Friday, November 07, 2008

Paradox of Thrift

  • Disney's 4th-quarter income fell 13%.  Perhaps because $DIS cartoon characters were too busy out there registering to vote.  C'mon, Pluto!  Quit humping Obama's leg and start bringing in some revenues!
  • Nice job by Eddie Royal last night, for those of us with ER on our fantasy teams.  Woo.
  • Jobs data horrible in every way.
  • $MSFT says "no thanks not interested" to $YHOO.  “We made an offer, we made another offer, and it was clear that Yahoo didn’t want to sell the business to us and we moved on,” Ballmer said. “We are not interested in going back and re-looking at an acquisition. I don’t know why they would be either, frankly. They turned us down at $33 a share.”
  • Playboy's Girl Next Door Kendra Wilkinson is engaged to Philadelphia Eagle WR Hank Baskett!  No wonder  he's looked a bit lethargic on the field lately.  Drop him from fantasy line-ups.
  • Jobs data likely to get worse before getting better. 

The employment report adds to the likelihood that the current economic downturn will be the worst in a quarter century. The October unemployment rate of 6.5% already broke through the 6.3% high reached in the aftermath of the 2001 recession. It’s the highest since March 1994, following a downturn that took the jobless rate as high as 7.8%.

...

Today’s jobs report offers more evidence that the economy is in the midst of a downturn that will not only be deeper than the recessions that ended in 1991 and 2001, but may approach, or perhaps surpass, the severity of the long recession that ended in 1982.

That’s a possibility that would put many Americans into unfamiliar territory. Of the 181 million people in the U.S. last year that were 20 to 64 years old – roughly working age – only 42% were 20 or over in 1982. Arguably, a lot of people don’t know how they should respond to a severe downturn, since they’ve never really experienced one.

Maybe that’s not such an entirely bad thing. While individually people might be better off skimping and saving, if everybody becomes miserly the economy enters the realm of what the economist John Maynard Keynes called the paradox of thrift. That would make a bad recession even worse.

  • You know, right now debt is the enemy.  It's our personal enemy.  I know I don't want debt heading into a period where our jobs are threatened.  Back in the early 1980's I remember employers not only letting staff go, but cutting working hours for those who remained.  I recall my dad receiving a 20% pay cut (fridays off) for over a year.  That's where we could be headed.  Get rid of debt however possible.
  • "Paradox of thrift."  And I think that's what happened in Japan in the 1990s, too.
  • Staying the course on investments. I'm feeling down about the economy like everyone else now.  The news is overwhelming.  Last week's rally has been crushed in just two days after the election.  But no time to do anything radical with the stock holdings.  Adding some, moving some around from place to place, etc.  Same as always.