What are the potential impacts of public confidence on the economy's recovery?

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In summary, the economy is still at the brink. The president is trying to revive it by restoring confidence in the capital markets, but this is dangerously misguided. The government has been propping up the economy for years and this has had negative consequences. The economy will not recover until the government restructures its economy.
  • #596
Moody's sees big banks' risks of 'outsized losses'
http://finance.yahoo.com/news/moodys-sees-big-banks-risks-040708171.html

. . . .
The banks "have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities," Moody's global banking managing director Greg Bauer said in a statement outlining the rationale for the downgrades.

The behemoth banks are all major players in the global stock and bond markets, which have become extremely volatile. Critics such as former U.S. Federal Reserve Chairman Paul Volcker argue that the stability of the financial system is threatened when banks' profits rely on proprietary trading desks that make high-risk bets on derivatives and other opaque financial instruments. Rich profits can be made from such trades but the losses can also be huge.
. . . .
If the banks simply move money around they are not investing in wealth - they are just moving it around - incurring a cost - that would seem to actually reduce wealth.
 
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  • #597
I heard on the radio this morning that housing prices in my area have started going up, and the number of homes for sale has dropped 25%.

Zillow and Redfin seem to confirm this. Redfin reports that the number of homes for sale has dropped 31.7% over the last year.
 
  • #598
Astronuc said:
Moody's sees big banks' risks of 'outsized losses'
http://finance.yahoo.com/news/moodys-sees-big-banks-risks-040708171.html

If the banks simply move money around they are not investing in wealth - they are just moving it around - incurring a cost - that would seem to actually reduce wealth.

They were talking about the Defazio tax yesterday on the radio again. I pretty much only monitor the value of one of my stocks, and it looks to me like day traders have been playing with it for quite some time. It's been mostly going down over the last 2 years. One of the stock puppets was bragging about how he'd been so brilliant in shorting the stock. I suppose I should be thankful, as buying a thousand shares at $20 each would have been a lot more expensive than the $3 I've ended up paying. But overall, I think its stupid that people who don't really know much about a company should be able to control the price of the stock, simply because they've got billions to play with.

Anyone else sign one of the petitions?

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Equally important, this tax would raise at least an estimated $100 billion per year in federal revenue. Of that, 50% will be used to address the deficit and 50% to pay for rebuilding infrastructure.
http://www.taxfairnessoregon.org/action-emails/financial-speculation-tax/
 
  • #599
US Economy Going From Bad to Worse: Roubini
http://finance.yahoo.com/news/us-economy-going-bad-worse-084304553.html [Broken]

A robust and self-sustaining U.S. recovery is not on the cards, and we should now expect below trend growth for many years to come, according to Nouriel Roubini, the economist famed for his bearish views.

. . . .
Certainly locally, we do not see much of a recovery.
 
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  • #600
Astronuc said:
US Economy Going From Bad to Worse: Roubini
http://finance.yahoo.com/news/us-economy-going-bad-worse-084304553.html [Broken]

Certainly locally, we do not see much of a recovery.

Roubini has always been very bearish, its always the end of the world with him. Not that I am saying he is completely wrong, but at least part of his premise is false. He is also making a guess on what is going to happen, which I am also not saying is wrong, but I'm not sure it is correct either.

The wrong part
The fiscal cliff could knock 4.5 percent off 2013 growth if all tax cuts and transfer payments were allowed to expire and spending cuts where triggered, according to Roubini.

"Of course, the drag will be much smaller, as tax increases and spending cuts will be much milder. But, even if the fiscal cliff turns out to be a mild growth bump - a mere 0.5 percent of GDP - and annual growth at the end of the year is just 1.5 percent, as seems likely, the fiscal drag will suffice to slow the economy to stall speed: a growth rate of barely 1 percent," he wrote.

He is assuming the percent drop is based on this years growth. It is not. It is based on next years projected growth, which from what I have heard is around 4.4%, so worst case scenario is around a 0.1% decrease, which is still bad to very bad considering the times we are in.

Then there is the guess work. Who knows what spending and taxing will be next year? I don't imagine much getting done before the elections, and its anyones guess on how those will turn out. I seriously doubt that all the taxes and spending will expire, although I could be wrong.

In short its too early to tell. Personally I have some hope that July's job numbers will come out strong.
 
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  • #601
A robust and self-sustaining U.S. recovery is not on the cards, and we should now expect below trend growth for many years to come, according to Nouriel Roubini, the economist famed for his bearish views.

Fix, or help the economy, by increasing taxes on everyone. Otherwise, I agree with Nouriel.
 
  • #602
JonDE said:
...

He is assuming the percent drop is based on this years growth. It is not. It is based on next years projected growth, which from what I have heard is around 4.4%, ...
Where does that figure come from? I've seen nothing anywhere close to 4% for 2013. CBO calls for 1.1% real growth next year, for whatever forecasts are worth.

The Economic Outlook
In part because of the dampening effect of the higher tax rates and curbs on spending scheduled to occur this year and next, CBO expects that the economy will continue to recover slowly, with real GDP growing by 2.0 percent this year and 1.1 percent next year (as measured by the change from the fourth quarter of the previous calendar year).
http://www.cbo.gov/publication/42905
 
  • #603
phoenix:\\ said:
Fix, or help the economy, by increasing taxes on everyone. Otherwise, I agree with Nouriel.
How does raising taxes on everyone help the economy?
 
  • #604
mheslep said:
Where does that figure come from? I've seen nothing anywhere close to 4% for 2013. CBO calls for 1.1% real growth next year, for whatever forecasts are worth.


http://www.cbo.gov/publication/42905

Actually I am not sure where I read that, I even looked and can't find much, although the only thing I am really finding is Obama's prediction and the CBO's and normally I don't take either of their predictions to heart.

Yet it is easy to see the difference between the CBO and Roubini. The CBO was estimating if all tax provisions expired and all tax cuts implimented, that growth would be 1% next year. Roubini is saying it starts at 1.5% and if everything is allowed to expire it would drop by 4.5%, yeilding a -3% growth rate.

If you use a little reverse engineering (and guesswork), if we keep the 4.5% as the drag on the economy and add that back into the 1% prediction, you would get a 5.5% growth rate for the CBO estimate if nothing is allowed to expire (although I think most people would agree, that number is unlikely, so more likely the 4.5% drag number is exaggerated)

Still, no one knows what next years taxes are going to look like. No one knows what cuts are going to be allowed to expire. So any predictions at this point are almost pointless.
 
<h2>1. What is public confidence and how does it affect the economy's recovery?</h2><p>Public confidence refers to the level of trust and optimism that individuals and businesses have in the economy. It is a key factor in determining consumer spending and business investments, both of which are crucial for economic growth. When public confidence is high, people are more likely to spend and invest, leading to a stronger economy. On the other hand, low public confidence can result in decreased spending and investments, which can hinder economic recovery.</p><h2>2. How does public confidence impact consumer behavior?</h2><p>Public confidence plays a significant role in shaping consumer behavior. When people have confidence in the economy, they are more likely to make purchases and spend money. This can lead to increased demand for goods and services, which can stimulate economic growth. However, when public confidence is low, consumers tend to be more cautious with their spending, which can slow down economic recovery.</p><h2>3. What are the potential consequences of low public confidence on the economy's recovery?</h2><p>Low public confidence can have several negative impacts on the economy's recovery. It can lead to decreased consumer spending, which can result in a decrease in demand for goods and services. This, in turn, can lead to a decline in production and job losses. Low public confidence can also discourage businesses from investing and expanding, which can further hinder economic growth.</p><h2>4. How can the government and policymakers influence public confidence?</h2><p>The government and policymakers can influence public confidence through various measures. They can implement policies that promote economic stability and growth, such as fiscal and monetary policies. They can also communicate effectively with the public, providing updates on the state of the economy and measures being taken to support economic recovery. Additionally, promoting transparency and addressing any concerns or uncertainties can help boost public confidence.</p><h2>5. Are there any long-term effects of low public confidence on the economy?</h2><p>Yes, low public confidence can have long-term effects on the economy. It can lead to a decrease in consumer and business spending, which can result in a decrease in production and economic growth. This can create a cycle of slow economic growth, as businesses may be hesitant to invest and expand in an uncertain economic environment. Additionally, low public confidence can also lead to a decrease in foreign investments and a negative impact on international trade, further hindering the economy's recovery.</p>

1. What is public confidence and how does it affect the economy's recovery?

Public confidence refers to the level of trust and optimism that individuals and businesses have in the economy. It is a key factor in determining consumer spending and business investments, both of which are crucial for economic growth. When public confidence is high, people are more likely to spend and invest, leading to a stronger economy. On the other hand, low public confidence can result in decreased spending and investments, which can hinder economic recovery.

2. How does public confidence impact consumer behavior?

Public confidence plays a significant role in shaping consumer behavior. When people have confidence in the economy, they are more likely to make purchases and spend money. This can lead to increased demand for goods and services, which can stimulate economic growth. However, when public confidence is low, consumers tend to be more cautious with their spending, which can slow down economic recovery.

3. What are the potential consequences of low public confidence on the economy's recovery?

Low public confidence can have several negative impacts on the economy's recovery. It can lead to decreased consumer spending, which can result in a decrease in demand for goods and services. This, in turn, can lead to a decline in production and job losses. Low public confidence can also discourage businesses from investing and expanding, which can further hinder economic growth.

4. How can the government and policymakers influence public confidence?

The government and policymakers can influence public confidence through various measures. They can implement policies that promote economic stability and growth, such as fiscal and monetary policies. They can also communicate effectively with the public, providing updates on the state of the economy and measures being taken to support economic recovery. Additionally, promoting transparency and addressing any concerns or uncertainties can help boost public confidence.

5. Are there any long-term effects of low public confidence on the economy?

Yes, low public confidence can have long-term effects on the economy. It can lead to a decrease in consumer and business spending, which can result in a decrease in production and economic growth. This can create a cycle of slow economic growth, as businesses may be hesitant to invest and expand in an uncertain economic environment. Additionally, low public confidence can also lead to a decrease in foreign investments and a negative impact on international trade, further hindering the economy's recovery.

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