Businesses might even be able to overcome the drag of Obamacare. We're already seeing market improvements. Anyhow, read the article @ http://dailysignal.com/2014/11/08/republican-congress-good-financial-markets/
Now I just need a kind person to come along and explain to me the link between the stock market and the real economy in performance terms.,
Republicans are good for the stock market because they reduce regulation which increases corporate profits and results in increasing stock prices. This is the thrust behind the Republican drive to reform the corporate tax structure. The problem with this is that just increasing corporate profits doesn't translate into the corporations creating more jobs in America so the main beneficiary is the class of Americans who own stocks which is primarily the upper ten percent. Corporations are already sitting on record amounts of cash which is not being invested to create jobs in America. Republicans will pretend that this is not being invested due to uncertainty about future regulation or the costs of Obamacare but the real reason is that net worth of the lower 90% of Americans is stagnant to down and consumer demand is on a long term downward trend. No demand, no need to produce more goods, no jobs created.
Here is an article that might help: http://www.nytimes.com/2012/12/16/y...d-the-stock-market-a-big-disconnect.html?_r=0
Economics is not my strong suit, but the idea, I think, is that reduced tax and regulation will improve profit MARGINS. Presumably, across-the-board profit margin improvements allow extra room for competition to drive down prices, which in turn drives up demand, which in turn forces business to hire to meet demand. Here, you only address step one of that process: "Less regulation = more profit. More profit = bigger yacht!" That would only be completely true in a monopolistic situation.
I think we need a list of what the corporations are making here that would add more to their workforce to supply a higher demand caused by lowering prices, that was driven by reducing taxes and regulations. We still make cars here. What else, which americans might buy more of if the prices dropped? What? For if that product is made in china, which most consumer goods are, dropping prices on those products, those goods, will not hire an American, except if walmart needs a new cashier or two. Adding such a job, that pays so little as for the worker to draw welfare isn't going to help this economy. Yet we act like we have our old economic model, which made what we consumed, employing amrericans. Using those old tools like reducing taxes on the top boys, to create jobs here is ludicrous, sheer nonsense. All that it will do is to drive up debt even more. The only thing that will help fix the jobless problem, is for us to start making what we consume, again, in a way as we used to. This means lower profits for business, for we are not poor communist workers. And since corporations moved for more profits through lower labor rates in china, what can reverse this? We need to reverse it, not enable it going into the future. For if a consumption based economy doesn't need its own people, this it just is not tenable as a model for a nation over the long haul.
Keynesian vs Supply Side Economics. Keynesian once again proves it doesn't work, Supply Side to the rescue again.
so buy some stocks. many of them are VERY cheap and you can make a ton of money with them. since you are so "hep" about what the market is about.
Many thanks - I'm watching the clock to make sure I'm on time for work and only had a quick scan of the article so I will need to read it more carefully a bit later. But thank you for taking the trouble to link.
Hotdogr says economics is not a strong suit. Jeez for me it's not even a strong pair of pants, let alone the whole suit! I have to rely on others to inform me.
I sort of understand the rationale - a business sells shares/stock in order to have the capital to build it business or to develop it further. When the business profits then the shareholders/stockholders get money. I know I've simplified it but that process makes sense to me. But I'm at a loss to know about the linkage. I suppose if the price of shares/stock in a company goes up then it means it's doing well and people want to get in on the action, which is quite rational. But for me I have to ask what drives the successful business. I mean for the price to go up surely it means the company is doing well. So what makes it do well? It seems to me with my limited knowledge that we can see a correlation between performance and price but no causation. Anyway, I'll read on (still watching that evil clock) and see what I can make of it. - - - Updated - - - How does it work though?
First you will have to furnish any evidence that improving profit margin will increase competition. If that were true higher profit margin industries would be more competitive. You will have a very hard time finding any data to support that theory. And reduced regulation can have the opposite effect which is increasing monopolies and reducing competition. If you want to have some economic fun look into why breaking up Ma Bell didn't actually result in lower consumer costs.
I did not posit that improving profit margins would "increase" competition. In a healthy market, competition already exists. Presumably, if margins increase equally for all competitors, as would be the case with a tax cut for instance, eventually market pressures would drive those margins back down in the form of falling prices. Breaking up Ma Bell didn't create competition. After it happened, I still had exactly 1 choice for telephone service at my house. If I'd have had 10 choices, then prices would have fallen.
read the INVESTOR'S BIZ DAILY, a newspaper published by William Oneal. His book, HOW TO MAKE MONEY IN STOCKS, is very explanatory and helpful and he updates it every few years.
When has the Stock Market ever been as high as it is right now? 55 months of job growth. Republicans taking credit for that,too? Deficit cut in half while paying off two wars? Ask me 2 years from now.I will give you an answer. Right now I do not give Republicans credit for much. No is not solving any problems. That hiring sign is funny if you are thinking Republicans built that. They just won Tuesday and will not take office until January!
I think I understand it now. Correlation, not causation. It's like where you can bet on football, down on the field the players are causing the ball to move around but off-field the followers are moving money around based on their prediction of the result. Correlation, not causation - well I think it is anyway.
The Stock Market started climbing back up in early 2009.....and kept climbing, even before the GOP House came into session in January 2011.
