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Originally Posted by Seaver
I hate this group-think.
Honestly are you telling me that 4% of personal income would cause investors to stop buying into companies? Don't even tell me that 4% is the difference between the desire to make more money or sit like a fat kid on the bench.
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The magic happens on the margins.
Every decision made and every decision you make has a pivot point, a point where it turns from no to yes or yes to no.
So, yes. Millions of jobs pivot on decisions on something as small as a 4% swing. Then there is a trend or momentum affect. If competitors are expanding, growing, adding employees, it will impact my outlook on the future. In business perception can become reality. And, perhaps the real issue is not the 4%, but confidence levels.
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Besides, the nations corporations HAVE well over a trillion dollars sitting idle waiting for the economy to get better. If the supply-side logic held true that money would be currently spent creating new jobs... which they're clearly not doing. Therefore, if companies owned by rich people are not reinvesting to grow the economy why would we expect the rich to do the opposite?
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If you are sitting on a pile of money and you expect things to get worse, you hold on to cash - we are in an environment where cash is king. If you expect things to get better you may not only spend your cash but use leverage for growth. Think of the housing market. If I can buy a $150,000 house six months from now at $125,000, I wait. If in 6 months I expect it to be $175,000 I buy now. People, business or market participants are rational. I know some don't agree, but decision making can be explained and predicted with enough information.
---------- Post added at 06:21 PM ---------- Previous post was at 06:13 PM ----------
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Originally Posted by Baraka_Guru
My point is that no one will invest unless there's a market. There's no need for innovation and productivity if not enough people are buying anything.
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There was no market for airplanes before people invested time and money in flight.
Supply side.
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People aren't investing for a lack of money, they're not investing because sitting on the cash is safer at the moment.
What's the point of investing $1,000 in seed corn if you'll only have to dump the yield into a Third World market?
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To keep the pump primed. An old fashion water pump required a outside source of water to get the pump to start producing water. If you consume the outside source of water, you are screwed. It is often easier to keep you pump operating than it is to re-start it.