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GDP, M&A, EBITDA, P/E, NASDAQ, Econo-thread Part 13

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  • #76
    "I just jump when I see this type of flaw: A and B have not proven X>Y."

    Well you claimed superior investment opportunities, did you not ?

    "What is the ILO standard and how is it different from whereever I got that 10% figure."

    10 % is the german standard, ILO is what the US or eurostat use. It's just comparable. National standards like germany's or the UK insured unemployment rate are based on completely different standards.

    "Regarding lack of correlation, we would need to look at a lot fo confounding factors and over a time range as well."

    Well primarily an understanding of legal regimes is required. The OECD for example did a study on obstacles to firing, and labelled an ex ante control of layoffs as a huuuge rigidity. Total bollcoks - can be horrible, can be the best thing that can happen to an employer....

    "I love the US, no doubt."

    Strange idea.

    ""de facto garuanteed" will need to be nailed down if there is a default. (What is "GSE"?)"

    Government sponsored enterprises. Fannie and Freddie will be bailed out if something goes wrong. They're just too big.

    "Yes, the recycling is an interesting question. Do you have any feel for this? In other words, do temporary imbalences exist only for short amounts of time? Or is it possible for these to stay around for a long time?"

    Imbalances of this scale aren't very lasting. The problem with the recycling game is that it includes many intermediaries. I wonder how much hedging and manufacturing of A rated securities is involved in this....

    "Rubin's pals at GS did well the last few years, no?"

    With the treasury and fed as your *****.....

    "Anyway, it's not Bush's tax cuts that are driving the deficit, its the bomb that Cats left."

    For now. Bush's tax cuts will really hit in the 2nd half of the decade.
    “Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324)

    Comment

    • #77
      Originally posted by HershOstropoler
      "I just jump when I see this type of flaw: A and B have not proven X>Y."

      Well you claimed superior investment opportunities, did you not ?
      I was making a specific point to Colon about "proof".

      Comment

      • #78
        Ad deficits: Bush's tax cuts and the spendingtrousers congress. If you remember, in 2000 I said the usual post-bubble budget deficit swing is about 8-10 % of GDP. We're at 5 % at the fed level now, add the states. I can't see any turnaround in US public finances.

        The FY '02 deficit was $157 billion at the Federal Level. The peak surplus (FY '00) was $232 billion. IOW, a 4% swing, not 5%.

        Congressional Budget Office
        http://www.cbo.gov/showdoc.cfm?index=3858&sequence=0

        Congressional Budget Office
        http://www.cbo.gov/showdoc.cfm?index=2552&sequence=0


        If you want to dicker about calendar year versus fiscal year, it is true that you might add .6% or so to the swing, I guess. But that should make itself up this calendar year.

        On a calendar year basis, the IMF puts the swing at the federal level at 4.1 % through '02. A total of 4.3 % counting '03 as the trough. As discussed previously, most states have to close their deficits, which as I understand for '03 is about $60 billion. Don't know how much state/local deficit will flow through to the bottom line. Perhaps ef can tighten up these numbers.

        As to how much of the swing is due to tax cuts, it is said in the press to be about 1/3, although I haven't had occassion to to do the math myself. The White House says about 30% of it is due to tax cuts in FY '02, 40% in FY '03.

        Another thing to consider is that much of the increase in '02 and '03 spending is for non-discretionary items. Increased medicaid and medicare costs, for instance. The spending habits of this congress has little impact on these amounts. Rather, it's more of an agreement to go with the policy status quo. Discretionary items, such as kicking OBL's and Saddam's butt, account for only about 7% of GDP.

        Anyway, we are taking the magnitude of this swing out of context when we only compare it to GDP and seek to make some comparisons among nations. It seems to me that the swing in value of long-term assets and liabilities of the government dwarfs these figures.

        Long story short, I think you're barking up the wrong tree. A swing of 2 or 3 % attributable to economic conditions is pretty miniscule IMO.
        Last edited by DanS; January 20, 2003, 17:41.
        I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

        Comment

        • #79
          Some more context in this argument. Considering Bush's further tax cuts (which are by no means assured), FY '03 would have a deficit of about $200 billion and '04 a deficit of about $300 billion. This does not include the war costs.

          Yahoo News: Latest and Breaking News, Headlines, Live Updates, and More
          http://story.news.yahoo.com/news?tmpl=story2&cid=68&ncid=68&e=20&u=/nyt/20030116/ts_nyt/bush_aide_sees_deficit_in_2003_of__200_billion
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          Again, as a fiscal conservative, any deficit is at best a necessary evil. But a 3% of GDP federal deficit at trough is no big deal. And the label "evergrowing" is inaccurate--typical Hershell overheating when discussing the US.
          Last edited by DanS; January 20, 2003, 17:18.
          I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

          Comment

          • #80
            "The FY '02 deficit was $157 billion at the Federal Level. The peak surplus (FY '00) was $232 billion. IOW, a 4% swing, not 5%."

            2003 will be 200-250 billion $ under current estimates. That's roughly 5 %.

            "But a 3% of GDP federal deficit at trough is no big deal."

            What trough ?

            "And the label "evergrowing" is inaccurate--typical Hershell overheating when discussing the US."

            From 2000 on we have growing deficits and evergrowing budget deficit forecasts, now out to 2004. And as I added, I can't see a breaking of that trend.
            “Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324)

            Comment

            • #81
              Originally posted by HershOstropoler


              From 2000 on we have growing deficits and evergrowing budget deficit forecasts, now out to 2004. And as I added, I can't see a breaking of that trend.
              If the economy gets healthier will that be enough to swing the deficit into surplus?

              Comment

              • #82
                I think it would take some hefty growth to swing the budget into surplus.
                “Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324)

                Comment

                • #83
                  Originally posted by HershOstropoler
                  I think it would take some hefty growth to swing the budget into surplus.
                  How much? About half the difference between 1999 and today right?

                  Comment

                  • #84
                    That's just guesstimating. Tax cuts, defense spending, prescription drugs plans, "homeland security", pork, subsidies....

                    If I had to say a number, I'd guesstimate north of 4 % over maybe 5 years.
                    “Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324)

                    Comment

                    • #85
                      Hershell's just pulling numbers out of his ass.
                      I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                      Comment

                      • #86
                        Sorry, I got overwhelmed by my economist side.
                        “Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324)

                        Comment

                        • #87
                          Couple good articles in the Journal today:

                          One was on a company in Canada that stopped making 7.8cm Mason jars (for home-canning). All the pioneer wives in Asher-land are up in arms. They say that they have jars from their grandmothers. It's part of their heritage. The jars last forever, but they need replacement lids each time.

                          The comment from one of the company shills was really funny: "You know I have a lot of old stuff from my grandmother that I can't get replacement parts for either..."
                          Last edited by TCO; January 21, 2003, 13:05.

                          Comment

                          • #88
                            Another good one was extolling the virtues of bankrunptcy law and saying that it is fine if the company reorganizes and stays as a going concern. If that delivers more money to creditors than a liquidation. Also, that it is just the creditors comeing to grips with their situation. Taking their haircut. And that bankruptcy risk is incorporated in the interest rate charged...and who ever said loanding moeny was riskless.

                            Comment

                            • #89
                              "Another good one was extolling the virtues of bankrunptcy law and saying that it is fine if the company reorganizes and stays as a going concern."

                              In which context ?
                              “Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324)

                              Comment

                              • #90
                                Originally posted by HershOstropoler
                                "Another good one was extolling the virtues of bankrunptcy law and saying that it is fine if the company reorganizes and stays as a going concern."

                                In which context ?
                                Hmmm...was an opinion piece. I think the main context was against people who say, "look the company still exists after bankruptcy, something must be wrong." The author is just making the simple point that if keeping a going concern with the brand around and all is a better solution for debt-holder than a liquidation (i.e. they get 40 cents of value versus 30 cents of cash) than that is fine. Umm...other context was the FAO Schwartz bankruptcy. And author's general comment that it is better to let bankruptcies proceed than to do bailouts. He doesn't want Ford to be bailed out. And it may be next down the tubes.

                                But taking this guys point forward, it would not surprise me to see Ford continue to exist as a brand and as a going concern. Just with the bankers taking their haircut. Yes...I think this is good.

                                Comment

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