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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsDon't confuse soaring stocks with real economic growth
BY BENJAMIN HARRIS, OPINION CONTRIBUTOR, the Hill
http://thehill.com/opinion/finance/366761-dont-confuse-soaring-stocks-with-real-economic-growth
"SNIP...........
The Republican plan forgave hundreds of billions in owed taxes for multinational corporations who had deferred taxes in the past, which judging by prior experience will boost share buybacks and the attendant stock prices. The sheer magnitude of the package with its $1.5-trillion price tag is certain to boost consumer demand, at least a little, in the next year or two.
But market gains and economic growth are not at all the same thing. With the 2017 gains in the books, and the GOP tax plan signed into law, two questions are on the forefront: One, will the tax cut lead to more growth down the line? And two, is more stimulus coming?
The answer to the growth question can be answered by economic models. Congress Joint Committee on Taxation found that the bill would increase GDP by less than 1 percent, cumulatively, over the decade. The Wharton Schools Budget Model puts the annual growth rate from 2028 and 2040 at between 0.01 and 0.03 percent. All told, this is as close to zero extra growth as it gets.
Those who are looking for Congress to provide more stimulus in 2018 should be wary. The only real option here is an infrastructure package, and the odds are slim.
...........SNIP"
guillaumeb
(42,641 posts)Until they burst. Then there are calls for a taxpayer bail out to reward the speculators.
Recommended.
RKP5637
(67,086 posts)RKP5637
(67,086 posts)with their unbridled selfishness and group think, enough is never enough.
panader0
(25,816 posts)Wellstone ruled
(34,661 posts)Everyone needs to read this story. Those who are not in the 10%,a few have exposure via some kind of 401,and those usually are made up of Mutual Funds with some what restrictive access. The used number of 52% is so f---n Bogus. But,it pacifies those who do not bother to do research like the Republican Party members.
unblock
(52,116 posts)They make workers think their interests are suddenly completely aligned with billionaires interests just because they have a miniscule fraction of the stock market.
In truth, the billionaires benefit immensely while 401(k) holders barely notice a difference. And its easier for billionaires to bail out when it crashes.
KY_EnviroGuy
(14,488 posts)It's tough shit for the little guy when the market crashes. I've always felt that 401Ks and IRAs were invented to pacify the public's rightful rage against the stock market.
..................
former9thward
(31,934 posts)All have the option of cash based funds. If you have your money in stocks it is your personal choice. No one makes you do it.
KY_EnviroGuy
(14,488 posts)I still feel the financial industry's motive was to get the public enthralled with the market so it then becomes a "sin" to criticize corporations - in other words, a mind-set. Just stay tuned to CNBC and read that Wall Street Journal, folks - and help us resist any efforts to regulate Wall Street.
Isn't it also strange that they have kept interest rates for cash accounts at near zero? A motive here?
Wellstone ruled
(34,661 posts)What is scary is the Recapture provisions in some of these 401's. If the sponsoring company goes South and BK's,they have a right to recapture all of their input funds and in some cases,the employees funds that have been deducted via payroll.
My Spouse and her Sister had this happen. After a lawsuit against the Major Bank who was the Repository and Marketing Agent of this 401,the Bank was ordered to repay only a portion of the lost funds and those funds were paid in Bank Stock. Here is the kicker,they could not move any of those funds into any other product. The Feds stepped in and forced the Employer to offer different choices as a investment accounts within their 401's.
Hoyt
(54,770 posts)I think they are in the 70 %.
unblock
(52,116 posts)Obviously Obama did well, but Donnie is taking credit for the continued Obama economy and he has many enablers and believers on this score. The tax cut is an excuse to take even more credit no matter how economically useless or even counterproductive it is.
ProudMNDemocrat
(16,721 posts)The record Stock Market numbers means that Corporations are doing well, nothing more. Those who have investments in many of these companies will see gains. Most investors are smart enough to to have their eggs in several baskets in order to survive any downturn in the Market.
Diversification is important as well. For what goes up, must eventually come down.
Buns_of_Fire
(17,149 posts)There's no money to pay for it now, of course, so they'll be even HAPPIER to privatize the hell out of them potholes!
RandomAccess
(5,210 posts)legal gambling.
BigmanPigman
(51,565 posts)longer hours and fewer benfits with more taxes. The GOP must think we are rubes when it comes to understanding the economy.
applegrove
(118,478 posts)Less stability in employment is going to make regular people more risk averse. Less in the stock market and more into more stable financial instruments. More stocks for rich people.
KY_EnviroGuy
(14,488 posts)"20 years of stagnant wages, longer hours and fewer benefits with more taxes" is mostly why the damned market is so high (that and corporate welfare). Companies are squeezing what workers that remain for every tiny bit of efficiency and free time they can get.
It's an international race to the bottom. And, you're right that the GOP thinks no one pays attention....or cares.
..............
KPN
(15,635 posts)means relatively little in the absence of meaningful wage/ personal income growth. It's not about growth, it's not about jobs, it's about income ... but the GOP doesn't want us to hear or even think about that. Ergo their shrill cry about "class warfare".
It IS class warfare. One they created. And the Democratic Party better damned well recognize and fight it -- as if it were (and is) a war and not a respectful game of statesmanship. I'm not yet convinced that will actually happen.
IronLionZion
(45,380 posts)and used it to rebuild roads and bridges and trains and other infrastructure. That would have caused economic growth and created jobs.
L. Coyote
(51,129 posts)applegrove
(118,478 posts)fight inflation for the rich. Growth of stock market is speculation and wealth growth in the rest of the world. It is not inflation.