the economy.. a history lesson

[storm1977 0]

Defending the Bush Deficits
It’s not hard to do if you look at the data.

By Aman Verjee

"Since President Bush took office in 2000, the economy has gone through at least three major shocks that were not of his making: a major terrorist attack that damped consumer confidence; the depression in business spending that followed the bursting of the stock market bubble; and a series of accounting scandals that afflicted some of the largest and most visible corporations in the United States.

Yet, the U.S. economy has outperformed that of every other G7 country since 2001. Today, the unemployment rate is at 5.4 percent, where it was in 1996 when Bill Clinton was re-elected. Clinton proclaimed in his State of the Union speech that year that the “economy is the healthiest it has been in three decades.” In the last three quarters, since the 2003 tax cuts were enacted, the U.S. economy has been growing at a 5.4 percent annualized pace, which is the fastest clip we’ve experienced since 1984.

This remarkable record on the economy owes much to the pro-growth policies of the Bush administration. By reducing the tax code’s inherent penalties on work, saving, investment, and entrepreneurship, the administration has kept us out of a prolonged recession. Yet, critics of President Bush’s fiscal policies have argued that today’s record federal deficit, which will reach $445 billion in 2004, will cause long-term economic growth to flounder by pushing interest rates higher.

Like Chicken Little, who caviled because she mistook a tumbling acorn for a crashing sky, President Bush’s critics are unjustified when they foretell of an impending economic doom. Alarmists who worry about the historical heights to which deficits have climbed need to review the historical data for some context.

At the end of 2001, the federal debt held by the public of the United States stood at 33 percent of U.S. gross domestic product. That was the lowest it had been in 18 years. At the end of 2003, federal debt stood at 36 percent of GDP. It is currently projected by the Congressional Budget Office to reach 40 percent of GDP by 2005 before it begins to decline again.
By historical and international standards, these levels of debt are very modest. For instance, the debt burdens of Germany and France are over 60 percent of GDP; in Japan, debt is almost 150 percent of GDP. In the United States, there have been 24 years since 1939 when the federal debt was below 36 percent of GDP. In 41 years, the debt has been higher. The president’s critics might suggest that economic growth should have been better in the low-debt years than in the high-debt years, but in fact, real GDP growth averaged 4.44 percent in the high-debt years and just 3.14 percent in the low-debt years.

To some extent, this divergence in growth rates can be tied to whether or not the country was at war. During war years, debt piled up quickly and economic growth was relatively robust. But the story is the same over a more restricted time horizon.

Indeed, we can look only at the years since 1963, which is when the debt fell to present-day levels for the first time since WWII. Since then, public debt fell to a low of 24 percent in 1974, rose to a high of 50 percent in 1993, and fell back to 33 percent in 2001. Economic growth during this period was higher in the relatively high-debt years, averaging 3.47 percent versus 2.59 percent. Unemployment was also lower in the high-debt years, averaging 5.65 percent as opposed to 6.43 percent in the low-debt years. And consumer price inflation was almost three-times higher in the low-debt years than in the high-debt years — 7.6 percent to 3.0 percent.

Looking back at American history, it is apparent that economic prosperity can continue even if the federal government maintains a debt burden that is much higher than it is today as a percentage of GDP.

Moreover, large budget deficits have never been a cause of — nor have they even been correlated with — the high interest rates or slow economic growth that deficit hawks predict. For instance, in the late 1940s and 1950s, the Truman and Eisenhower administrations practiced fiscal restraint, keeping taxes high (the top rate was over 90 percent) and paying down the federal debt. The result: four recessions between 1948 and 1961. Contrary to the expectations set by President Bush’s critics, real interest rates actually rose slightly during this period of fiscal restraint; the real, inflation-adjusted 10-year government bond yield edged up from 170 basis points in 1953 (when the 10-year was first issued) to 280 basis points in 1961.

In the 1960s, the federal government ran modest deficits while cutting taxes. In the 1980s, the federal government ran much larger deficits, while cutting taxes sharply and increasing spending. In both periods, economic growth was robust. In the 1960s, interest rates fell slightly; throughout the 1980s, they dropped dramatically, which is exactly the opposite of what the deficit Chicken Littles would predict.

The lesson is clear: Economic prosperity can continue even if the federal government never balances its budget. The greater threats to prosperity are high levels of taxation and regulatory barriers to growth. President Bush deserves our gratitude for having steered a fiscal course that has kept the economy on track."

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Sometimes it is more important to protect LIFE than Liberty

[PhillyKev 0]

That whole thing is flawed for one basic reason.

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In the 1960s, the federal government ran modest deficits while cutting taxes. In the 1980s, the federal government ran much larger deficits, while cutting taxes sharply and increasing spending. In both periods, economic growth was robust. In the 1960s, interest rates fell slightly; throughout the 1980s, they dropped dramatically, which is exactly the opposite of what the deficit Chicken Littles would predict.

They're right, interest rates fell. And THAT is the reason those economic plans worked. Right now the rate is 1.75%. There's nowhere for it to go but up. Without falling interest rates, supply side economics don't work.

[storm1977 0]

What do you mean???? If you look at the Intrest rates of the period between 2000 and say 2010. What do you think they will have done over that stretch of time?

I will guess they will be down. Even if the rates climb slightly, during that 10 year period rates will have fallen.

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Sometimes it is more important to protect LIFE than Liberty

[JohnRich 4]

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Defending the Bush Deficits
It’s not hard to do if you look at the data.

Hmmm. That's odd. I haven't heard any of this information on CBS News...

[PhillyKev 0]

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What do you mean???? If you look at the Intrest rates of the period between 2000 and say 2010. What do you think they will have done over that stretch of time?

I will guess they will be down. Even if the rates climb slightly, during that 10 year period rates will have fallen.

That's ludicrous. First of all Bush took office in 2001 and his supply side economic policies didn't go into effect until 2002. The rate was at 1.73% at the beginning of '02.'

How are they going to drop from that? Greenspan has already stated a short term target of 3.5%.

Oh, and in 82, when Reagan's policies started to take effect rates were over 14%. Slightly below the all time high.

[kallend 2,174]

Well, John Wayne Gacy, Charles Manson and Jeff Dahmer found someone to defend them too.

If Alan Greenspan had written the article it would have some credibility.

PS you do know that Greenspan's last report said that the deficit was harming the economy, don't you?

Here's a link to dozens of "Greenspan on the deficit" articles:

www.google.com/search?sourceid=navclient&ie=UTF-8&q=greenspan+deficit+economy

On the whole I find Greenspan to be more credible than your source.

...

The only sure way to survive a canopy collision is not to have one.

[rushmc 23]

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That whole thing is flawed for one basic reason.

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In the 1960s, the federal government ran modest deficits while cutting taxes. In the 1980s, the federal government ran much larger deficits, while cutting taxes sharply and increasing spending. In both periods, economic growth was robust. In the 1960s, interest rates fell slightly; throughout the 1980s, they dropped dramatically, which is exactly the opposite of what the deficit Chicken Littles would predict.

They're right, interest rates fell. And THAT is the reason those economic plans worked. Right now the rate is 1.75%. There's nowhere for it to go but up. Without falling interest rates, supply side economics don't work.

Wrong!

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[rushmc 23]

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What do you mean???? If you look at the Intrest rates of the period between 2000 and say 2010. What do you think they will have done over that stretch of time?

I will guess they will be down. Even if the rates climb slightly, during that 10 year period rates will have fallen.

That's ludicrous. First of all Bush took office in 2001 and his supply side economic policies didn't go into effect until 2002. The rate was at 1.73% at the beginning of '02.'

How are they going to drop from that? Greenspan has already stated a short term target of 3.5%.

Oh, and in 82, when Reagan's policies started to take effect rates were over 14%. Slightly below the all time high.

OK? so you are saying that we should elect Kerry so he can raise taxes, collapse the economy and raise the interest rates so we can elect a conservative later and fix the mess Kerry will get us into?
Wow

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[PhillyKev 0]

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Wrong!

Really? That's convincing. If you have some knowledge about supply side economics please share it and educate us. You see I was under the impression that it depended on the concept of the supply side (businesses, manufacturers, etc.) producing more so that costs fall and consumer purchase more. I was also under the impression that the vast majority of businesses operate on credit which they pay interest and when they produce more they borrow more. I was also under the impression that the vast majority of businesses try to reduce debt when interest rates are rising thereby negating any positive effect of incentives for them to produce more.

Please explain where I'm wrong.

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OK? so you are saying that we should elect Kerry so he can raise taxes, collapse the economy and raise the interest rates so we can elect a conservative later and fix the mess Kerry will get us into?
Wow

No, I'm saying that we should elect Kerry so that he can reduce deficit spending, which will bolster the economy and slow interest rates from rising because the path we're on is leading toward an economic meltdown in the future.

Economics is cyclical. It can't constantly expand. Everyone thought the rules changed in the 90's and got burned. When interest rates are low and on the rise, you need to implement demand side policies. When interest rates are high and the economy is sliding, you go to supply side policies. That's how you prevent massive inflation or deflation both of which can lead to recession.

The path Bush is on will temporarily boost the economy, it has done so moderately so far. But as debt gets extended, and interest rates rise the end result will be a collapse.

[kallend 2,174]

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That whole thing is flawed for one basic reason.

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In the 1960s, the federal government ran modest deficits while cutting taxes. In the 1980s, the federal government ran much larger deficits, while cutting taxes sharply and increasing spending. In both periods, economic growth was robust. In the 1960s, interest rates fell slightly; throughout the 1980s, they dropped dramatically, which is exactly the opposite of what the deficit Chicken Littles would predict.

They're right, interest rates fell. And THAT is the reason those economic plans worked. Right now the rate is 1.75%. There's nowhere for it to go but up. Without falling interest rates, supply side economics don't work.

Wrong!

Cool - you understand the economy better than Alan Greenspan.

I bet you were a teenager quite recently.

...

The only sure way to survive a canopy collision is not to have one.

[rushmc 23]

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Wrong!

Really? That's convincing. If you have some knowledge about supply side economics please share it and educate us. You see I was under the impression that it depended on the concept of the supply side (businesses, manufacturers, etc.) producing more so that costs fall and consumer purchase more. I was also under the impression that the vast majority of businesses operate on credit which they pay interest and when they produce more they borrow more. I was also under the impression that the vast majority of businesses try to reduce debt when interest rates are rising thereby negating any positive effect of incentives for them to produce more.

Please explain where I'm wrong.

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OK? so you are saying that we should elect Kerry so he can raise taxes, collapse the economy and raise the interest rates so we can elect a conservative later and fix the mess Kerry will get us into?
Wow

No, I'm saying that we should elect Kerry so that he can reduce deficit spending, which will bolster the economy and slow interest rates from rising because the path we're on is leading toward an economic meltdown in the future.

Economics is cyclical. It can't constantly expand. Everyone thought the rules changed in the 90's and got burned. When interest rates are low and on the rise, you need to implement demand side policies. When interest rates are high and the economy is sliding, you go to supply side policies. That's how you prevent massive inflation or deflation both of which can lead to recession.

The path Bush is on will temporarily boost the economy, it has done so moderately so far. But as debt gets extended, and interest rates rise the end result will be a collapse.

I don't agree! I do not think deficit has anything to do with it. People keep screaming about the number and yes it is staggering to comprehend however, as a percentage of the GNP it is not as big as it has been. (The deficit spending issue is more political than anything else) Don't get me wrong, I think the government spends way too much but something had to be done after 9/11 to fix the mess in the military and I am not real happy that Bush can't seem to find his veto pen when it comes to spending. But if you think a Kerry administration will cut spending I want some of what you are smoking

History shows us that every time taxes have been lowered the economy expands and grows. When taxes are raised (as Clinton did) the economy slows. Interest rates are a tool to control inflation and I think rates can work to do that but taxes??.... Tax it and it will slow down or go away. Remove taxes and regulation and that activity will grow and expand. On a high level I believe it is as simple as that.

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[Ron 10]

You say the economy is cyclic...then you say

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The path Bush is on will temporarily boost the economy, it has done so moderately so far. But as debt gets extended, and interest rates rise the end result will be a collapse.

So if it is cyclic...then it will happen anyway.

By the way

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The path Bush is on will temporarily boost the economy, it has done so moderately so far.

So his plan IS working huh?

"No free man shall ever be debarred the use of arms." -- Thomas Jefferson, Thomas Jefferson Papers, 334

[storm1977 0]

Yes kallen... I think Greenspan is an idiot who over thinks and is slow to react!!!! It surprises me he still has his job!!!.

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Sometimes it is more important to protect LIFE than Liberty

[PhillyKev 0]

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So if it is cyclic...then it will happen anyway

It is cyclic and you have to modify policy to match those cycles. IF you screw up you get recession. Recession is not an inevitability. It is a probability if you're zigging when you should be zagging.

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So his plan IS working huh?

If his plan is to moderately and temporarily prop up the economy so that people think things are great and vote for him, then yes, his plan is working. Unfortunately, the rest of his plan leads to disaster a few years down the road when both debt and interest rates reach all time highs.

[Ron 10]

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the rest of his plan leads to disaster a few years down the road when both debt and interest rates reach all time highs.

And you base this off of?????

"No free man shall ever be debarred the use of arms." -- Thomas Jefferson, Thomas Jefferson Papers, 334

[kallend 2,174]

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Yes kallen... I think Greenspan is an idiot who over thinks and is slow to react!!!! It surprises me he still has his job!!!.

Appointed by Reagan, reappointed by Bush(41), reappointed by Bush(43). Why would these fine Republicans appoint and reappoint an idiot?

On the whole, I'd give Greenspan more credibility than Aman Verjee who is clearly a Bush apologist.

Still, Greenspan is likely to retire soon, why don't you or rushmc apply for the job?

...

The only sure way to survive a canopy collision is not to have one.

[PhillyKev 0]

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the rest of his plan leads to disaster a few years down the road when both debt and interest rates reach all time highs.

And you base this off of?????

Knowledge of economics and the views shared by Greenspan and the CBO.

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But Greenspan and other economists have warned that, over time, persistent deficits and high government debt will push interest rates higher, hurting economic growth and the nation's living standards.

"If no action is taken at all ... we're going to be confronted within a few years with a marked upward ratcheting of long-term interest rates, which is very debilitating to long-term economic growth," Greenspan said in response to a lawmaker's question.

http://money.cnn.com/2004/02/25/news/economy/greenspan/

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Unless taxation reaches levels that are unprecedented in the United States, current spending policies will probably be financially unsustainable over the next 50 years. An ever-growing burden of federal debt held by the public would have a corrosive and potentially contractionary effect on the economy.

http://www.cbo.gov/showdoc.cfm?index=2517&sequence=0

[Ron 10]

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Knowledge of economics and the views shared by Greenspan and the CBO.

Ah, so you are guessing...an educated guess I will give you, but you talk as if it is fact...

From your own sources.

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But Greenspan and other economists have warned that, over time, persistent deficits and high government debt will push interest rates higher, hurting economic growth and the nation's living standards.

"If no action is taken at all ... we're going to be confronted within a few years with a marked upward ratcheting of long-term interest rates, which is very debilitating to long-term economic growth," Greenspan said in response to a lawmaker's question

Well it ain't over now is it? And you somehow think Kerry has the answers?

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Unless taxation reaches levels that are unprecedented in the United States, current spending policies will probably be financially unsustainable over the next 50 years. An ever-growing burden of federal debt held by the public would have a corrosive and potentially contractionary effect on the economy.

Gee, thats a long time...You think maybe we need a fix for NOW, and a fix for latter?

You see you can't fix later till...well, later.

"No free man shall ever be debarred the use of arms." -- Thomas Jefferson, Thomas Jefferson Papers, 334

[PhillyKev 0]

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Ah, so you are guessing...an educated guess I will give you, but you talk as if it is fact...

Of course. If future economic policy could be positively determined as fact then there would be no need for debate and a whole lot of financial advisors, including my employers would be out of business.

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Well it ain't over now is it? And you somehow think Kerry has the answers?

No, it's not over. And no one has the answers. All anyone can do is make educated guesses. Kerry's guesses seem to be more realistic and in line with the majority of financial experts. Bush's guesses seem to be based on failed policies of the past.

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Gee, thats a long time...You think maybe we need a fix for NOW, and a fix for latter?

No, you don't fix now without an eye on later. If you do, you get those wild cyclical swings I was talking about. There are plenty of things you could do to make the economy hum positively for a short time. But if you do that when conditions are not right, you end up with an even bigger burst when the cycle changes.

The idea is to keep the economy moving moderately in a positive direction over time. Not pop up and down. At least if you want to benefit the average American. If you're wealthy and have lots of money that can be tied up for years and risk possibly losing, you can benefit greatly from those pops up and down.

That tells me a lot about who GWB is trying to help with his economic policies. It isn't the average American.

[Ron 10]

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Of course. If future economic policy could be positively determined as fact then there would be no need for debate and a whole lot of financial advisors, including my employers would be out of business.

So you are guessing....Thanks I thought you had a crystal ball or something.

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No, it's not over. And no one has the answers. All anyone can do is make educated guesses. Kerry's guesses seem to be more realistic and in line with the majority of financial experts. Bush's guesses seem to be based on failed policies of the past.

But they are working for right now right?

Gee last I checked an obect in motion tends to stay in motion...So an economy that is headed down (Like the one old Georgie was handed by Clinton) needs to head up to get moving.....Given the Clinton downtrend,9/11 ect I think "W" is doing pretty good.

Of course you will not agree.

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No, you don't fix now without an eye on later. If you do, you get those wild cyclical swings I was talking about. There are plenty of things you could do to make the economy hum positively for a short time. But if you do that when conditions are not right, you end up with an even bigger burst when the cycle changes.

And how do you know that this is the wrong thing? How do you know that this is not the right course?

You don't.

I personally like the idea of not getting taxed to death by Kerry and his buddies. His 20 year voting record has shown him to one of the biggest tax raisers around. Also his extreme left voting has shown me that all he wants to do is give the money he takes from me away.

Add in the fact that he is willing to basicly give control of the US armed forces to the UN...

That spells "dangerous asshole" to me.

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That tells me a lot about who GWB is trying to help with his economic policies. It isn't the average American.

And Kerry does not want to help the "average" American either. He is not a man of the people with his 26,000 worth of ties and him not even knowing about Wendy's...

Most Average Americans would eat at Wendy's, not throw the food away.

"No free man shall ever be debarred the use of arms." -- Thomas Jefferson, Thomas Jefferson Papers, 334

[PhillyKev 0]

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And Kerry does not want to help the "average" American either. He is not a man of the people with his 26,000 worth of ties and him not even knowing about Wendy's...

Most Average Americans would eat at Wendy's, not throw the food away.

Well, I thought we were actually going to have an intelligent debate regarding our differing views. Then you had to throw in the typical irrelevant bashing.

Bush would be just as rich as Kerry if he didn't keep bankrupting the companies he was in charge of before giving up and running for office. And last I checked, it was possible to understand the needs of people who aren't identical to yourself. That's if you have the ability to empathize, which is a trait I find lacking in the conservative rhetoric.

[Ron 10]

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Well, I thought we were actually going to have an intelligent debate regarding our differing views. Then you had to throw in the typical irrelevant bashing.

How is it irrelevant? You claimed that Bush was not taking care of the Average person?

I counter claimed that Kerry does not either, and he would not know an Average American if they hit him in the head.

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Bush would be just as rich as Kerry if he didn't keep bankrupting the companies he was in charge of before giving up and running for office

Edison took 1,000 tries to make a light bulb...You consider him a failure also?

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That's if you have the ability to empathize, which is a trait I find lacking in the conservative rhetoric.

And I find that the bleading heart left are more than willing to give other peoples money away.

"No free man shall ever be debarred the use of arms." -- Thomas Jefferson, Thomas Jefferson Papers, 334

[rmsmith 1]

Chances are neither of them will make any real change to deal with the babyboomer issue. Try this guy's piece; what if he's only half right?
http://www.thegreatbustahead.com/pi_article_feb2004.pdf

[PhillyKev 0]

It's a sound theory and one that's been around for awhile. But he overhypes a few things. First, the age range of the biggest consumers has been declining. He's basing his theory solely on the population of 45-54 year olds. However, people are buying first homes, new cars, etc at younger and younger ages and people are more aware of the fact that SS won't be enough at retirement. So the big spenders are increasingly in their 30's while those in their 50's are starting to hunker down, save more and prepare for retirement.

He makes another assumption that's off a bit. He implies that a decline in the markets will effect the purchasing power of younger people because they are more heavily involved in the market then they were in the past. The point he overlooks, though, is that the vast majority of that market activity is in the form of retirement savings that will not be relied upon for spending cash until after his projections.

Yes, there will definitely be a decline during those years, but I doubt it will be nearly as catastrophic as he makes it out to be.

There are a couple things that led to the depression that no longer exist. First, 80% of the market was owned by 20% of the people. It was a much smaller and more sophisticated base of already rich investors and corporations. They started manipulating paper value through leveraging and margins. That still goes on today but not even close to the same extent as in the 20's.

The other aspect missing today is agriculture as a leading economic sector. The dust bowl was a huge contributor to the depression. (partisan side note - We could have a similar problem in the future with the service industry which is our biggest sector today being outsourced to other countries, that's why we need to stop it.)

Another major change since the days before the depression is the average person's investment in real estate. Barely anyone owned their home back then. Mortgages we're just coming about, you had to pay cash to buy property back then. The vast majority of homes were rented. Today, home ownership is at an all time high, and people have diversivied investments in real estate through REITs.

All that being said, the number one cause of the depression was because people expected it to happen. They panicked and they sold, and sold, and sold, and sold. No price was too low. Everyone wanted cash and they wanted it now.

History has shown us that the average return of 7-8% on the market even exists through years including the depression if you keep your money in there. Anyone who owned a diversified portfolio before the crash and didn't sell, ended up with that same 7-8% average return a few years after the recovery. Investors know that and are more likely to hold their investments and ride it out. It's only a small portion who actively manipulate their portfolios to maximize profits.

Bottom line is that his is a self fulfilling prophecy. If everyone buys into that theory and trades in their stocks for cash or bonds in anticipation of a crash, they will in fact cause that crash by that action. If people are smart and realistic, have long term investment horizons and keep their portfolios diversified, You'll end up with the same 7-8% yearly return overall even after any market declines.

[storm1977 0]

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It's a sound theory and one that's been around for awhile. But he overhypes a few things. First, the age range of the biggest consumers has been declining. He's basing his theory solely on the population of 45-54 year olds. However, people are buying first homes, new cars, etc at younger and younger ages and people are more aware of the fact that SS won't be enough at retirement. So the big spenders are increasingly in their 30's while those in their 50's are starting to hunker down, save more and prepare for retirement.

He makes another assumption that's off a bit. He implies that a decline in the markets will effect the purchasing power of younger people because they are more heavily involved in the market then they were in the past. The point he overlooks, though, is that the vast majority of that market activity is in the form of retirement savings that will not be relied upon for spending cash until after his projections.

Yes, there will definitely be a decline during those years, but I doubt it will be nearly as catastrophic as he makes it out to be.

There are a couple things that led to the depression that no longer exist. First, 80% of the market was owned by 20% of the people. It was a much smaller and more sophisticated base of already rich investors and corporations. They started manipulating paper value through leveraging and margins. That still goes on today but not even close to the same extent as in the 20's.

The other aspect missing today is agriculture as a leading economic sector. The dust bowl was a huge contributor to the depression. (partisan side note - We could have a similar problem in the future with the service industry which is our biggest sector today being outsourced to other countries, that's why we need to stop it.)

Another major change since the days before the depression is the average person's investment in real estate. Barely anyone owned their home back then. Mortgages we're just coming about, you had to pay cash to buy property back then. The vast majority of homes were rented. Today, home ownership is at an all time high, and people have diversivied investments in real estate through REITs.

All that being said, the number one cause of the depression was because people expected it to happen. They panicked and they sold, and sold, and sold, and sold. No price was too low. Everyone wanted cash and they wanted it now.

History has shown us that the average return of 7-8% on the market even exists through years including the depression if you keep your money in there. Anyone who owned a diversified portfolio before the crash and didn't sell, ended up with that same 7-8% average return a few years after the recovery. Investors know that and are more likely to hold their investments and ride it out. It's only a small portion who actively manipulate their portfolios to maximize profits.

Bottom line is that his is a self fulfilling prophecy. If everyone buys into that theory and trades in their stocks for cash or bonds in anticipation of a crash, they will in fact cause that crash by that action. If people are smart and realistic, have long term investment horizons and keep their portfolios diversified, You'll end up with the same 7-8% yearly return overall even after any market declines.

Philly, I think what your say is true and well thought out, but don't you see it as a problem that there are more "Common people" investing in the market now? People who don't research and don't really know what they are doing. I think that can be very detrimental to the market. If there were another "bubble" in some sector, can't you see a lot of the "Common" people pulling out so they don't take another big hit like they did in the late 90's.

I know a great deal of people who were in their 50's and 60's who lost 60% of there money for retirement in the late 90's. Meanwhile, many economists were saying it was going to burst sooner or later. Based on that experience couldn't you see the private secor pulling out of the market if the shit starts to hit the fan again?

I for one would not, because I am young and I have the time to ride out the storm. But the babyboomers do not!!!!

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Sometimes it is more important to protect LIFE than Liberty