Hi dale sinor and fellow threaders, warning ... this post is going to be long, disturbed, disjointed, containing only common sense already known to all, denied by some.
[EDIT: but it is my post]
You are right, it is time to move along in the exercise, from rough bear cub play in the den, to circle *erking for the truth; but first, a group hug, the back-slapping bearish manly kind. Thank you for the opening at an awkward moment, as the lights got turned back on and the den is in a mess.
I am sorry to the thread for having adopted a strategy I learnt from playing Unreal Tournament, that being, when being chased by an opponent packing some persistent fire power and unable shake or to turn around, simultaneous load, aim and fire weapon, the optimum strategy is then to run into the midst of other battling warriors, hoping one or many of them will take out the chaser, if not by intent, then by mistake. I may have gotten flamed with a laser cannon in the face by intent or accident, but my chaser will probably get it in the back, or front, or left or right, or better still, dare I hope, from all sides. Gratitude does not describe my sense. Thank you all for aiming so well so that there need not be hearings on Friendly Fire incidents.
I just came back from dinner in the near neighborhood Vietnamese restaurant “Saigon”. They had interesting motorized bamboo fans (the handheld kind) instead of the normal spinners. I thought about your question over dinner whilst parallel processing my wife’s chatter. Now, I am ready, but just as I put on Gloria Estefan’s “Turn the Beat Around” and made the mouse liven up the screen, my wife wanted to switch the sound energy to “Samuel Barber Sonata Op 6.”
My mind is now thus switched to 20th gear. I am thinking as I go … (besides that marriage is an odd state and that there is another sound system in the apartment – same brand, same speakers, same same):
<<The personal savings rate … calculated as earned income minus spending?
So if I spend all my earned income, sell a stock for a 200% gain and put this in a T-Bill, my savings rate is zero.
Is this a realistic way to calculate savings?>>
The direct and straightaway answer is “Yes and No, But and However”.
Yes:
SAVINGS = EARNED INCOME less SPENDING, and
No:
This is not a realistic way to calculate $AVINGS, as in what I can use to finance 50 years of retirement under conservative and robust assumptions whilst frolicking in the ocean,
But:
It is not used to calculate that number. SAVINGS not = $AVINGS, and
However:
SAVINGS does indicate a trend, out of many trends, as it is a convenient number to calculate from consistently compiled numbers.
The economists do the strange things because otherwise they would have no jobs. For example, they think just because sushi went up in price, I would then therefore switch to beef in some meaningfully measurable way. They are wrong. Substitution may work better in automobile selection, but far less better in food selection. Same strangeness applies to hedonism.
But, OK, enough. The chart showing savings has been trending down to below zero. The chart indicates that, and only that. The other charts, equally uninteresting singularly, show the Nasdaq, DJIA, S&P had been trending up, so that the market cap of all traded companies reached 180% of steadily growing GDP, a valuation above historic norm. One chart shows growth of money supply, and yes, we all know money supply must grow in a growing economy.
I do not know how to, at least not correctly, add US national savings to the growth in value of the stock market and housing market; I leave that to others.
I can, however, discern the general gist of the trend lines and be concerned that … gee, income up, GDP up, money supply up, spending up, savings down, NAV up, frolic time at the beach near; but what if financial system not healthy, and hedonism is crock (not completely crock, but “crock-ish” enough to matter)?
Back to the drawing board, and start over …
Let’s define “Savings” simply as “earned income less spending”;
Define “NAV growth” as “Earned income plus unearned income less spending plus increase in value of every other goodie we hold” taking account of inheritance, horse race winnings, all net increases since last measuring period in stocks, bonds, precious metals, residence, investment real estate. Microsoft Money program and Oracle database all help in this exercise.
[EDIT: … Went to bed, my parting thoughts were “how many lurkers are there on any one SI thread? how big is the Universe? that there should be such drama on our 2500-message thread? and why is my better half trying to do so many things, all at the same time, all with the total focus and energy of a concert pianist. Now, 7 hours later, safe from the missus for a few hours, music energy back to “Turn the Beat Around” …]
[EDIT: Yes, the music makes the difference]
The economist can define concepts however they want, and so can we on this thread, for example and such as
Sausages = Savings,
Nausages = NAV growth = Sausages + value growth of things held = Sausages + value growth due to supply/demand + value growth due to inflation/deflation
Now that the music and the world is in alignment, we rock …
[EDIT: … Now you know that I am ranting as I move along, because the album is now playing “Party Time” and if you can picture a Trinidadian Chinese doing the pelvic thrust victory taunt Unreal Tournament style, you would be on the right channel … and yes, English is the best language in the world, Philippines the best place …]
[EDIT: … just went to the wife, gave her a hug and all is well again, because it was not my fault anyway, this time at least, and I am just the safety valve for irrationality and other self-generated pressures, real and imaginary, miniscule and consequential … I am lucky to be a French Creole Trinidadian Chinese with claimed disproportionate dimensions, pretended acrobatics and some vague Nausages, lot more sense of fun, and infinite amount of patience]
[EDIT: … wait till she finds out what I had done two summers ago, and then the revision of history will extend back to the time of Adam & Eve, or before]
[EDIT: … wait till she finds out what I plan for next summer, and then the projection of history will extend beyond the time of Dow 36,000]
[EDIT: what is the worst anybody on this thread did not do to their life partner?]
[EDIT: … energy thus aligned, we do collective pelvic thrust victory taunt to the tune of “I am not Giving You Up”, as in Thinking back, I see what we have …]
Ok, where were we? Oh yes,
Sausages = Saving,
Nausages = NAV growth = Sausages + value growth of things held = Sausages + value growth due to supply/demand + value growth due to inflation/deflation
We can plan on Sausages, but we frolic on beach based on Nausages. Sausages are controllable, plan-able, sustainable; Nausages sometimes not.
Prudent banks lend to us based Sausages, and when not as critical, or prepared to inherit our goodies, leverage us up based on Nausages.
Because Sausages are more controllable and plan-able, it tends to be more positive than negative.
Nausages, on the other hand, can go every which way, depending on supply/demand, inflation/deflation, which, in the aggregate, are demographic and policy driven.
Demographics: For the USA and all nations, more babies and immigrants, put to hard work, earning more, Sausage making more, the better. Most countries are not immigrant friendly, thus babies friendly. Japan is in trouble, big trouble, with no immigrants and no babies.
Policy: For the USA, W Bush and the Maestro have all the answers that half the population does not agree with. For the rest of the world, lower taxes, increasing physical production, reduce government, reduce cost via mental production and copying the best of the USA, before that, the best of Japan … Germany, England, China, Rome, Egypt, aliens who landed on earth … Adam & Eve.
[EDIT: I attribute half of all that I am to USA, The other half to my mom and dad, and thus to the old country of China and non-country of Trinidad]
[EDIT: Yeah, we are now pumping … to “Out of Nowhere”, as in
… Out of nowhere, without a sign, never knowing what I would find, out of a dream, into my life, must have done something right this time, I don’t know where all this came from, but I think I wanna get me some …
Oh yeah]
[EDIT: go get the CD … Greatest Hits Vol II, Epic Records, owned by Sony, as in 6758.JP or SNE in USA, and thus, for disclosure, owned by Jay Chen]
When I was going to school, I thought of Sausages as the money I can get from selling my textbooks and use to buy steamed clams at Antler’s Inn and aluminum wheels for the Scirroco.
After graduation, I thought of Sausages as “every ten cents saved is one cent I can earn less each year”.
After I got some Nausages from Sausages, I began to get ambitious, thinking that I ought to measure my income and Nausages in such a way that “How many passive portion of Nausages can I generate vs what active earnings, and as the trend line of passive realizable Nausages overwhelms the active Sausages, I ought to be able to go frolic on the beach”.
Then, one day, I lost all my Nausages, in one fast swoop … zoom, gone in 60 seconds. Having realized that I am not God, or god, but just odd, and … lucky, and just as quickly, vroom, new Nausages got generated from Sausages, not as speedily, but not slow enough to matter.
Lesson: Sausages are good. Nausages are better. Sausages controllable, so control it. Nausages are fickle, so bottle it up in pickle.
Lesson: When Nausages overwhelm Sauages, pay attention to Nausages, but keep the Sausages positive anyway.
As the Nausage count goes down, folks will want to up their Sausages, and both W and Maestro are worried, for good reasons, else no need to cut taxes and reduce FED rate.
If policy makers are worried, and they are invariably the slowest of the lot, we ought to be doubly worried, to the extent of casting some dense metallic Nausages.
[EDIT: Now I go on line to look at our beloved den; switch sound energy to “A Toda Cuba le Gusta” – no idea what it means, but sounds mean enough]
Second to last paragraph on Nausages and Sausages. My parents and I were exiled into the countryside of China in 1969-1970. Their accounts were frozen, possessions taken. We were helped by friends in high places, but only to the extent of being placed in a villages controlled by peasnts (I use that word in gratitude) friendly to the forces of right, light, and human. Had that not been the case, my then 60 some year old dad would have perished under a tractor track, and now I a smartie pants BBC listening water melon sales assistant along the newly built expressways of China.
We had a one room mud hut, next to the pig pen, no light, no fresh water, no income, and no way out. Little Jay had a large jar of coins (oops, little Sausages) generating no passive Nausages, but enough to buy one year's worth of eggs, some hatching chicks, some for boiling, and some piglets, not for eating, but for selling. My father's Oxford education (no, like Richard Li, he did not graduate either, as he was too adventurous and lively for that routine) and my mom's St Mary's finishing, and the determination of a Shanghai lady and the optimism of a Trinidadian Creole Chinese man was reduced to doing the basics ... replacing paper window with translucent plastic (that caused a stir in the village, mixing innovation with perceived wealth ... oops, Nausages), doing some good for the villagers with little Jay's jar of Sausages, so that when the red guards came for my dad, with the tractor ready, the lawless and authority-less old world peasants gathered with sticks and stones.
Not exactly 1929 stuff, but dramatic enough for a 10 year old. The basic lesson is easy to learn, obvious to relate, and hard to forget.
Hi dale, thought I forgot about you, nope, and thanks for the opening again.
Chugs, Jay |
