Repeat After Me: The Markets Are Not the Economy

Took me 20 years to figure that out. Recent events are very telling.


Jim Cramer's Mad Money, back in April

Conventional wisdom would explain the market’s comparatively modest losses this way: Since markets tend to be forward-looking, investors have already accounted for what’s expected to be a cataclysmic drop in second-quarter activity and are forecasting a relatively rapid economic recovery afterward. The Federal Reserve’s actions have also bolstered investors’ confidence that the bottom won’t fall out of the market.

But the pandemic has also highlighted a deeper trend. For decades, the market has been growing increasingly detached from the mainstream of American life, mirroring broad changes in the economy.

Source

I mean what? We've been told through all administrations since Reagan that the Markets have been on a consistent upward climb. When the markets do great, we do great, yet we've seen the opposite trend for the middle and working classes. Steady declines in middle-class household incomes. Wage stagnation. In fact, any wage growth having been outpaced by inflation over the last few decades. We're told we're growing, but we can't seem to keep up with costs anymore. The economy was supposedly the strongest it's ever been before this pandemic, for decades we were told this, yet we know that it's a different generation from those of our parents, where a family household could survive on one income. But keep on cutting those taxes, it outta trickle down right?



It's all a farce. They're all pissing on us and we're being constantly told it's golden rain. Until we do a complete overhaul of the economy, a refocus on the working man and woman of this country, we'll continue to lose out. Are we going to continue to fall for it? When the markets are owned by the top 1%, and make no reflection of how the working-class man is doing on the ground? Are we going to continue cutting taxes for the wealthy hoping it will continue to trickle down? Despite the evidence that the wealth avoid paying billions in taxes? The number of outstanding taxes has gone up 17 times since 2010, the vast majority of which can be traced back to the elite. Despite the fact we gave them billions of tax cuts over the last 10 years alone. We're all being fooled, and rest assured, they'll try it again once this pandemic blows over. The markets will be back up and we'll be told it's raining gold again! Any criticism, skepticism, and we'll be given the age-old red scare talk! Forgetting that any extreme should be of concern, whether left or right.

Markets are not the economy, The people are the real economy. They are the ones who spend their money.

a reply to: Southern Guardian

They aren't the economy, they are an INDICATOR of the state of the economy.

But hey, let's just post some emotionally charged next level bull# to stir up the pot, right?

And why do people need all this money. Even the lowest of the low has access to welfare. The wage earners below middle class have TV's, cable, phones, electricity, running water. Healthcare is a concern I concede that one but even upper middle is going to struggle with long term care but nobody is denied access to an ER...meh.

I will never understand the issue with this income gap other than people want more stuff they can't afford but don't actually need. They probably could have the stuff if they stop having kids they can't afford and maybe learn a viable skill that pays. Nurses, plumbers, electricians all in high demand and pay well. Nope. Too lazy. Rather work at Walmart and Arby's and make unreasonable demands for low skill work.

a reply to: FlyinHeadlock

nobody is denied access to an ER...

Of course not! You'll just get a $23,000 bill at the end of the night! But hey! You weren't denied were you? Happy days.

a reply to: Southern Guardian

Of course markets aren't the economy, markets are how people play the economy like a game.

I totally agree with you on healthcare but there is no viable solution. No country has really figured it out. Some claim they have but the quality is crap. At least in the US, one can get some basic care and if you have the coin / expensive coverage you can get exceptional care. That is one thing socialized medicine doesn't care about at all because, end of the day nobody has enough resources to give everyone the same level of care. Not everyone can have a Maserati on the highway. Some walk, some bike it, some a 1972 pink and gray Datsun.

a reply to: Southern Guardian

What’s the hospital supposed to do? Stem degrees cost money and advanced training and degrees cost even more money the workers have to get paid right?

a reply to: Southern Guardian
Lol
Trump will still win
The economy is rebounding
People like tax cuts

Biden is for raising taxes


Nice try tho......

originally posted by: Southern Guardian
a reply to: FlyinHeadlock

nobody is denied access to an ER...

Of course not! You'll just get a $23,000 bill at the end of the night! But hey! You weren't denied were you? Happy days.

Lol you get a bill and you get numbers to call if you are in hardship, and basically they will take what you can send in. I went in 3 weeks ago and they are working with me and completely understand I have no funds to pay for it, right now and likely not anytime soon. It's not ideal of course but it's just a phone call, the people aren't nasty they understand

a reply to: putnam6
I get a call asking me how I am holding up, and if I wish to receive additional care?

Oh, once they did call and demand to return some items I forgot...which was about the most forceful they had ever been, lol.

In the past the wealthy of the world were land locked to the contrary they lived; and even in the towns in which they lived. This caused a situation where they had a vested interest in how the economic standing of their porer neighbors. 1) because they needed to keep their work force productive. 2) they want to keep their neighborhoods safe.

With the increased mobility of the wealthy, that has come from globalization, the tie between rich and pore within a country has become very much diminished to non existent.

Its not hard to picture a future world where the global devides that fule ills like war will not be geographic but economic. Where the world's elite throw off national pride and unit under one global umbrella, and where everyone else are seen as nothing more than fodder no mater what country they live in.

Individual countries will mimic Charles Dickens ... "a tail of two countries" same geological location very different governance and expectations.

a reply to: FlyinHeadlock

The US economy is based off the classic market systems that are championed within the wealth of nations.

The middle and lower class basically 'move' the economy, by allowing for everyone to be a 'capitalist'. Given access to the market systems that are set in place by the more wealthy and successful capitalists who meet the demand with the most supply. The efficiency model is then put in overdrive to build more capital, to make more 'stuff' for the middle class to purchase. This is how a market system economy works.

The stock market is a place that taps into the market systems and props up certain capitalist ventures to become more efficient, run smoother, meet more demand, and in the end a return will eventually come to those who invest into that niche market.
Problem is, when you run into a situation like back when JP Morgan saved America with his close banker friends, they dictate the markets. Corner certain groups and company's and either prop them up, or let them float off to sea.
Amazon didn't pay any taxes for nearly 20 years because Bezo's and his team were a company built entirely off investment capitalists, Amazon didn't own anything until recently, and never turned a profit for over 17 years.

The stock market is a good 'indication', but it's also where only the top percentage of people own nearly all the wealth, yes, they can dictate how the economy can be run, and those same people are in cahoots with Banks and corporate arms that slither their smiley tentacles into government, and tap into massive amounts of wealth that people pay in taxes.

originally posted by: putnam6

originally posted by: Southern Guardian
a reply to: FlyinHeadlock

nobody is denied access to an ER...

Of course not! You'll just get a $23,000 bill at the end of the night! But hey! You weren't denied were you? Happy days.

Lol you get a bill and you get numbers to call if you are in hardship, and basically they will take what you can send in. I went in 3 weeks ago and they are working with me and completely understand I have no funds to pay for it, right now and likely not anytime soon. It's not ideal of course but it's just a phone call, the people aren't nasty they understand

Sorry to hear about your situation.

But your statement actually falls more broader than those who can not afford to pay. Hospitals will even work with people who can afford to pay them.

I read an article a few years back interviewing a hospital CEO and when asked about the rising cost of hospital care and how many people suffer sticker shock when they get their bill; he answered by saying "the bill is just the start of negotiations not the end".

I took the hospital up on that offer about a year later after the birth of my second daughter. I had insurance but it didn't cover the whole process; making matters worse was that my daughter was born in January which meant I had to reach my out of pocket maximums twice for the entire pregnancy. So as the bills started rolling in I started calling the hospital and other providers to see what could be done with what I was responsible for. Some providers accepted what the insurance gave them and simply forgave what I owed them out of pocket.

Markets can be reported at any valuation without regard to supply and demand in the short term.
We learned our lesson in the flash crash of 1987 when the trading firms that continued to trade despite being technically bankrupt brought the reported indexes back up at the end of the day.
If customers made a run on investing firms to liquidate their fictionally valued holdings, there is a point that the system would fail.
Very few investors panic over any news, they just believe their investments will hold their value regardless.
Historically debt servicing is subject to supply and demand so you might expect all these government bailouts and stimulus measures that have added trillions to the national debt would need to be serviced with competitively priced bonds.
That may be the mistake we non gamblers made, like so many other global nations the US is prepared to default when the time comes. Some Democratic candidates have suggested we just print money for everything like Germany did before WW2 reasoning that countries like Japan have far more debt as a function of GDP.
Once the global default cascade starts it would all collapse anyways, we just don't want to be first there.
It would be like when DJT took over the troubled NJ gambling industry back in the 90's, the actual bankruptcies in 2004, 2009 and 2014 were relatively clean.
If all the world governments created pools 100 times each countries current debt, issueing government bonds at 0 percent to cover the debt then same government bought all those bonds back and just left them unserviced it wouldn't effect foreign exchange rates for their currency. GDP is what it is and as long as there was motivation to work, produce a product and contribute to that GDP there would be no changes there either. Of course if a country just printed currency and used the money to buy oil or gold without a GDP offset there could be issues.

a reply to: Vector99

They aren't the economy, they are an INDICATOR of the state of the economy.

No, it isn’t. The stock market is where people place bets on how the economy will perform. The way people invest in the stock market isn’t an indicator of the economy. While they are adjacent, they’re further from each other than they’ve ever been.

But hey, let's just post some emotionally charged next level bull# to stir up the pot, right?

How is this some next level BS? This isn’t some radical idea. I thought it was common knowledge until I saw Trump use it as a talking point. And you guys started purposefully misunderstanding it.

The global economy is currently just like the Coyote chasing the Roadrunner and he runs off a cliff. He pauses in mid-air, reaches down and feels nothing, then drops to the bottom of a canyon in a little cloud of dust. The economy is at that point where it hasn't looked down yet.

a reply to: Southern Guardian

What's Biden going to do for the economy that he didn't do as VP for 8 years, or senator for 40 years?

a reply to: underwerks

You clearly have zero knowledge of the fundamentals of a functioning economy.

Stock markets merely created a trading place, an INDICATOR, of economical trends.

Markets can absolutely be manipulated, your best friend George Soros could explain it to you.

originally posted by: DBCowboy
a reply to: Southern Guardian

What's Biden going to do for the economy that he didn't do as VP for 8 years, or senator for 40 years?

What's anybody going to do for the economy? If Trump and his people have the answers, they're not telling. So far, all they've been doing is giving away money, like putting a Band-Aid on a decapitation.

If Trump was smart, he wouldn't try to be re-elected but let the economy go down the toilet on somebody else's watch. But it's not like he's in charge or anything. We found that out when he tried to open everything back up by Easter. Remember that one? Good times.