th of July. (See chart below.)
However, there is a sharp pullback in net spending underway now and that will likely translate into a renewed market downturn. (See below.)
The Administration seems wary of continued "pump priming." Each time they see the deficit expanding they pull back, however, without job growth or renewed lending (neither of which are happening), government spending is the only way to support aggregate demand. They don't seem to understand that.
As a trader, I would be a seller of stocks here.
ECONOMIC MYTHS AND FACTS: PART 2
ReplyDeleteMIKE
I THINK YOU SHOULD CREATE A PAGE THAT DEBUNKS ANYONE WHO USES A VARIANT OF THE "TAX PAYER ON THE HOOK"
LATEST CULPRIT :
DAVID BROOKS, NY TIMES COLUMNIST
- SAYS THAT $787 BILLION IN SPENDING IS A FISCAL EXPLOSION THAT IS BORROWED MONEY
- DOES NOT UNDERSTAND HOW MONETARY SYSTEM WORKS SINCE THE MONEY DISAPPEARED FIRST FROM THE SYSTEM BASED ON ASSET EVAULATION BEING EVAPORATED LAST YEAR, GOVERNMENT HAS TO RE-FILL THE STADIUM WITH DIRT OR FACE IMPLOSION OF ECONOMY.
- POINTS OUT THE OBVIOUS BUT FOR A DOGMA > THAT THE DEFICIT IS GOING TO HURT SOMEONE WHEN IN FACT IT WILL ALLOW MORE BABIES TO BE BORN, MORE HOSPITALS TO RUN FUNCTIONALLY, AND THE GENERAL ECONOMY TO CONTINUE
- DOES NOT KNOW THAT I = S, INVESTMENT IS A FUNCTION OF SPENDING WITH AN "S" AND NOT "SAVING" WITH AN "S" ON THE PART OF THE GOVERNMENT WHICH DOES NOT NEED TO "SAVE"
- SHOULD BE HOSED DOWN WITH CASTOR OIL ALONG WITH JACK BAURUDIJIAN ON BIZ RADIO
..OVER AND OUT..
July 21, 2009 9:30 AM
googleheim said...
based on hegelian logic the dialectic should present some info:
IF "TAX PAYER ON THE HOOK" WAS TRUE THEN ALL WE NEED TO DO TO BALANCE A BUDGET IS TO CRASH THE MARKET, SINCE THE OPPOSING FUNCTION IS THAT BORROWED MONEY CREATES A BAD DEFICIT.
BERNANKE HAS THE TOOLS TO MOP UP INFLATION AND TAKE LIQUIDITY OUT OF THE SYSTEM.
ALL ELSE IS DOGMA AND BS.
LET THE STIMULUS FLOW !!!