Comments for Robert Samuelson Tells Us We Need a High Stock Market to Rescue the Economy at http://www.cepr.net , comment 1 to 7 out of 7 comments http://www.cepr.net Mon, 20 May 2013 17:38:39 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-tells-us-we-need-a-high-stock-market-to-rescue-the-economy/#comment-994 Keep up the good work. Don't worry about the first time readers who don't understand from where you are coming. But, how do you have the time to be so thorough and first so many times? Congrats!! - Ethan Tue, 15 Jun 2010 05:14:57 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-tells-us-we-need-a-high-stock-market-to-rescue-the-economy/#comment-977 Uh huh. That's for the wealthiest 20% who drive 60% of consumption spending. Consider the context, aggregate macro spending in a deep recession. Samuelson and Zandi are telling us the rich overspend and undersave at 1% in a boom to make it worse, then underspend and oversave at 16% in a bust to make it worse as well. If this were an article to justify trickle down economics by Samuelson and Zandi, they'd be claiming there's no static rich class, there's only different people with temporary gains or losses in income, from which much or little is saved respectfully, in order to maintain more stable levels of consumption over periods of boom and bust. Therefore the numbers on the 20% wealthiest would be presented as a statistical aberration, in the sense that it's all temporary, rather than a result of accumulated market power and concentrated wealth over time by the same privileged individuals. Instead, over time, individually, they're said to behave in the opposite direction than when in a boom or bust, saving much of an income gain, and saving little when income declines. So the 1% and 16% just happen to catch a cross section of whomever was "randomly rich and saving or not" at the time, but even then, the "temporarily rich" aren't trickling down on anyone but themselves as they inflict even more damage on the business cycle, pushing the economy in the wrong direction on both ends. The rich don't "need" a high stock market to rescue the economy by saving less and consuming more. The economy as well as the stock market needs more growth and aggregate demand, despite efforts of the rich to suppress it with absurd measures of austerity that actually send the stock market in the wrong direction in the first place. - izzatzo Mon, 14 Jun 2010 13:24:10 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-tells-us-we-need-a-high-stock-market-to-rescue-the-economy/#comment-974 "There is a well-known stock wealth effect." Translation: the rich get richer. - not_a_capitalist Mon, 14 Jun 2010 09:42:08 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-tells-us-we-need-a-high-stock-market-to-rescue-the-economy/#comment-970 Probably the reason that Mr Samuelson and Mr Baker differ on the savings rate is that Samuelson is only talking about the wealthiest 20 percent of Americans, whereas Dean quotes rates for 100% of Americans. "Samuelson also somehow has the saving rate having increased to 16 percent following the stock market's crash in 2008-2009. This is his invention, it does not show up in the data." versus: "The [b]wealthiest 20 percent[/b] of Americans represent about 60 percent of consumer spending, says Zandi. [b]These[/b] same people are most heavily invested in the market. When the market rises, [b]they[/b] feel wealthier, save less and spend more -- and vice versa. In mid-2007, their savings rate plunged to 1 percent of disposable income; but when the market dropped, savings jumped to 16 percent and spending suffered." - AndrewDover Mon, 14 Jun 2010 08:39:16 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-tells-us-we-need-a-high-stock-market-to-rescue-the-economy/#comment-963 Double, double toil and trouble Fire burn, and cauldron bubble. - Scott ffolliott Mon, 14 Jun 2010 04:25:01 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-tells-us-we-need-a-high-stock-market-to-rescue-the-economy/#comment-962 Samuelson must have read my comment under 'Consumer Spending.." a couple of days ago - he is always quick to push the interests of the Establishment. As Dean says he is off the mark as far as consumer spending is concerned, but the stock market does have a disproportionate effect on confidence in other aspects of the economy, especially those involving speculation. A bubble in the stock market typically increases the attitude that one can get rich quick, or that "everyone is getting rich" and encourages all types of speculation. Samuelson and many other pundits can't tell or don't care about the difference between this and confidence in real productive investment. - skeptonomist Mon, 14 Jun 2010 04:10:44 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-tells-us-we-need-a-high-stock-market-to-rescue-the-economy/#comment-961 To Dr. Baker: One point brought up by Kindleberger in his book "Manics, Panics, and Crashes" is that there is a relationship between investment spending and the stock market valuation of a firm. The higher the value of a firm's stock the cheaper capital is to purchase, Kindleberger finds. Thus, a speculative bubble can help fuel investment. But, as we all know, a stock market gains may cause investment not in plant and equipment but , rather, in speculative ventures. But, this comment by Kindleberger doesn't override your post's point which is the small amount of additional spending caused by a stock market valuation increase. J. Holt - J. Holt Mon, 14 Jun 2010 04:04:16 +0100