How Our “Recovery Plan” is Implemented

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    Posted: 27 December 2009 11:40 PM

    It?s a slow day in a little east Texas town. The sun is beating down,and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich tourist from back east is driving through town. He stops at the motel and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs in order to pick one to spend the night.

    As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.

    The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

    The pig farmer takes the $100 and heads off to pay his bill at the supplier of feed and fuel.

    The guy at the Farmer?s Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her ?services? on credit.

    The hooker rushes to the hotel and pays off her room bill with the hotel owner.

    The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything.

    At that moment the traveler comes down the stairs, picks up the $100 bill, states that the rooms are not satisfactory, pockets the money, and leaves town.

    No one produced anything. No one earned anything.

    However, the whole town is now out of debt and now looks to the future with a lot more optimism.

    And that, ladies and gentlemen, is how the United States Government is conducting business today.

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
  • Posted: 28 December 2009 09:32 AM #1

    TanToday - 28 December 2009 03:40 AM

    It?s a slow day in a little east Texas town. The sun is beating down,and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich tourist from back east is driving through town. He stops at the motel and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs in order to pick one to spend the night.

    As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.

    The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

    The pig farmer takes the $100 and heads off to pay his bill at the supplier of feed and fuel.

    The guy at the Farmer?s Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her ?services? on credit.

    The hooker rushes to the hotel and pays off her room bill with the hotel owner.

    The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything.

    At that moment the traveler comes down the stairs, picks up the $100 bill, states that the rooms are not satisfactory, pockets the money, and leaves town.

    No one produced anything. No one earned anything.

    However, the whole town is now out of debt and now looks to the future with a lot more optimism.

    And that, ladies and gentlemen, is how the United States Government is conducting business today.

    The pig farmer raised the pig.
    The butcher slaughtered the pig.
    The feed and fuel distributed the pig feed.
    The prostitute supplied needed psychiatric services.
    The hotel operator provided the room.

    The premise as stated is obviously false but does beg the question…,what’s everybody doing today?  wink

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    I don’t mind being wrong…,I just hate being wrong so FAST!

         
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    Posted: 28 December 2009 11:58 AM #2

    TanToday - 28 December 2009 03:40 AM

    It?s a slow day in a little east Texas town. The sun is beating down,and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich tourist from back east is driving through town. He stops at the motel and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs in order to pick one to spend the night.

    As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.

    The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

    The pig farmer takes the $100 and heads off to pay his bill at the supplier of feed and fuel.

    The guy at the Farmer?s Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her ?services? on credit.

    The hooker rushes to the hotel and pays off her room bill with the hotel owner.

    The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything.

    At that moment the traveler comes down the stairs, picks up the $100 bill, states that the rooms are not satisfactory, pockets the money, and leaves town.

    No one produced anything. No one earned anything.

    However, the whole town is now out of debt and now looks to the future with a lot more optimism.

    And that, ladies and gentlemen, is how the United States Government is conducting business today.


    This was pretty funny, if rather a rather silly and misleading view of economics.  Each transaction in the chain was just about as valuable as the contributions to the economy by day traders, who produce essentially nothing of value, except for themselves.  Day trading, and much of stock trading in general, reminds me of the old game of musical chairs ...

         
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    Posted: 28 December 2009 12:10 PM #3

    firestorm - 28 December 2009 03:58 PM

    This was pretty funny, if rather a rather silly and misleading view of economics.  Each transaction in the chain was just about as valuable as the contributions to the economy by day traders, who produce essentially nothing of value, except for themselves.  Day trading, and much of stock trading in general, reminds me of the old game of musical chairs ...

    Except traders create markets, supply liquidity, and fuel interest. I haven’t heard one person complain about my trading AAPL today (which is obeying intraday technicals perfectly suggesting that the only people trading AAPL are the traders and the bots?until somebody begins gaming the technicals). Moreover, you’re failing to recognize that traders don’t sit on all of their money, when in point of fact, some of that money gets put into the local economy and fuels local commerce. Furthermore, to maintain the claim that “one must produce something” to make viable contributions is to marginalize every service related job from dishwashers to bank tellers to waitresses and accountants, to salesmen and tour guides and so forth. Really, you need to think the thesis through.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 28 December 2009 12:28 PM #4

    Eric Landstrom - 28 December 2009 04:10 PM
    firestorm - 28 December 2009 03:58 PM

    This was pretty funny, if rather a rather silly and misleading view of economics.  Each transaction in the chain was just about as valuable as the contributions to the economy by day traders, who produce essentially nothing of value, except for themselves.  Day trading, and much of stock trading in general, reminds me of the old game of musical chairs ...

    Except traders create markets, supply liquidity, and fuel interest. I haven’t heard one person complain about my trading AAPL today (which is obeying intraday technicals perfectly suggesting that the only people trading AAPL are the traders and the bots?until somebody begins gaming the technicals). Moreover, you’re failing to recognize that traders don’t sit on all of their money, when in point of fact, some of that money gets put into the local economy and fuels local commerce. Furthermore, to maintain the claim that “one must produce something” to make viable contributions is to marginalize every service related job from dishwashers to bank tellers to waitresses and accountants, to salesmen and tour guides and so forth. Really, you need to think the thesis through.

    Most day traders lose money, and are a drain on their families’ finances.  With less money, they are less valuable at contributing to their local economies than if they held a productive job.  Somehow our economy limped along before the days of day trading, which is really akin to playing the slots at a casino or buying tickets for the state lottery: yes, someone makes money, but the whole idea is based not upon making a valuable contribution to the world, but on getting rich quick.  You may think that day trading is a noble occupation, but I think it is more akin to parasitism in the biological world: a part of the ecosystem, but not one that we necessarily like or respect.  That is thinking the thesis through ...

         
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    Posted: 28 December 2009 12:33 PM #5

    firestorm - 28 December 2009 03:58 PM


    This was pretty funny, if rather a rather silly and misleading view of economics.  Each transaction in the chain was just about as valuable as the contributions to the economy by day traders, who produce essentially nothing of value, except for themselves.  Day trading, and much of stock trading in general, reminds me of the old game of musical chairs ...


    I try to be rather tolerant but this point of yours makes it clear you have no understanding of the need for the capital markets.  Without the capital markets you have no economy and without a secondary market you have no capital markets.  Without traders you have no secondary market.  By the way I just added you to ignore so no need to respond to my post.  You don’t get it and I don’t care to have a debate with you either.

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    Posted: 28 December 2009 01:19 PM #6

    firestorm - 28 December 2009 04:28 PM
    Eric Landstrom - 28 December 2009 04:10 PM
    firestorm - 28 December 2009 03:58 PM

    This was pretty funny, if rather a rather silly and misleading view of economics.  Each transaction in the chain was just about as valuable as the contributions to the economy by day traders, who produce essentially nothing of value, except for themselves.  Day trading, and much of stock trading in general, reminds me of the old game of musical chairs ...

    Except traders create markets, supply liquidity, and fuel interest. I haven’t heard one person complain about my trading AAPL today (which is obeying intraday technicals perfectly suggesting that the only people trading AAPL are the traders and the bots?until somebody begins gaming the technicals). Moreover, you’re failing to recognize that traders don’t sit on all of their money, when in point of fact, some of that money gets put into the local economy and fuels local commerce. Furthermore, to maintain the claim that “one must produce something” to make viable contributions is to marginalize every service related job from dishwashers to bank tellers to waitresses and accountants, to salesmen and tour guides and so forth. Really, you need to think the thesis through.

    Most day traders lose money, and are a drain on their families’ finances.  With less money, they are less valuable at contributing to their local economies than if they held a productive job.  Somehow our economy limped along before the days of day trading, which is really akin to playing the slots at a casino or buying tickets for the state lottery: yes, someone makes money, but the whole idea is based not upon making a valuable contribution to the world, but on getting rich quick.  You may think that day trading is a noble occupation, but I think it is more akin to parasitism in the biological world: a part of the ecosystem, but not one that we necessarily like or respect.  That is thinking the thesis through ...

    Anybody who manages money on any level for a living is in the risk management business, not the wishing on a star business. For the most part those people who lose money fail to manage their risk properly. The art and science of managing risk is what differentiates long-term successful traders from unsuccessful traders. Contrary to what many people believe, most successful traders grind out a living through an endless succession of tiny little trades rather than larger, huge trades while at the same time offsetting some of the potential profits through the purchase of risk protection.

    The square of opposition states that some doesn’t mean all which is to say that the particular isn’t necessarily universal and yet your thesis maintains that the particular (“most”?80% in point of fact) is universal. Moreover, you’ve built upon your thesis that in order to be an asset to society one must be produce something. The something produced is limited by your as yet undefined assumption of what constitutes viable production. What we do know is that your thesis is remarkably naive about secondary market forces if for the only reason that you overlooked the fact that the money lost by 80% of traders is also distributed and goes on to fuel markets, economies, and employment. This is to say that money lost doesn’t vanish down a hole.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 28 December 2009 01:50 PM #7

    Eric Landstrom - 28 December 2009 05:19 PM
    firestorm - 28 December 2009 04:28 PM
    Eric Landstrom - 28 December 2009 04:10 PM
    firestorm - 28 December 2009 03:58 PM

    This was pretty funny, if rather a rather silly and misleading view of economics.  Each transaction in the chain was just about as valuable as the contributions to the economy by day traders, who produce essentially nothing of value, except for themselves.  Day trading, and much of stock trading in general, reminds me of the old game of musical chairs ...

    Except traders create markets, supply liquidity, and fuel interest. I haven’t heard one person complain about my trading AAPL today (which is obeying intraday technicals perfectly suggesting that the only people trading AAPL are the traders and the bots?until somebody begins gaming the technicals). Moreover, you’re failing to recognize that traders don’t sit on all of their money, when in point of fact, some of that money gets put into the local economy and fuels local commerce. Furthermore, to maintain the claim that “one must produce something” to make viable contributions is to marginalize every service related job from dishwashers to bank tellers to waitresses and accountants, to salesmen and tour guides and so forth. Really, you need to think the thesis through.

    Most day traders lose money, and are a drain on their families’ finances.  With less money, they are less valuable at contributing to their local economies than if they held a productive job.  Somehow our economy limped along before the days of day trading, which is really akin to playing the slots at a casino or buying tickets for the state lottery: yes, someone makes money, but the whole idea is based not upon making a valuable contribution to the world, but on getting rich quick.  You may think that day trading is a noble occupation, but I think it is more akin to parasitism in the biological world: a part of the ecosystem, but not one that we necessarily like or respect.  That is thinking the thesis through ...

    Anybody who manages money on any level for a living is in the risk management business, not the wishing on a star business. For the most part those people who lose money fail to manage their risk properly. The art and science of managing risk is what differentiates long-term successful traders from unsuccessful traders. Contrary to what many people believe, most successful traders grind out a living through an endless succession of tiny little trades rather than larger, huge trades while at the same time offsetting some of the potential profits through the purchase of risk protection.

    The square of opposition states that some doesn’t mean all which is to say that the particular isn’t necessarily universal and yet your thesis maintains that the particular (“most”?80% in point of fact) is universal. Moreover, you’ve built upon your thesis that in order to be an asset to society one must be produce something. The something produced is limited by your as yet undefined assumption of what constitutes viable production. What we do know is that your thesis is remarkably naive about secondary market forces if for the only reason that you overlooked the fact that the money lost by 80% of traders is also distributed and goes on to fuel markets, economies, and employment. This is to say that money lost doesn’t vanish down a hole.

    Of course the money does not disappear down a hole; as I said, “somebody makes money.”  But it will probably be somebody else.  I just do not think that day trading, enabled by computers, adds ANYTHING of value to America, and it certainly stresses the lives of many who participate.  My point is that day trading works for some people, but it does not work for the majority of people, and it essentially adds nothing of value to the economy.  The capital markets existed before day trading and functioned well, with a lot less of the parasitic action of gaming in the market.  When you look at the selling of day trading by companies that provide the technology, it is largely sold as a “get rich quick” scheme.  I prefer the Warren Buffet style of investment:  find a great company and invest in its prospects for the long term.  That investment style is clearly counter to that of the majority of current commenters on this board, but I think it is a better approach for most people and for the American economy as a whole.

         
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    Posted: 28 December 2009 02:19 PM #8

    firestorm - 28 December 2009 05:50 PM

    ... I prefer the Warren Buffet style of investment:  find a great company and invest in its prospects for the long term.  That investment style is clearly counter to that of the majority of current commenters on this board, but I think it is a better approach for most people and for the American economy as a whole.

    Most AFBers are of this type.  The active posters are usually traders.  I’m against trading for a living too.  However, I also agree with Eric that trading create markets, supply liquidity, and fuel interest.  The issue is excessive trading.  I don’t like it when young healthy guys glue to the displays.  I don’t like it when those Wall Street crooks seduce naive guys into trading.

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    Posted: 28 December 2009 02:34 PM #9

    firestorm - 28 December 2009 05:50 PM
    Eric Landstrom - 28 December 2009 05:19 PM
    firestorm - 28 December 2009 04:28 PM
    Eric Landstrom - 28 December 2009 04:10 PM
    firestorm - 28 December 2009 03:58 PM

    This was pretty funny, if rather a rather silly and misleading view of economics.  Each transaction in the chain was just about as valuable as the contributions to the economy by day traders, who produce essentially nothing of value, except for themselves.  Day trading, and much of stock trading in general, reminds me of the old game of musical chairs ...

    Except traders create markets, supply liquidity, and fuel interest. I haven’t heard one person complain about my trading AAPL today (which is obeying intraday technicals perfectly suggesting that the only people trading AAPL are the traders and the bots?until somebody begins gaming the technicals). Moreover, you’re failing to recognize that traders don’t sit on all of their money, when in point of fact, some of that money gets put into the local economy and fuels local commerce. Furthermore, to maintain the claim that “one must produce something” to make viable contributions is to marginalize every service related job from dishwashers to bank tellers to waitresses and accountants, to salesmen and tour guides and so forth. Really, you need to think the thesis through.

    Most day traders lose money, and are a drain on their families’ finances.  With less money, they are less valuable at contributing to their local economies than if they held a productive job.  Somehow our economy limped along before the days of day trading, which is really akin to playing the slots at a casino or buying tickets for the state lottery: yes, someone makes money, but the whole idea is based not upon making a valuable contribution to the world, but on getting rich quick.  You may think that day trading is a noble occupation, but I think it is more akin to parasitism in the biological world: a part of the ecosystem, but not one that we necessarily like or respect.  That is thinking the thesis through ...

    Anybody who manages money on any level for a living is in the risk management business, not the wishing on a star business. For the most part those people who lose money fail to manage their risk properly. The art and science of managing risk is what differentiates long-term successful traders from unsuccessful traders. Contrary to what many people believe, most successful traders grind out a living through an endless succession of tiny little trades rather than larger, huge trades while at the same time offsetting some of the potential profits through the purchase of risk protection.

    The square of opposition states that some doesn’t mean all which is to say that the particular isn’t necessarily universal and yet your thesis maintains that the particular (“most”?80% in point of fact) is universal. Moreover, you’ve built upon your thesis that in order to be an asset to society one must be produce something. The something produced is limited by your as yet undefined assumption of what constitutes viable production. What we do know is that your thesis is remarkably naive about secondary market forces if for the only reason that you overlooked the fact that the money lost by 80% of traders is also distributed and goes on to fuel markets, economies, and employment. This is to say that money lost doesn’t vanish down a hole.

    Of course the money does not disappear down a hole; as I said, “somebody makes money.”  But it will probably be somebody else.  I just do not think that day trading, enabled by computers, adds ANYTHING of value to America, and it certainly stresses the lives of many who participate.  My point is that day trading works for some people, but it does not work for the majority of people, and it essentially adds nothing of value to the economy.  The capital markets existed before day trading and functioned well, with a lot less of the parasitic action of gaming in the market.  When you look at the selling of day trading by companies that provide the technology, it is largely sold as a “get rich quick” scheme.  I prefer the Warren Buffet style of investment:  find a great company and invest in its prospects for the long term.  That investment style is clearly counter to that of the majority of current commenters on this board, but I think it is a better approach for most people and for the American economy as a whole.

    More than any other contributor, computers have aided the average American in wealth generation. With the advent of computers we’ve seen markets move from fractions of a dollar to ten-thousandths of a dollar. We’ve seen commissions to execute trades from hundreds of dollars to less than ten dollars and this alone has greatly reduced the cost of entry for all participants! Because of the lower cost of entry, something like 80% of domestic households participate in the market and this increased participation has allowed the wealth generated by markets to be distributed among more and more people rather than among the affluent alone.

    While I appreciate Ben Graham’s (Warren Buffet is Graham’s best known disciple) methodology of investing on valuation, I also recognize the value of momentum and counter-trend trading where short-term movements can be capitalized upon. Notwithstanding, I offered a YouTube survey on this subject some time ago.

    [ Edited: 28 December 2009 02:38 PM by Eric Landstrom ]

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.