At Dow 16,000 we still are only 13% higher, peak-to-peak, than where we were before the collapse of 2008. A full six-and-a-half years later. Yet the economy, both locally and globally, is in vastly better shape than it was when we took that terrible tumble, down to Dow 6,800 in March 2009.
Americans have cut back on debt, and so have companies.
2013/Q4, 13105115.7, a level last seen in 2006/Q4. “Cut back”? Really? Worse, ex mortgages this is not true at any level; there is $3,733.5 billion in non-mortgage consumer debt outstanding. That is an all-time high; in Q4/2006 (just before the crash, remember?) that stood at $3,047.2 billion or nearly $700 billion less.
An awful lot of that increase since 2007, incidentally, is student loans — exactly where it cannot be for sustainable economic progress since the younger generation has to eventually take the reins from us older folks. This is nothing more than an economic Ponzi scheme with its cheering section led by people like Dennis who refuse to look at and argue from facts.
As for corporate debt it never decreased at all. It now stands at $1.362 trillion, an all-time high. In 2007/Q4, when the bubble started to pop, it was $1.098 trillion or approximately 19% less.
Corporate debt has been refinanced at the lowest rates in 40 years.
True. But since the truth is that corporations do not pay off their debts in aggregate (just as do not governments, when you look at the Fed Z1) a rate of an effective zero will not go lower; it will eventually, at some point, rise.
When it does how do you refinance an ever-growing debt without going bankrupt?
For businesses, the Internet of Things augurs a new wave of productivity increases. Imagine the meter man (alright fine, or meter-woman) no longer having to visit each home to check the electric readings when the gadgets themselves zap their results to the utility’s computers.
How does the former meter reader buy his groceries?
Oh, and before you tell me that deflation is so horrible, would you care to discuss that with Henry Ford’s ghost? He seems to have caused amassive deflation in the price of cars, but by doing so led to a literal explosion in the number of them on the road and the people who could afford to drive them.
If deflation is so bad how come it did so much good in that instance? Should you think this is an isolated incident or not applicable to the common economy as a whole perhaps you’d like to talk about computers, The Internet and the deflation in pricing there as well?
So what’s to worry? This bull is getting old, that’s true, but it’s still a bull, and I’m thinking it still has room to run.
It may. After all it most-certainly did in house prices in 2006 and in Internet stocks in 1999 and the first few months of 2000.
But you don’t make a cogent argument for such a claim when your underlying alleged “facts” are flat-out lies, and determining that you are misrepresenting these facts takes nothing more than a cursory examination of the canonical statement of debt in the economy, that being the Fed’s quarterly Z1 report.
Sunlight is an amazing disinfectant.
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