Mish analyzes Gross:
You know what, a stronger dollar does promote, you know, some negatives. It promotes not only lower exports and -- and lower growth in terms of manufacturing, but it promotes a -- an infusion of deflation as opposed to inflation, which is exactly opposite the -- what the Fed wants to doAnd this excellent analysis of the stock market:
You know, it keeps zombie corporations alive because they can borrow at 3 and 4 percent, as opposed to the 8 or 9 percent. It destroys business models. It's destroying the pension industry and in the insurance industry because, you know, basically, their liabilities can't be -- they can't be provided for by very low interest rates.
And ultimately, I think it destroys, you know, the capitalistic model at the margin. You talk about stocks and cheap money, they're basically corporations, instead of investing in the real economy, can now simply borrow at, you know, close to 0 percent and buy their own stocks, which yield 2 or 3 percent on a dividend basis and, you know, provide a return of 6 or 7 percent on an earnings to price ratio basis.Feel free to forward this by email to three of your friends.
2 comments:
This, "You know, it keeps zombie corporations alive because they can borrow at 3 and 4 percent, as opposed to the 8 or 9 percent." is how big business cheats over small business.
Right, lending credit allows the big to buy in quantity and crowd out the small where otherwise it would not be possible. Cheap crap seems pleasing, no knowledge of slightly more expensive good was once available. Thinks a 1965 USA hamburger and a McDonald's today.
In my neighbor we still salivate at the thought of Mrs. Rossman's burgers. No one thinks of MickeyD.
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