economic boom in 2003

[6thGen]

When supporting your arguments, you'd be wise to quote someone who knows more than you do. Anecdotes are great when you are writing restaurant reviews, not so great when trying to discuss something you clearly do not understand. Just find me one credible expert that says that home equity lines of credit had a greater effect on the economy than lower marginal tax rates.

 

[Bob]

You have to be kidding me. Show me the inverse of this. And are you saying that tax cuts did not affect the economy?

The latest run is from '06 onward. Money is flowing from real estate to the market. I was not commenting on our economy, which is heading for recession.

 

[2bfabian]

I can not do that,but it can be my present theory. It is my understanding that no one can sit down and tell you what causes a boom other wise we would continue the process never looking back at economic depressed times. This is just a thesis that I am proposing which on the surface many may disagree with,But would you not conclude that when capital gains tax cuts came out in early 2003 there was a flood of people going and taking out (heloc)s on there homes and by doing so trying to follow that supply side approach which is now causing the economy to suffer because many were not educated to the fact that real estate does not always continue to go up,to the contrary it is probably one of the worst investments one could make.

 

[Smiling JOe]

The latest run is from '06 onward. Money is flowing from real estate to to the market. I was not commenting on our economy, which is heading for recession.

As Bob is saying, if you look at the growth in the DOW from Oct 2005, about the recent peak of the Real Estate Market, to current day, you will see that there is much truth in what Bob is saying here. Sure the tax cuts spurred the growth of the Dow in 2003, for a period of about 8 months, then it leveled off for a year and a half when the real estate market was kicking strongly. As the Real Estate market slowed, more money was pumped into the Dow.

 

[6thGen]

Sure, capital was moving sectors. That happens all the time and I'm not disputing that. What I am disputing is that the overall health of the DOW is due to the slowdown in RE. The Dow increased nearly 25% from 4/03-4/04. What was RE doing then?

 

[2bfabian]

So are you saying in order for real estate to do well the Dow must do bad? I have heard this but dissmissed it.

 

[Smiling JOe]

... because many were not educated to the fact that real estate does not always continue to go up,to the contrary it is probably one of the worst investments one could make.

That is a stretch of a statement. Nothing always goes up, including the stock market, even though an average growth over time, may show an upward growth. Short term investing is erratic and dynamic, thereby having risks. Real estate can be a great investment, just depends on when you buy and sell and the prices at the time. I guess the condo you bought for $90K which you are trying to sell for ... I cannot remember the price, but well over $300K (right?), was a terrible investment. Of course you will not know that for sure until you have the cash in the bank from the sale.

 

[6thGen]

I can not do that,but it can be my present theory. It is my understanding that no one can sit down and tell you what causes a boom other wise we would continue the process never looking back at economic depressed times. This is just a thesis that I am proposing which on the surface many may disagree with,But would you not conclude that when capital gains tax cuts came out in early 2003 there was a flood of people going and taking out (heloc)s on there homes and by doing so trying to follow that supply side approach which is now causing the economy to suffer because many were not educated to the fact that real estate does not always continue to go up,to the contrary it is probably one of the worst investments one could make.

First, you have zero credibility to offer theory. You don't even understand a supply/demand curve, as evidenced on your "quit dropping prices and the buyers will come back" thread. Also, quote one supply sider stating that real estate always goes up. I'll wait.

 

[Smiling JOe]

Sure, capital was moving sectors. That happens all the time and I'm not disputing that. What I am disputing is that the overall health of the DOW is due to the slowdown in RE. The Dow increased nearly 25% from 4/03-4/04. What was RE doing then?

I think that run up was much in part to people learning of the tax changes. I don't disagree with your statement that the overall health of the DOW not being due to the slowdown in RE, though I do think the two markets compete for many of the same dollars. Most people follow the money. I think there are currently many people sitting on top of cash-filled mattresses.

 

[6thGen]

I think that run up was much in part to people learning of the tax changes. I don't disagree with your statement that the overall health of the DOW not being due to the slowdown in RE, though I do think the two markets compete for many of the same dollars. Most people follow the money. I think there are currently many people sitting on top of cash-filled mattresses.

I'd take gold filled mattresses, since the dollar is sucking wind (you should imagine the boom if monitary policy was dictated by a computer model rather than a Board of Governors - but that's another topic). I agree that the economy does not happen in a vacuum.