The Coming Economic Collapse, Part 1 131 comments
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Yesterday I outlined how the mainstream financial media is completely overlooking the similarities between this latest rally and the one leading into the summer of 2008.
Today, I am beginning a three part series explaining why I expect this fall (3Q09) to be as bad, if not worse, than last year’s in real terms, why Obama’s stimulus plan is too small to accomplish anything, why the US is entering a Depression, possibly a Great Depression, and what is the most likely outcome for the US in financial terms going forward.
Today, I’ll be focusing on the issues that brought us to this current mess.
The seeds of today’s crisis were first sown in 1971 when the US formally opened trade with China. In an effort to boost profits, large scale US manufacturers and other multinational firms began outsourcing their manufacturing jobs to the People’s Republic soon after.
When other industries realized the kind of money that can be saved by sending work overseas, they soon followed suit. Outsourcing moved up the corporate food chain until even R&D jobs and other high-level, high-skill set jobs were shifted to Asia. This, of course, diminished the number of these positions in the US. Thus began three major trends:
1) The US’s economic shift from manufacturing to services (mainly financial)
2) The massive drop in US incomes
3) The beginning of the debt bubble
Nothing illustrates the first point like the rise of the financials sector. From 1970 until 2003, financials’ market capitalizations as a percentage of the S&P 500 rose from less than 5% to 22%. Over the same period, financials’ earnings as a percentage of the S&P 500’s total earnings rose from less than 10% to 31%.
Put another way, by 2007 one in every three dollars of corporate profits came from the financial sector. Meanwhile, China was experiencing an unprecedented level of growth thanks to our renewed trade: Chinese per-capita income doubled from 1978 to 1987 and again from 1987 to 1996.
Now, fewer jobs in the US means lower US incomes. Going by the Federal government’s official (inaccurate) data, weekly US incomes peaked in October 1972 and have since fallen 15%. Of course, these numbers are based on official inflation data which is horribly under-stated. According to John Williams of www.shadowstats.com, if you were to go by actual inflationary data, US incomes have fallen more like 40% since 1972.
This fact stares us in the face everyday, though no one really notices it. In the early ‘70s, typically one parent worked and the other stayed home. Today, BOTH parents work and most Americans are barely getting by.
The reason why we didn’t notice the drop in quality of life before was because of one thing:
Credit.
Credit cards had been in use since the ‘50s, but they had yet to catch on, largely because banks couldn’t make obscene profits from them (the interest rates they could charge were limited on a state-by-state basis).
Then, in 1978, the Supreme Court passed a law stating that banks could charge their cardholders any rate allowed in the bank's home state. With this ruling, credit cards suddenly had the potential to become a major profit center for banks. Large banks immediately shifted their credit card operations to states where there were no limits on interest rates (Delaware and South Dakota).
Credit creates the illusion of wealth (or in the US’s case for the last 30 years, the illusion of maintaining the same standard of living) because you’re able to spend more than you make or spend money without paying upfront. Americans, earning less and facing rising costs of living, gradually began their descent into indebtedness: between 1980 and 1990, credit card spending average household credit card balances quadrupled.
In this manner, the average American didn’t notice that his or her quality of life was deteriorating at a rate of about 2-3% a year. Similarly, he or she didn’t notice that more and more jobs (of greater and greater technical expertise) were shifting overseas.
And thus began the epic shift in American wealth to Wall Street (the rise in the financial industry) and China (the producer of cheap goods we had to buy due to the drop in incomes).
On Monday I’ll detail how the debt bubble encapsulated the US government and why Obama’s Stimulus won’t accomplish anything in terms of fixing the economy. Until then…
Good Investing!
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This article has 131 comments:
Graham, I'd love to see if you have any numbers on the effects of what I've mentioned here.
All the ingredients required to produce a generation of financial wizards and market timers.
in reality the american families are much more broke than in 1929!!!
We're beginning a trend in the other direction now, and new factories will have reason to locate in the US as the price of shipping rises to its true cost, while a balancing act continues in the price of labor.
Hopefully, the abundance of aggressive Wall Street types will mean more entrepreneurs tackling projects across the country. This recession could be a good thing. My business is booming.
This is not accurate. They ruled in a case. The Supreme Court does not pass laws.
YOU AIN'T SEEN NOTHING YET!
The level of suffering coming to the United States is going to be shocking.
with a tax penalty. The activity can't be stopped but it can be
taxed. An equivalent amount of tax reduction should be given to
those employers who meet payrolls for legal citizens within the
confines of this country.
It wasn't long ago that if you didn't outsource your production to china etc., Wall Street analysts would downgrade your company.
However, I would commend the author on one point: putting paid to the argument that the Chinese started everything. This is laughable for anyone in the manufacturing business over the last 20 years. Large US business outsourced so they could reduce US payroll...and then private equity (which must be examined) stepped in, with ample bank leverage, to bankroll business execs. The formula for US economic collapse...from which we may or may not recover. This is what is meant by structural failure. Whether there can be rebuilding of a new economic system (beginning with re-instituting a Glass-Steagall type law) is unclear; the odds are against it.
Actuals - ’06 – 45%, ’07 – 33%, ‘08 – loss
Estimates- ’09 – 13%, ‘010 – 18%
Financial industry is simply shuffling papers no real value add, we need to get out of it.
Get back to basics:
Econ 101: Savings -> Investment -> production -> Consumption. Have to get out of borrow and consume mode.
1. The Productive Economy, principally enagaged in generating real goods and services(including the protection of persons, property and the Nation) and real income, wealth and quality of life
2. The Parasitic Economy, principally engaged in social engineering and social transfers( much of what is called Big Government and its many clients)
3. The Fantasy Economy , engaged in spinning and trafficking in illusions and fantasies; here debt is confused with income, consuming with producing , digital notations with real assets, falsehoods with truth and fiction with reality. This is the domain of Wall St, its finacial engineering , its digital deceits and the serial bubbles it generated in collusion with the Parasitic Economy by convincing global investors and ordinary Americans that the Fantasy economy was really just a vibrant sub-set of the Productive economy.
For several years, the Fantasy Economy grew rapidly, the Parasitic Economy grew briskly and the Real Economy grew tepidly. Then, eventually the lies of the Fantasy economy grew so complicated and its illusions so big that they could not be sustained.
Now the Fantasy economy is imploding and dissolving(this is but the end of the begining of a multi-year process; it is not even mid-game), the Parasitic economy is growing rapidly, having taken over the bubble making business from the Fantasy economy in the vain hope the illusions can be recreated and the lies reassembled while the Productive economy continues to compress, badly weakened by the Fantasy economy and ruthlessly squeezed by the Parasitic economy.
For years, middle class Americans slept and dreamed that they had silken purses and stores of gold nuggets. Now they are awakening and scores of millions are discovering they only have sow's ears and a pile of iron pyrites.
I was around in the '70's. Actually, both of my parents worked then. Our "median-priced home" had one bathroom, no air conditioning, no garage, formica countertops, no...you get the picture. Today's "median-priced home" has a three-car garage, central air, granite countertops, 2 and 1/2 baths and so on. You are comparing apples to oranges.
I spent yesterday working on a home I own which is populated with "poor" people. Mom and the kids inside had the A/C cranked up while watching cable TV. Mom was surfing the (high speed--none of this dial-up nonsense for her) net while I was outside sweating. There is more wealth in this country now by far than in 1970 and this type of analysis has the purpose of cementing the case the our "Citizen of the World" should lead us down the path to more "spreading the wealth" to make things fair.
Jimmy Carter also warned us that we were in a malaise and we would have to get used to a permanent state of decline. We'll get through this as soon as we give the boot to Jimmy Carter redux and get on with the business of producing again.
We don't need a prostrate China in order for us to prosper, quite the contrary. Their prosperity aids us as well.
Thomas Jefferson lamented the rise of manufacturing at the expense of rural hamlets and farming. Now we lament the rise of "services" and "financials" at the expense of manufacturing. The rise of services and financials is not a sign of weakness but of prosperity. Stop attempting to spread the wealth around and allow producers to prosper from their wealth and we'll have a new beginning.
I have to fundamentally disagree with this statement. China had a comparative advantage: cheaper labor. Is it any wonder that companies would move some operations there to take advantage of that cheaper labor and, eventually, a 1 BILLION+ consumer universe?
No, the seeds of today's crisis were sown in 1913 with the signing of the Federal Reserve Act by President Wilson. The movement from a hard currency to paper money is a fearsome occurrence: instead of an asset-backed medium of exchange, the government (and I DO classify the Fed as part of the federal government) can create large flows of credit for its own political ends. This leads to malinvestment on the part of entrepreneurs and firms and to overleverage on the part of consumers. We are now suffering through a cleansing period, though the Fed & government are trying mightily to avoid the "pain" that is caused by this natural process.
On Jun 05 03:11 PM steve graves wrote:
> Well said. The housing bubble unleashed the last gasps of a dying
> beast, basically. When you think that U.S. GDP would have been less
> than one percent since the 2000-2001 recession without such absurd
> and unprecedented levels of mortgage equity withdrawals, that personal
> consumption expenditures are plunging at rates not witnessed since
> the 1930s (the chart at the St. Louis Fed's website is scary as hell:
> research.stlouisfed.or...), that unemployment
> soared 4% in a single year (again, not since the 30s...), that commercial
> real estate's collapasing at warp speed and that our smoke and mirrors
> financial sector, such a large portion of our GDP, is in the process
> of imploding... well you begin to realize just how totally screwed
> we really are. This fall's stock market collapse will make last fall's
> look like a pinprick... 1929-2009 R.I.P.
Seriously, good article. Americans have truly been intoxicated with liquidity and do not understand their imminent poverty. But Carlos Lam has it exactly correct- the Fed is first in the firing line. The utter disintegration of dollar value since 1971 has a whole lot more to do with the annulment of Bretton Woods and thereby the gold standard than the opening of China. Chinese trade has grown logarithmically with time; dollar disintegration ramped dramatically in almost instantaneous fashion at that time. Until the UnConstitutional Fourth Branch is anesthetized like the rabid dog it is, we're cursed to a fate of Bubbles, Confiscatory Taxation through Inflation, and Wall Street Plutocracy.
On Jun 05 11:51 AM jake1949 wrote:
> would correct spelling of Mr. Summers' company name logo increase
> the credibility of his writings and advice?
On Jun 05 01:25 PM thiazole wrote:
> You argue with feelings instead of facts. For example, you stated
> "Today, BOTH parents work and most Americans are barely getting by."
> The facts don't back that up. You are just appealing to populist
> discontent. People are unhappy because we are in the middle of a
> recession and the angry populist movement will agree to anything
> they can shake their fist at, so you are giving it to them. In the
> end, the more people in society that work, the more goods produced
> and the more we can therefore consume (ie, overall wealth DOES increase).
> It really is that simple (and we won't even get into increases in
> productivity since the 70s).
I see the same thing happening here, and it has been going on since the 70's.
I think that in the intermediate term (less than 5 years) we will avoid the predicted decline if we play our cards right. The things that are different is that the dollar is currently the worlds reserve currency (this will probably change longer term), and that we are the worlds largest market.
That aside, I hate to admit your points could well come true in the 5 to ten years. It will take a lot of luck and wizard like decisions to avoid the projected demise.
If you compare income to necessaties, then I think today the average American compares very favourably to his parents, or grandparents 35 years ago.
I am not trying to diminish the severity of the current recession and how it is hurting the 9% unemployed, but now for the majority, a recession means delaying the iPhone purchase. A recession in the 70's meant putting off buying shoes.
> cant wait to read the other parts. Wealth of the world is constant.
> Its the shadow money or credit that made it look like infinite.
Nonsense. The world's "wealth" depends on its productive capacity, its resources, its efficiency, and its technological advancement.
Does the world now really have the same "wealth" as we did in 500 BC, with a population in the low millions and no cars, computers, phones, planes, or air-conditioning?
The wealth of the world is anything but "constant."
And soon the kids will have to work too in order to help their parents pay down the mortgage. This of course is the outcome of decades of small "erosion" inflation. We didn't see it happening and now it is too late to reverse. Our last great hope is that by digging a deeper hole and further inflating we will stave off the inevitable "real" correction.
We selfishly hope we can shore up our positions in time to weather the real storm which is sure to follow all this stimulus.
But it is not working. I have a friend in Africa. She is dirt poor (earning an astonishing 300 dollars per month now, which is huge for her country. Yet she has a full-time live-in maid who does all the cooking, cleaning, errands, washing etc. How the hell is it possible that a person with such a tiny fraction of my own income can live so rich, have help and not sacrifice her free time?
I don't have a maid!!!
Being cash rich and time-poor is a terrible trade off. We don't get to enjoy our lives. And it is all getting worse and accelerating. We have become indentured and enslaved by our addiction to accumulation. Inflation will only accelerate our loss. But it does not make sense. The third world is better off in so many ways (you think I am kidding but I am not) and "time" is at the top of the list of things they enjoy that we have so readily given away.
So what is the cost of getting our freedom back really?
That is the question I pose in answer to your excellent article today.
The growth of our wealth since the late 70's is not what it has been cracked up to be. It has been an illusion allowing us to accumulate heaps and piles of stuff while our free time and leisure have been lost. And that is a barren statement indeed about the quality of the lives we are leading today.
On June 05 2009 Graham Summers wrote:
"This fact stares us in the face everyday, though no one really notices it. In the early ‘70s, typically one parent worked and the other stayed home. Today, BOTH parents work and most Americans are barely getting by".
Also, if you think being cash rich and time poor is bad, you should be thrilled with this recession since it is making many people cash poor and time rich.
On Jun 05 08:32 PM cameroni wrote:
> Nicely said Graham:
>
> And soon the kids will have to work too in order to help their parents
> pay down the mortgage. This of course is the outcome of decades of
> small "erosion" inflation. We didn't see it happening and now it
> is too late to reverse. Our last great hope is that by digging a
> deeper hole and further inflating we will stave off the inevitable
> "real" correction.
>
> We selfishly hope we can shore up our positions in time to weather
> the real storm which is sure to follow all this stimulus.
>
> But it is not working. I have a friend in Africa. She is dirt poor
> (earning an astonishing 300 dollars per month now, which is huge
> for her country. Yet she has a full-time live-in maid who does all
> the cooking, cleaning, errands, washing etc. How the hell is it possible
> that a person with such a tiny fraction of my own income can live
> so rich, have help and not sacrifice her free time?
>
> I don't have a maid!!!
>
> Being cash rich and time-poor is a terrible trade off. We don't get
> to enjoy our lives. And it is all getting worse and accelerating.
> We have become indentured and enslaved by our addiction to accumulation.
> Inflation will only accelerate our loss. But it does not make sense.
> The third world is better off in so many ways (you think I am kidding
> but I am not) and "time" is at the top of the list of things they
> enjoy that we have so readily given away.
>
> So what is the cost of getting our freedom back really?
>
> That is the question I pose in answer to your excellent article today.
>
> The growth of our wealth since the late 70's is not what it has been
> cracked up to be. It has been an illusion allowing us to accumulate
> heaps and piles of stuff while our free time and leisure have been
> lost. And that is a barren statement indeed about the quality of
> the lives we are leading today.
>
> On June 05 2009 Graham Summers wrote:
>
> "This fact stares us in the face everyday, though no one really notices
> it. In the early ‘70s, typically one parent worked and the other
> stayed home. Today, BOTH parents work and most Americans are barely
> getting by".
On Jun 05 08:32 PM cameroni wrote:
> Nicely said Graham:
>
> And soon the kids will have to work too in order to help their parents
> pay down the mortgage. This of course is the outcome of decades of
> small "erosion" inflation. We didn't see it happening and now it
> is too late to reverse. Our last great hope is that by digging a
> deeper hole and further inflating we will stave off the inevitable
> "real" correction.
>
> We selfishly hope we can shore up our positions in time to weather
> the real storm which is sure to follow all this stimulus.
>
> But it is not working. I have a friend in Africa. She is dirt poor
> (earning an astonishing 300 dollars per month now, which is huge
> for her country. Yet she has a full-time live-in maid who does all
> the cooking, cleaning, errands, washing etc. How the hell is it possible
> that a person with such a tiny fraction of my own income can live
> so rich, have help and not sacrifice her free time?
>
> I don't have a maid!!!
>
> Being cash rich and time-poor is a terrible trade off. We don't get
> to enjoy our lives. And it is all getting worse and accelerating.
> We have become indentured and enslaved by our addiction to accumulation.
> Inflation will only accelerate our loss. But it does not make sense.
> The third world is better off in so many ways (you think I am kidding
> but I am not) and "time" is at the top of the list of things they
> enjoy that we have so readily given away.
>
> So what is the cost of getting our freedom back really?
>
> That is the question I pose in answer to your excellent article today.
>
> The growth of our wealth since the late 70's is not what it has been
> cracked up to be. It has been an illusion allowing us to accumulate
> heaps and piles of stuff while our free time and leisure have been
> lost. And that is a barren statement indeed about the quality of
> the lives we are leading today.
>
> On June 05 2009 Graham Summers wrote:
>
> "This fact stares us in the face everyday, though no one really notices
> it. In the early ‘70s, typically one parent worked and the other
> stayed home. Today, BOTH parents work and most Americans are barely
> getting by".
As far as the government spending your money...quit electing the democrates....better yet - push for term limits....
Too many aliens allowed to enter the country...this is the problem. They have no allegiance to our country.
Close the borders...enforce our laws...and we will have work for our people.
Instead of worrying about disasters happening to us - we should start creating disasters to the ones that would think of harming us. Why should we worry about this....As an example: Iran wants the nuculear bomb...I say give it to them . Drop a couple on them and let the rest of the world know that we will take them out the same way if they even think about screwing with us.
Take out N. Korea too...
I say take the battle to the enemy....
On Jun 05 09:05 PM positro wrote:
> When folks finally see that they can’t just get someone else to pay
> for all this, there will likely be a huge tax rebellion which will
> cause more short term problems, but may in the long term (hopefully)
> have the effect of getting the government to manage our money better.
> In the meantime, let’s hope we don’t have too many large national
> disasters, military conflicts, pandemics or the like to deal with.
> This country is in a lot of trouble and we need to start thinking
> like Americans instead of Republicans or Democrats if we’re going
> to get through this mess……..
>
> good reading kl.am/tsc
In other words, capitalism is best for the capitalists and by coincidence, it can be best for the masses. This coincidence can only come about if the capitalist can extract surplus value, or profits, from the labor of the working class. In the event that the capitalist class can not achieve this, which is most of the history of capitalism, then the working/middle class with be subjected to mass firings, mass reductions in wages, benefits, and mass relocation of jobs to other areas until, once again, surplus value can be extracted from labor. Sounds like what is happening this time around, as it always does, of course.
Other than missing the above, your article was great. For the record, I am a capitalist but am concerned that it is the present couse is leading to a type of 19th century, early 20th century type of capitalism where violence among the masses of the proletariat class and the bourgeoisie class was commonplace.
22% in 2007. So? What is it now? 5% or so I bet. Not relevent.
Credit cards are out of control. Uh, we figured that out a while back. See recent legislation. And if our senators/legislators can figure it out, it must be really old news.
The national standard of living is... higher! Take a long look at a 70's car/house/etc. A mustang II with vinyl seats, no safety systems beyond a seat belt, an 8 track, poor mileage and no emissions controls other than an EGR is not particularly desireable.
Do some research, then write parts 2 and 3.
Seems to me that massive amounts of government spending is on exactly that including: the legal system, firemen. policemen, the US military, the health regulation system, the driving lisence system, airport security system, port security system, the prison system, etc.
Further, you forget to mention that the so-called productive sector could not even operate or distribute without massive government spending on infrastructure such as roads, bridges, airports, ports, dams, water and sewar systems, etc., not to mention the US university system which is massively government subsidized and produces most of the "educated and trained" personnel that the productive sector then takes and supposedly uses to be the productive sector.
And further, you also neglect to mention that the so-called productive sector, rarely if ever pays all the costs of their so-called production. Rather they leave those costs that they choose not to pay for for everyone else to pay for one way or the other. Examples include expensive to fix pollution such as agri-business has caused on the US eastern seaboard, or global warming by the auto and power industries and others that will be very expensive to contain, or many other similar examples.
So, it certainly seems to me that at least significant parts of what you term the "parasitic economy" actually are essential to what you term the 'productive economy".
And lastly, what you refer to as the "fantasy economy" was in many cases invented by and the result of what you call the "productive economy". We can identify numerous examples such as: the Dotcom frauds hyped and promoted by Wall Street and analysts, or Enron and Worldcom and Arthur Anderson frauds, or Bernie Madoff, or Haliburton/KBR defrauding the military and sickening soldiers (a master electrian testified that KBR work in Iraq on electrical wiring in thousands of buildings was the worst he had ever seen), or ratings agencies fraudently rating mortgage securites as AAA when they were really DDD and allowing investment banks to shop rating for extra fees. The list is almost endless of the so-called productive economy creating the fantasy economy for their own fraudlent greed.
So while your theory of productive, parasitic, and fantasy economies is interesting, it hardly holds up when one looks at the actual facts and what really happens in the real world. So, I don't think you will be getting your PhD based on your theory at anything but a mail order PhD factory.
On Jun 05 01:37 PM User 353732 wrote:
> The US economy is a tale of 3 linked but separate economies.
> 1. The Productive Economy, principally enagaged in generating real
> goods and services(including the protection of persons, property
> and the Nation) and real income, wealth and quality of life
> 2. The Parasitic Economy, principally engaged in social engineering
> and social transfers( much of what is called Big Government and its
> many clients)
> 3. The Fantasy Economy , engaged in spinning and trafficking in illusions
> and fantasies; here debt is confused with income, consuming with
> producing , digital notations with real assets, falsehoods with truth
> and fiction with reality. This is the domain of Wall St, its finacial
> engineering , its digital deceits and the serial bubbles it generated
> in collusion with the Parasitic Economy by convincing global investors
> and ordinary Americans that the Fantasy economy was really just a
> vibrant sub-set of the Productive economy.
>
> For several years, the Fantasy Economy grew rapidly, the Parasitic
> Economy grew briskly and the Real Economy grew tepidly. Then, eventually
> the lies of the Fantasy economy grew so complicated and its illusions
> so big that they could not be sustained.
>
> Now the Fantasy economy is imploding and dissolving(this is but the
> end of the begining of a multi-year process; it is not even mid-game),
> the Parasitic economy is growing rapidly, having taken over the bubble
> making business from the Fantasy economy in the vain hope the illusions
> can be recreated and the lies reassembled while the Productive economy
> continues to compress, badly weakened by the Fantasy economy and
> ruthlessly squeezed by the Parasitic economy.
>
> For years, middle class Americans slept and dreamed that they had
> silken purses and stores of gold nuggets. Now they are awakening
> and scores of millions are discovering they only have sow's ears
> and a pile of iron pyrites.
But I am sure the gold bugs and short-the-market wackos will buy into this END OF THE WORLD. Yawn.
Investment in today's market is more of a gambling. You can only try to reduce your risk by being on top of things. Therefore, all these figures while perfectly legitimate, are really inapplicable to this market environment. That is my humble two cents.
> Further, you forget to mention that the so-called productive sector
> could not even operate or distribute without massive government spending
> on infrastructure such as roads, bridges, airports, ports, dams,
> water and sewar systems, etc., not to mention the US university system
> which is massively government subsidized and produces most of the
> "educated and trained" personnel that the productive sector then
> takes and supposedly uses to be the productive sector.
Your comment just begs the question: if the items you mentioned are so great, then why does it take government subsidies to produce them?
> Rather they leave those costs that they choose not to pay for for
> everyone else to pay for one way or the other. Examples include expensive
> to fix pollution such as agri-business has caused on the US eastern
> seaboard, or global warming by the auto and power industries and
> others that will be very expensive to contain, or many other similar
> examples.
You are correct that we can do a better job of requiring some firms to internalize their costs. There's no reason to allow a company that cuts costs by dumping chemicals to profit from such a dangerous act. The global cooling...er...global warming...er...climate change issue is quite different, though: you cannot use the scientific method to prove such change because it takes literally thousands of years. Even if the globe is warming (or cooling, as scientists argued in the 1970s), there is simply no way to prove that it is caused by humans because there is no way to replicate the earth and all human activity. At best, scientists are using proprietary models to predict climate change (after the past year in the financial markets we just know how accurate computer modeling can be!).
By law you would not be able to tax the insourcing of labor as per companies who use illegal immigrants. The hiring of illegal immigrants is a criminal offense, not civil, and is governed by criminal law, not civil. The consequences, therefore, are criminal in nature. There are already criminal penalties in place for this.
On Jun 05 12:49 PM Valley Boy wrote:
> The outsourcing and insourcing of labor should be be slapped
> with a tax penalty. The activity can't be stopped but it can be
>
> taxed. An equivalent amount of tax reduction should be given to
>
> those employers who meet payrolls for legal citizens within the<br/>confines
> of this country.
arabianmoney.net/2009/.../
> "the Supreme Court passed a law stating..."
This is not accurate. They ruled in a case. The Supreme Court does not pass laws.
On Jun 05 03:14 PM Tony Petroski wrote:
> The author: "This fact stares us in the face everyday, though no
> one really notices it. In the early ‘70s, typically one parent worked
> and the other stayed home. Today, BOTH parents work and most Americans
> are barely getting by."
>
> I was around in the '70's. Actually, both of my parents worked then.
> Our "median-priced home" had one bathroom, no air conditioning, no
> garage, formica countertops, no...you get the picture. Today's "median-priced
> home" has a three-car garage, central air, granite countertops, 2
> and 1/2 baths and so on. You are comparing apples to oranges.
>
>
> I spent yesterday working on a home I own which is populated with
> "poor" people. Mom and the kids inside had the A/C cranked up while
> watching cable TV. Mom was surfing the (high speed--none of this
> dial-up nonsense for her) net while I was outside sweating. There
> is more wealth in this country now by far than in 1970 and this type
> of analysis has the purpose of cementing the case the our "Citizen
> of the World" should lead us down the path to more "spreading the
> wealth" to make things fair.
>
> Jimmy Carter also warned us that we were in a malaise and we would
> have to get used to a permanent state of decline. We'll get through
> this as soon as we give the boot to Jimmy Carter redux and get on
> with the business of producing again.
>
> We don't need a prostrate China in order for us to prosper, quite
> the contrary. Their prosperity aids us as well.
>
> Thomas Jefferson lamented the rise of manufacturing at the expense
> of rural hamlets and farming. Now we lament the rise of "services"
> and "financials" at the expense of manufacturing. The rise of services
> and financials is not a sign of weakness but of prosperity. Stop
> attempting to spread the wealth around and allow producers to prosper
> from their wealth and we'll have a new beginning.
On Jun 05 06:44 PM JCC wrote:
> Some of your points remind me of Kevin Philips book "Bad Money."
> He looks at the economy historically, and notices the movement from
> manufacturing to services and financials through time. This happened
> in Europe, and it caused them a lot of suffering.
>
> I see the same thing happening here, and it has been going on since
> the 70's.
>
> I think that in the intermediate term (less than 5 years) we will
> avoid the predicted decline if we play our cards right. The things
> that are different is that the dollar is currently the worlds reserve
> currency (this will probably change longer term), and that we are
> the worlds largest market.
>
> That aside, I hate to admit your points could well come true in the
> 5 to ten years. It will take a lot of luck and wizard like decisions
> to avoid the projected demise.
There is a tendency for all of us to confuse these two tracks. Clearly, technological progress has had a strong second derivative for many decades, to get technical, but progress on the other front as not been as strong and might possibly even have a negative derivative.
We Americans have many illusions about ourselves. For example, during the period when minorities and women were included in corporate and political life, inequality of income and social conditions increased dramatically. It isn't clear that this trade-off is a net positive. At least on the surface, it looks as if we have created a nation of economic elitists who come from every minority and both sexes instead of a country with more equality.
Politics and social conditions are at least as important as economic progress. Who cares if China surpasses the per capita GDP of the United States if they remain a police state? We forget that one of the engines behind the American attack of Chinese and Soviet Communism was our love of freedom and not our love of simple economic efficiency. What if the Soviet economy HAD been able to grow much faster than American economy but at the cost of being a police state?
Net GDP is not everything. Many European countries, such as France and Britain, have developed a way of life that some think superior to the American Way of Life of life even though they have a lower GDP.
It might be that this article places the cart before the horse in the sense that it is the social and political poverty of the American Way of Life that has caused the economic collapse and the present economic chaos is only a symptom of the poverty of our social and political conditions.
I suggest to all of this off-shoring and out-sourcing that their US citizen or corporate charters be rescinded if they do not want to play by our set of rules, that have been corrupted since Nixon. They have sucked enough money out of our economy. These are your true parasites.
On Jun 05 01:37 PM User 353732 wrote:
> The US economy is a tale of 3 linked but separate economies.
> 1. The Productive Economy, principally enagaged in generating real
> goods and services(including the protection of persons, property
> and the Nation) and real income, wealth and quality of life
> 2. The Parasitic Economy, principally engaged in social engineering
> and social transfers( much of what is called Big Government and its
> many clients)
> 3. The Fantasy Economy , engaged in spinning and trafficking in illusions
> and fantasies; here debt is confused with income, consuming with
> producing , digital notations with real assets, falsehoods with truth
> and fiction with reality. This is the domain of Wall St, its finacial
> engineering , its digital deceits and the serial bubbles it generated
> in collusion with the Parasitic Economy by convincing global investors
> and ordinary Americans that the Fantasy economy was really just a
> vibrant sub-set of the Productive economy.
>
> For several years, the Fantasy Economy grew rapidly, the Parasitic
> Economy grew briskly and the Real Economy grew tepidly. Then, eventually
> the lies of the Fantasy economy grew so complicated and its illusions
> so big that they could not be sustained.
>
> Now the Fantasy economy is imploding and dissolving(this is but the
> end of the begining of a multi-year process; it is not even mid-game),
> the Parasitic economy is growing rapidly, having taken over the bubble
> making business from the Fantasy economy in the vain hope the illusions
> can be recreated and the lies reassembled while the Productive economy
> continues to compress, badly weakened by the Fantasy economy and
> ruthlessly squeezed by the Parasitic economy.
>
> For years, middle class Americans slept and dreamed that they had
> silken purses and stores of gold nuggets. Now they are awakening
> and scores of millions are discovering they only have sow's ears
> and a pile of iron pyrites.
A ruthless technical analysis of the facts, even back-of-envelope, easily shows that the defect is not "populism" but a refusal to understand that the rest of the world isn't catching up, but has caught up with the basic infrastructural concepts of advanced technology (if not fully practicing). I don't believe that there is any big conspiracy here, people are just people and get silly when they get comfortable,,,but from now on, stored historical advantages will not save this nation from appalling second rate performance, and all the progressivist BS and threats, "diversion" (stealing) and pretend public and looting by encroaching public unions will have any influence on our future. The article is spot on, and we've been talking about this gathering storm (or maybe just slow death by mediocrity), but its still valuable to go over it again. You can rave on all you want, McBeth, but I have a second passport in my hip pocket.
On Jun 05 01:25 PM thiazole wrote:
> You argue with feelings instead of facts. For example, you stated
> "Today, BOTH parents work and most Americans are barely getting by."
> The facts don't back that up. You are just appealing to populist
> discontent. People are unhappy because we are in the middle of a
> recession and the angry populist movement will agree to anything
> they can shake their fist at, so you are giving it to them. In the
> end, the more people in society that work, the more goods produced
> and the more we can therefore consume (ie, overall wealth DOES increase).
> It really is that simple (and we won't even get into increases in
> productivity since the 70s).
Prior to 1970, each retail brand name had its own credit card. You'd have a wallet full of an Esso card, a Gimble's card, a Sunoco card, a Wanamaker's card, and another card for anyplace else you shopped. (Many people didn't have checking accounts. They cashed their paychecks and then stood in line at the Bell office to pay their phone bills with dollar bills. But that's a different history lesson.)
In 1970 (AFAIK; this is my personal knowledge), Unicard was born. You could use this credit card at any retailer that displayed its emblem, particularly small stores that couldn't afford the credit apparatus of a chain. Soon, you could buy just about anything with a Unicard, and in my mind, that was the start of the credit boom. After all, how much credit could you run up at Flying A?
I can tell you as an immigrant, over 15 yrs in this country, I have noticed a big shift. I am originally from Asia and recently become a citizen of this country.
I went to an engineering graduate school here, when I was in graduate school I noticed 15 yrs ago, there were many asians(nonamericans) in my classes BUT there were a good amount of americans as well. I happen to have a friend who is now a professor who went through graduate school at the same time as me, and he has noticed that the shift in the graduate school, now over 90% are NOT americans, and many many are asians (nonamericans)either from India or China. He noticed this shift was very prominent about 10 yrs ago, but this professor has now noticed in the last 5 yrs or so, more and more chinease/indian students are staying in their homeland as opportunities have increased there.. OR they are comning here, going to engineering grad school here and returning to their homeland.
I would urge the author to look into this, in the 80's 90's there was a huge influx of asian immigrants,engineers, who came to this country, and settled here that led to some of the biggest techonlogy companies being built and grown.
BUT now that;s shifted , they are either not even comning in such high numbers (b/c of increased opportunities in their home countries) OR they are returning home after getting educated here.
This "brain drain" in the technology sector will surely have a detrimental effect on the economy. Would appreciate comments on this. Thanks.
and all the progressivist BS and threats, "diversion" (stealing) and pretend public and looting by encroaching public unions will have any influence on our future.
should read:
...and all the progressivist BS rationalizing "diversion" of remaining productive resources (stealing and looting), the phoney public "services" provided by government and the associated public unions, will have any productive influence on our future."
On Jun 06 12:36 PM Brendanav wrote:
> With the handle "Thiazole", I'm surprised you're not thinking like
> a scientist. If vast numbers of people are "working" by carrying
> baskets of dirt or rocks on their heads to build a "great leap forward"
> dam or to make low grade pig iron in their backyards, they are all
> employed, but the life sucks. Sex is the only cheap entertainment,
> but the extra mouths are further burdens, so whack 'em. Lots of employment,
> but the supply of goods was pathetic. The argument in the article
> and in US experience is that services as output is toxic when excessive
> services vastly outweigh the productive sector, especially gunpoint
> purchases of government "services" provided by rackteering polticians
> fron the california state house (which steals from all states, believe
> me) to the laughable corruption of the Federal miracle circus (Barney,
> you listening???). Finally, the reason people used to go to church
> was not to be perfected, but to be reminded of their self-serving
> corruption, and at least put a muzzle on it.
> A ruthless technical analysis of the facts, even back-of-envelope,
> easily shows that the defect is not "populism" but a refusal to understand
> that the rest of the world isn't catching up, but has caught up with
> the basic infrastructural concepts of advanced technology (if not
> fully practicing). I don't believe that there is any big conspiracy
> here, people are just people and get silly when they get comfortable,,,but
> from now on, stored historical advantages will not save this nation
> from appalling second rate performance, and all the progressivist
> BS and threats, "diversion" (stealing) and pretend public and looting
> by encroaching public unions will have any influence on our future.
> The article is spot on, and we've been talking about this gathering
> storm (or maybe just slow death by mediocrity), but its still valuable
> to go over it again. You can rave on all you want, McBeth, but I
> have a second passport in my hip pocket.
Americans have to borrow a lot of money to go to graduate school and they're unable to pay it back because of artificially low wages in technology jobs. As soon as salaries rise a bit, Microsoft et al. scream that they can't find anyone to hire (at $40K), and Washington caves.
Bright young Americans have instead done graduate work in finance, business, law, etc., so they could get jobs that would pay their student loans. Until now, their decisions were correct for their situations.
On Jun 06 11:44 AM carey_jim wrote:
> There are two tracks in modern history that run side by side. One
> is economic/technological progress and the other is social/political
> progress.
>
> There is a tendency for all of us to confuse these two tracks. Clearly,
> technological progress has had a strong second derivative for many
> decades, to get technical, but progress on the other front as not
> been as strong and might possibly even have a negative derivative.
>
>
> We Americans have many illusions about ourselves. For example, during
> the period when minorities and women were included in corporate and
> political life, inequality of income and social conditions increased
> dramatically. It isn't clear that this trade-off is a net positive.
> At least on the surface, it looks as if we have created a nation
> of economic elitists who come from every minority and both sexes
> instead of a country with more equality.
>
> Politics and social conditions are at least as important as economic
> progress. Who cares if China surpasses the per capita GDP of the
> United States if they remain a police state? We forget that one of
> the engines behind the American attack of Chinese and Soviet Communism
> was our love of freedom and not our love of simple economic efficiency.
> What if the Soviet economy HAD been able to grow much faster than
> American economy but at the cost of being a police state?
>
> Net GDP is not everything. Many European countries, such as France
> and Britain, have developed a way of life that some think superior
> to the American Way of Life of life even though they have a lower
> GDP.
>
> It might be that this article places the cart before the horse in
> the sense that it is the social and political poverty of the American
> Way of Life that has caused the economic collapse and the present
> economic chaos is only a symptom of the poverty of our social and
> political conditions.
On Jun 05 11:31 AM Swashbuckler wrote:
> Thanks. Looking forward to Parts II and III.
That said let me comment a bit on Graham's article:
#1 While it is true that the many jobs have moved to China and India it is the U.S. companies that own these labor forces and are running the show. The American labor force is quickly figuring out that the value-add does not come from the tail of the dragon but from being in the head of the dragon. The smarter labor force is moving to the head of the chain and let the body be filled by labor force from the likes of China and India. I am in the tech industry and I am increasingly making my living by managing projects in other countries rather than being one of the individual producers on the project. I understand not everyone can do this but as the younger workforce that is replacing the current generation is getting more and more adept at getting into the head of the chain and not the body of the chain.
#2 The U.S. has created or is in the process of creating several new industries where we lead and even staff the labor chain because the third world is yet up to par in terms of technology and skills. These industries lie in high tech, pharma, biotech and the new Obama initiative of clean energy. There is a ton of venture money flowing into clean energy. Of all industries the one that offers the best hope for the larger left-behind displaced manufacturing type labor force is clean energy. If the Obama initiative works then a movement of the labor force from the erstwhile auto and other ruined industries will begin to move into clean energy. Think -- you can't create energy in China and power a building here in the U.S.! You have to create the energy here which means jobs will have to be created here!
#3 The United States is vast and has a significant amount of natural resources. The steel, the metals, and different mining companies will have strong incentives to reopen their mines and start digging this stuff out of the ground because now we have a 2 billion plus consumers with cash (China + India) that need these raw materials so that they can improve their lives. Why do you think the stock prices of mining companies (ex. Freeport McMoran) is going through the roof? It is just a matter of time before the Obama administration comes up with a scheme to approve safe drilling because the demand for even conventional energy will be so high and offshore and onshore drilling pace will increase dramatically. Oil companies that own leases that are already approved will start drilling. (The price of oil rising to $70-$80 level is therefore a good thing for both traditional energy industry and new green energy industry) This will lead to significant job creation. The irony of this all is that we made the people of China and India richer and now we will work for them to improve their livelihood while pocketing an income doing so. So making people of China and India rich was not a bad thing. Now they can afford to buy the ipod, the Cisco routers, the Brocade switches, the Amgen drugs, the Freeport copper, etc. So you need to literally think of all the jobs we moved overseas as a sort of investment in that we created a new economy into which we can sell our products into!
#4 DO NOT UNDERESTIMATE the agricultural prowess of the United States of America! Do you understand that there is a serious land shortage in China and India and that farmlands are scarce and getting eaten up by an ever increasing population? We have millions and millions of acres of fertile farmland on which crops will be grown to feed these people. Why do you think the stocks of companies like Potash and Agrium are going up? Back to basics now -- a large amount of jobs will be created in agriculture in the U.S. while China and India will produce less and less agriculture products. Why do you think the famed investor Jim Rogers is buying farmland and is producing crops??? Land is more plentiful here than in the third world. Europe has zilch farmland -- it is so small!
Don't give up on the U.S.A. yet! The free enterprise system that we have here which is way better than China and India will figure out exactly what competitive edge we have and exploit them to once again rule this world as the leading economy. I suggest you look at just how big of an economy the U.S. is as compared to any other country in the world. We are not going away -- not by a long shot!
#5 The U.S. dollar will continue its downward trend due to natural market forces all of which I think you can find in the plenty of criticisms that Graham has levelled against the U.S. economy. It is for these very reasons the dollar is falling. The dollar's fall will naturally increase the price of commodities because they are all priced in dollars. The prices for oil, crops, just about any commodity will increase significantly. This will incenticize production of more oil, more green energy, more crops, more metals, etc., most of which will happen in the U.S. because:
-- The falling dollar will reduce the cost of U.S. labor.
-- The falling dollar will increase transportation costs so much so that production of goods needs to happen close to where it is being consumed.
-- The cost of imports will rise so much because of the falling dollar and increased transportation costs that more people will consume Made in America goods. Which in turn will increase jobs here.
-- The cost of debt service will fall because of the decline in the value of the dollar which in turn will reduce the burden on our deficits which in turn will allow for the govt to pass on the savings to reduction in taxes and such.
But there are ways out of it if we are determined. Fist of all China and the other creditor nations will pay much of the price because we will, in some manner, default on much of that debt, either through an outright default or by massive inflation.
But then we must get back to rebuilding an industrial base and investing in our infrastrucure and quit spending so much of our money on policing the world and entitlement programs both here at home and abroad.
Much good has been accomplished by bringing China into the first world. They now have much to lose from war and can be an ally in many ways. It's all a matter of leadership now. I did not vote for Obama and I believe that so far he has not impressed but I believe he has the ability to lead us in the direction we need to go, without trampling on the rest of the world.
On Jun 05 03:11 PM steve graves wrote:
> Well said. The housing bubble unleashed the last gasps of a dying > beast, basically. When you think that U.S. GDP would have been less > than one percent since the 2000-2001 recession without such absurd > and unprecedented levels of mortgage equity withdrawals, that personal > consumption expenditures are plunging at rates not witnessed since> the 1930s (the chart at the St. Louis Fed's website is scary as hell:
> research.stlouisfed.or...), that unemployment
> soared 4% in a single year (again, not since the 30s...), that commercial
> real estate's collapasing at warp speed and that our smoke and mirrors
> financial sector, such a large portion of our GDP, is in the process
> of imploding... well you begin to realize just how totally screwed
> we really are. This fall's stock market collapse will make last
> fall's look like a pinprick... 1929-2009 R.I.P.
"Now, fewer jobs in the US means lower US incomes. Going by the Federal government’s official (inaccurate) data, weekly US incomes peaked in October 1972 and have since fallen 15%"
----------------------...
Sorry, where does this statistic come from?
I can't find an official data series "weekly US incomes".
Per capita GDP has grown from $6464 in 1973 to $44,155 (most recent). That's a nominal figure-- even adjusting for inflation, we are still looking at at doubling in per capita GDP in the period you describe.
This data can be found at:
https://cia.gov/library/public.../
Where can your data be found?
Our grandparents had it right - Save. Buy the refrigerator when you have the cash. Put 25% down on the house. Restraint. And slow down with selling out America.
On Jun 06 12:58 PM Brendanav wrote:
> Britain? Are you serious? On second thought, living in an Orwellian
> nightmare with 5,000,000 spycams might be good for the large number
> of Britons who just want to be fed and watered. You are certainly
> right that when a nation can no longer provide the right of individuals
> to be left alone form the mericiless eye of an outrageous police
> state, that that nation may be a better place for those who are not
> individuals. Thye are challenged by the 10 percent who strive and
> as always prefer not to think of their ordinariness or laziness,
> and all the cameras and spycams of that hideously oppressive state
> cannot create a vibrant society that moves forward. Anyway, if it
> was such a swell place, why do they need the spycams? The whole place
> is getting really creepy.
On Jun 06 12:39 PM tdillian wrote:
> great article, am looking forward to reading the second part...<br/>
>
> I can tell you as an immigrant, over 15 yrs in this country, I have
> noticed a big shift. I am originally from Asia and recently become
> a citizen of this country.
>
> I went to an engineering graduate school here, when I was in graduate
> school I noticed 15 yrs ago, there were many asians(nonamericans)
> in my classes BUT there were a good amount of americans as well.
> I happen to have a friend who is now a professor who went through
> graduate school at the same time as me, and he has noticed that the
> shift in the graduate school, now over 90% are NOT americans, and
> many many are asians (nonamericans)either from India or China. He
> noticed this shift was very prominent about 10 yrs ago, but this
> professor has now noticed in the last 5 yrs or so, more and more
> chinease/indian students are staying in their homeland as opportunities
> have increased there.. OR they are comning here, going to engineering
> grad school here and returning to their homeland.
>
> I would urge the author to look into this, in the 80's 90's there
> was a huge influx of asian immigrants,engineers, who came to this
> country, and settled here that led to some of the biggest techonlogy
> companies being built and grown.
> BUT now that;s shifted , they are either not even comning in such
> high numbers (b/c of increased opportunities in their home countries)
> OR they are returning home after getting educated here.
>
> This "brain drain" in the technology sector will surely have a detrimental
> effect on the economy. Would appreciate comments on this. Thanks.
The inventors of the terms of subprime mortgage loans created the original opportunity for the problem to evolve, the subprime lenders intensified the potential disaster by allowing 100% financing and also stated-income loans with high LTV's, and the Interagency Group of bank regulators on September 26, 2006 lit a match to the subprime fuel by imposing drastic new regulations that guaranteed subprime borrowers would not be able to refinance out of their exploding interest rates, and, for good measure, put an end to stated-income or other low doc mortgages for prime borrowers. ("Interagency Guidance on Nontraditional Mortgage Products," the main cause of the entire crisis). It's no coincidence the housing market peaked virtually on that day.
The resulting subprime crisis set off a self-reinforcing process of debt collapses, asset deflation, and credit tightening continuing to this day. Hundreds of mortgage lenders are out of business, most residential loan programs eliminated, low interest credit card balance transfers ended, consumer and business credit limits slashed or frozen, lending guidelines keep tightening, etc. So far, the responses of both the Bush and Obama administrations have been grossly inadequate and ineffective to stop the credit crisis or reverse it. Saving big banks with special federal lending programs and refinancing a few prime employed borrowers from 6% to 5% mortgages with the HARP program, or modifying a few loans with the HARP program will barely do anything to solve the problem. Rescued money center banks are using no-strings-attached TARP and other federal loans to save their own employment and invest and speculate in world equity markets, not to facilitate easier credit. It's bad debt being thrown at worse debt in the hope that eventual economic recovery will solve the problem. About 25 million or 20% of residential properties, and who knows how many commercial properties, are now upside down, many of them seriously under water, and cannot be refinanced. Their values will not increase quickly enough to solve the problem. This is a huge pool of probable eventual defaults that could destroy the banking system in spite of all the special acronym federal loan programs. The huge failing consumer sector will continue to drag down commercial and financial businesses.
The only viable solution is a program of direct federal lending to convert excess consumer mortgage debt and other consumer debt to long-term low-interest federal loans secured only by the tax code. Such a program would automatically recapitalize and liquefy lenders of all kinds, and rally the stock market in addition to restoring much purchasing power and dramatically improving liquidity and some value in residential real estate. It would not increase the deficit because it would be loans not handouts. It would replace most of the $10+ trillion of current special federal loans and guarantees to corporations with about $4.8 trillion of loans fairly allocated to all consumers and their lenders. It would be a loan program direct at the root of the problem, not the symptom. For a plan like that please see The AllStreets Bailout Plan at themortgagenews.info.
On Jun 06 12:39 PM tdillian wrote:
> great article, am looking forward to reading the second part...<br/>
>
> I can tell you as an immigrant, over 15 yrs in this country, I have
> noticed a big shift. I am originally from Asia and recently become
> a citizen of this country.
>
> I went to an engineering graduate school here, when I was in graduate
> school I noticed 15 yrs ago, there were many asians(nonamericans)
> in my classes BUT there were a good amount of americans as well.
> I happen to have a friend who is now a professor who went through
> graduate school at the same time as me, and he has noticed that the
> shift in the graduate school, now over 90% are NOT americans, and
> many many are asians (nonamericans)either from India or China. He
> noticed this shift was very prominent about 10 yrs ago, but this
> professor has now noticed in the last 5 yrs or so, more and more
> chinease/indian students are staying in their homeland as opportunities
> have increased there.. OR they are comning here, going to engineering
> grad school here and returning to their homeland.
>
> I would urge the author to look into this, in the 80's 90's there
> was a huge influx of asian immigrants,engineers, who came to this
> country, and settled here that led to some of the biggest techonlogy
> companies being built and grown.
> BUT now that;s shifted , they are either not even comning in such
> high numbers (b/c of increased opportunities in their home countries)
> OR they are returning home after getting educated here.
>
> This "brain drain" in the technology sector will surely have a detrimental
> effect on the economy. Would appreciate comments on this. Thanks.
On Jun 06 09:15 PM AllStreets wrote:
> The trend has been noticed and discussed here for decades. I have
> no idea why it exists to such a degree, but I suspect it's for two
> reasons: (1) there hasn't been much job growth for many years for
> professors of any kind and that's the main opportunity for PhD's,
> and, more importantly, the costs of financing have spiralled out
> of reach for many prospective students. I wonder how foreign students
> are financed, and what job opportunities they have when they leave.
> Do they get large government grants and guaranteed job opportunities?
>
>
> On Jun 06 12:39 PM tdillian wrote:
Great article !
Jude Jin ,Donald Ingram ,Steve Graves , Whippet ,
You are all spot on .
legal work visas. This insourcing of workers can be taxed. Those
who hire illegal immigrants still need to be punished. This kind of hiring is still commonplace partly because the employers still don't
believe the enforcement agencies are serious about it. President Obama's proposal to tax the outsourcing of workers needs to be balanced with reduced taxes for employers who hire legal workers within this country. Some kind of revenue-neutral, carrot-and-stick
taxation approach might offset some of the erosion of manufacturing employment in this country.
On Jun 06 08:30 AM YoYoMama wrote:
> Obama has already proposed a tax on those companies who outsource
> their operations overseas.
>
> By law you would not be able to tax the insourcing of labor as per
> companies who use illegal immigrants. The hiring of illegal immigrants
> is a criminal offense, not civil, and is governed by criminal law,
> not civil. The consequences, therefore, are criminal in nature. There
> are already criminal penalties in place for this.
Great deal.
Look around and realize 30% of the destruction is a direct result of off shoring. At least 30%
We gifted China our jobs, then our money to buy the things, and soon our sovereignty. In reality, that has already happened.
And I'm not protectionist. I just want a level field. Make China adhere to our minimum EPA standards (fat chance) AND enact the same exact import/export laws that China uses now.
Then they might be good for us. Now they are stealing from our children.
On Jun 06 11:08 AM carsons7 wrote:
> With the huge crop of consuming baby boomers, forming families, and
> entering the their peak consuming years in the 1970's through 2000's,
> if it wasn't for the cheap China labor producing all the goods that
> we, the baby boomers, needed, the price of EVERYTHING would be up
> MUCH MORE than what it is today. That cheap China labor put a cap
> on what inflation would have been over this time period. Now with
> the marginal perpensity to save back in vouge, inflation of goods
> and services should stay in check, but debt inflation (read interest
> rates) will rise. Yes, Staginflation is back..
The diff: now 90% of people do not know how to plant or harvest a bean and have no connection to the land.
On Jun 07 07:25 AM Michael Young wrote:
> Incredible comments. All enjoyable. What a forum of differing opinions
> we have. I do sense though that a lot of writers still feel beaten-up.
> I would have expected that 6 months ago but the economy is now stabilising
> and inflation (demand relative to supply) in certain sectors, commodities
> for example, is returning. In fact that increase in demand is not
> limited to resources, we are seeing it here in the UK in relation
> to consumer spending, house prices, M&A. I have also seen it
> in Asia, and the Middle East on my travels. The global economy is
> recovering. You serial pessimists can talk down your own local economy
> if you like. And I hate to kick you when you are down, but the <i>US
> <i> economy, is not the <i>Global<i> economy anymore. Q3 postive
> GDP (QoQ), globally and in the US, I predict.
On Jun 06 09:51 AM Ferdinand E. Banks wrote:
> I don't know whether I'll risk the intellectual punishment that I
> might have to take if I read the next installment, but I would definitely
> like for the author to make it clear that if Americans elect people
> like George W. and Bill Clinton, then they deserve what they get.
> The US economy is a tale of 3 linked but separate economies.
> 1. The Productive Economy, principally enagaged in generating real
> goods and services(including the protection of persons, property
> and the Nation) and real income, wealth and quality of life
> 2. The Parasitic Economy, principally engaged in social engineering
> and social transfers( much of what is called Big Government and its
> many clients)
> 3. The Fantasy Economy , engaged in spinning and trafficking in illusions
> and fantasies; here debt is confused with income, consuming with
> producing , digital notations with real assets, falsehoods with truth
> and fiction with reality. This is the domain of Wall St, its finacial
> engineering , its digital deceits and the serial bubbles it generated
> in collusion with the Parasitic Economy by convincing global investors
> and ordinary Americans that the Fantasy economy was really just a
> vibrant sub-set of the Productive economy.
On point #2: the parasitic economy is just getting larger. The rules of government are to keep people beholden to the welfare state and never to allow them to be free and independent. Once you ever have to deal with the bureaucracy, it is almost impossible to control your own destiny. It takes someone with a great deal of fortitude and self-control to free themselves. Most Americans will adhere to the government rules no matter how silly because 'you can't fight city hall.'
Most of our parent's generation had the wife as homemaker, with some outside income. Mom stayed home raising the kids. Daycare was not a requirement for raising a family as it is now. Maybe this is unfair, but every household is going to have to balance their expectations with an economic reality. Today's recession is forcing folks to face this question.
People will continue to adjust and as the world globalizes further you will actually begin to see more jobs migrate to the US to take advantage of the special skills that the US possess not just mentally but industrially as well.
The one disturbing trend that is occurring which is not unique to the US is a rise in debt to GDP that is climbing at an alarming rate, the future may include high inflation and staggering interests rates not seen since the 70s if this trend continues.
Ultimately, enjoy life and don't worry so much, if you live in the US your standard of living is better than 75% of the rest of the world--sometimes it is more important to enjoy life with friends and family than crying over the shrinking odds of becoming a millionaire in your lifetime.
I enjoyed the article, and I am sure you mean well, but you are off the mark on this one. Have you ever lived outside of US for any long period of time?
There are many among us who live abroad, while drawing salaries in USD and they also do not see the real picture.
Yes, families have moved from 1 income families to 2 and sometimes even more (with teen aged kids working) salaries. What was considered a luxury in 1970 became a discretionary in 1980 and then it became a must have in 1990 and now it is basic need. People blow a lot of money even today, 2-3 cars, over scheduled kids, a million toys for everyone, expensive vacations, and these huge houses, and Lawns and landscaping, and the list will go on forever. If people scaled back their wants and desires and are content with less, 1 income families would thrive.
The GDP of most of the world has been overinflated for a long time, and it will have to be contracted via de-leveraging, and no one wants that to happen, including myself. China and India are no more wiser than Americans, they are just where Americans were 50 years back, smart, prudent, diligent, level headed, and hard working, and if things are left unchanged, Indians and Chinese will be turn into present day Americans in another 10 years.
There will be no major catastrophe for many reasons. US borrowed money in USD and not in Euro or Yen or Yuan, and this debt can always be monetized. The lenders were morons if they did not see this coming, a plain and simple counter party risk. The lenders will probably decrease or eliminate their lending, but what else are the Saudis going to invest in?
US is still THE major consumer in the world, the norm will be reached slow and steady over more than decade. By that time, most Americans would have adjusted their expectations...
What do most people buy on credit? Toys!
Toys like 42" plasma screen TVs and cases of $200/bottle wine. Toys like Waverunners that never touch the water. Toys that enable the average American to "keep up with the Joneses" (Never mind the fact that your neighbor could frankly care less about your stuff.)
Can't afford it? Hey, that's what credit cards are for!
We bought things we couldn't afford with money we didn't have to impress people that we don't know.
On Jun 05 12:53 PM Tom E. wrote:
> The financial service industry encouraged the hollowing out of America
> because they knew it would increase the amount of debt people would
> have to take on to keep up their living standards. More debt means
> more money for them.
>
> It wasn't long ago that if you didn't outsource your production to
> china etc., Wall Street analysts would downgrade your company.
Gardening has become very popular recently (By the same token, HD and LOW are posting record gains.)
On Jun 07 08:36 AM cabaretewilliam wrote:
> (in reality the american families are much more broke than in 1929!!!)
>
>
> The diff: now 90% of people do not know how to plant or harvest a
> bean and have no connection to the land.
Up until recently, the Russians were heavy users of credit cards.
On Jun 08 02:04 AM punk_ash wrote:
> The GDP of most of the world has been overinflated for a long time,
> and it will have to be contracted via de-leveraging, and no one wants
> that to happen, including myself. China and India are no more wiser
> than Americans, they are just where Americans were 50 years back,
> smart, prudent, diligent, level headed, and hard working, and if
> things are left unchanged, Indians and Chinese will be turn into
> present day Americans in another 10 years.
>
When a society gets to the point of extreme hubris that we now have, people are spoiled in the work they will accept to do thus the society cannot find enough resident workers to do the low level but absolutely essential jobs a society requires so it must hire eager-to-do-anything immigrants, legal or not(slaves were used in earlier days). Thus, as a result, we shift our problems from one form to another, but they are still there just as strong. Which do we fix first? And, how?
Sending work offshore is a totally different thing, as that is 100% cost cutting device for increased profits only. Don't ever buy into the (Microsoft) agrument that it cannot find enough skilled workers here. It easily can, but it wants to pay less for them and increase its profits. It's all a bullshlt argument.
And yes, the easy credit(houses, credit cards, cars, etc.) but high interest rate game has been a major economic killer waiting to pounce. But why? Because spoiled people buy into the specious position of not saving but living high now and paying for it later that often turns into a cash flow nightmare or worse when a misfortune hits them. Look at today's unemployment and housing mess for proof of that.
Every action has an equal and opposite reaction. Always.
It is not the first time the USA have made such a huge strategic blunder. Thie reason behind the blunder was US desire to split Communist China from America's main adversary the Soviet Union.
The similar strategic blunder America has made back in 1939. Both Hitler's Germany and Stalin's USSR were totalitarian states. By that time,
- The Soviet Union has already "successfully" developed and implemented on a huge scale concentration & extermination camps and widely use poison gases and gas-chambers to kill millions of its own citizens when Nazi just learned about Soviet experience.
- Soviet Union has been already expelled from "League of Nation" for invading and occupying Finland before together with Nazi they invaded and occupied Poland.
However, FDR has made a strategic decision to support Stalin against Nazi. 14 years later, only Stalin's death saved the USA from Soviet nuclear blackmail and a potential nuclear war.
Well, America never learned from its mistakes and blunders. However, this time it is very serious situation. The USA were able to co-exist with USSR but this will not be so easy with a rising totalitarian monster called communist China.
I appreciate your effort to synthesize the situation, even if it takes 3 pages. Thanks.
I have a friend with an apartment building for low-income people. He says granite counter are a must, or he can't rent the apts.
On Jun 05 03:14 PM Tony Petroski wrote:
> The author: "This fact stares us in the face everyday, though no
> one really notices it. In the early ‘70s, typically one parent worked
> and the other stayed home. Today, BOTH parents work and most Americans
> are barely getting by."
>
> I was around in the '70's. Actually, both of my parents worked then.
> Our "median-priced home" had one bathroom, no air conditioning, no
> garage, formica countertops, no...you get the picture. Today's "median-priced
> home" has a three-car garage, central air, granite countertops, 2
> and 1/2 baths and so on. You are comparing apples to oranges.
>
>
> I spent yesterday working on a home I own which is populated with
> "poor" people. Mom and the kids inside had the A/C cranked up while
> watching cable TV. Mom was surfing the (high speed--none of this
> dial-up nonsense for her) net while I was outside sweating. There
> is more wealth in this country now by far than in 1970 and this type
> of analysis has the purpose of cementing the case the our "Citizen
> of the World" should lead us down the path to more "spreading the
> wealth" to make things fair.
>
> Jimmy Carter also warned us that we were in a malaise and we would
> have to get used to a permanent state of decline. We'll get through
> this as soon as we give the boot to Jimmy Carter redux and get on
> with the business of producing again.
>
> We don't need a prostrate China in order for us to prosper, quite
> the contrary. Their prosperity aids us as well.
>
> Thomas Jefferson lamented the rise of manufacturing at the expense
> of rural hamlets and farming. Now we lament the rise of "services"
> and "financials" at the expense of manufacturing. The rise of services
> and financials is not a sign of weakness but of prosperity. Stop
> attempting to spread the wealth around and allow producers to prosper
> from their wealth and we'll have a new beginning.
International businessman have taken advantage of the Chinese slave labor economy and shifted production to China. All in the name of 'Free Trade" and "Gobalization" that supposidly raises the standard of everyone as the lower cost producer supplies the world with more affordable goods and services.
For the Free Market deciples China has been and will continure to be a godsend of unhindered by Western rules and regulations.
For the worlds consumers it has been great because anytime a product can be made less expensive it increases our material standard of living. Until it is our job that is outsourced to China. The production of goods by China at costs below the cost of domestic production has decimated all industires and workers that have had to compete against the Slave Chinese Economy.
Slave Labor versus Wage Labor
In 1860 a war between two different economic systems occured. The Northern State of early Industrial America choose to pay a wage for labor. The millions of new immigrants went to work in Northern factories. But the North ran a trade decifit with England.
The Southern States used Slave labor to plant and harvest cotton. This cotton was then sent to England to made into cloth which was then sold back to the Americans. The South ran a Trade Surplus with England. But because the Southerners did not believe in wage labor the Southern Slave Owners never invested in factories in the South. Instead the profits from slave labor were depositied into Northern Banks. The Northern Bankers used Souther Slave Profits to finance the building of Factories in the North.
Eventually the economic and social conflict between the North and South erupted into war. Remeber that the Southern Slave Owners considered slaves to be property but the Norhtern States did not honor this.
When war broke out the leaders of the South realized that they did not have the MANUFACTURING INDUSTRIAL BASE to fight a war. The North was more prepared with an established manufacturing base.
In 1864 the Wage labor economy defeated the SLAVE labor economy.
Forward 145 years and the Wage Labor economy has SURRENDERED to the SLAVE labor economy of China. The Chinese army of slave labor with no enforceable rules protecting labor or enviroment is winning every battle (industry) it attackes. Its soldiers (slave laborers) out numbre the American forces at least by 4 to 1. The generals of the Chinese Slave Labor forces are not encombered by health care costs, pension funds, minimum wages, EPA, OSHA, FDA, FTC, and on and on with the alphabet soup of Western regulatory profit destroyers.
Wage deflation leads to general deflation and the lower wages decrease aggregate demand.
In the ruins of the wage labor economy new low wage jobs will sprout. But these new low wage jobs will not sustain the economic system created around the higer wage jobs of time past. All governments, local, state and federal will be forced to deal with the lower tax revenue that a low wage economy can pay.
Bankruptcy and insolvency of private individuals and business and public agencyies will continue until the liabilities do not exceed the ability of the low wage labor economy.
When does this deflationary process end? Equalibirum between the Slave Labor State of China and Wage Labor State of America will be reached when enough high labor jobs have been outsourced to China and the Effective wage labor rate for an American worker equals the effective wage rate of Chinese Slave labor.
There is no turning back the clock on "free trade". It is a philosophy heald deeply by the business and political elite in this country. As for the American worker the future is one of a lower standard of living. For domestic busniessmen it will be a readjustment to survive in a low wage labor economy with consumers earning and spending less.
For government leaders it will mean cutting services, medical, educational, and begging public employee unions to renegoiate the high wage labor contracts and pensions.
Today unlike in 1864 the Slave Labor Economy will defeat the Wage Labor Economy. And when real war breaks out between the two economic systems the Generals in the American Military and business will find themselves unprepared for war just as the Southern States discovered in 1860.
arabianmoney.net/2009/.../
On Jun 08 11:29 AM bobbobwhite wrote:
> Yes, but......................
>
> When a society gets to the point of extreme hubris that we now have,
> people are spoiled in the work they will accept to do thus the society
> cannot find enough resident workers to do the low level but absolutely
> essential jobs a society requires so it must hire eager-to-do-anything
> immigrants, legal or not(slaves were used in earlier days). Thus,
> as a result, we shift our problems from one form to another, but
> they are still there just as strong. Which do we fix first? And,
> how?
>
> Sending work offshore is a totally different thing, as that is 100%
> cost cutting device for increased profits only. Don't ever buy into
> the (Microsoft) agrument that it cannot find enough skilled workers
> here. It easily can, but it wants to pay less for them and increase
> its profits. It's all a bullshlt argument.
>
> And yes, the easy credit(houses, credit cards, cars, etc.) but high
> interest rate game has been a major economic killer waiting to pounce.
> But why? Because spoiled people buy into the specious position of
> not saving but living high now and paying for it later that often
> turns into a cash flow nightmare or worse when a misfortune hits
> them. Look at today's unemployment and housing mess for proof of
> that.
>
> Every action has an equal and opposite reaction. Always.
PerotCharts.com
extremely insightful with information and charts regarding how we got ourselves into this financial mess and possible solutions
just thought I'd pass this along as his site appears to tie in nicely with this article and is very informative
It seems incomes have risen...for the executives. While everyone else struggles. I wonder if this was accounted for, woulld all these be irrelevent points?
The first force is inequality of incomes. The advanced economies are creating labor force that is paid from corporate profits (think managers, Madison Ave, Wall Street, R&D) and government transfer payments that bid for consumption goods without (at least in the short run) actually contributing to their manufacture.
This induces inflationary pressures on consumption goods in excess of the productivity gains of that sector. Hence the decline in real wages going to that sector, even as the services sector (R&D, advertising, managers) tends to see large wage gains.
Outsourcing production to China/India doesn't change this picture, it just alters the location. Minsky's recommendations were to limit transfer payments along with barriers to entry in labor markets, and to control wage growth in the managerial classes.
The second Minsky force described in this article essentially discusses where we are in the process dealing with yet another inflationary bubble. To combat deflation, we know that we must retain the capability to lend and provide liquidity to the lenders. This is a lesson we have learned real well.
The government paper currently being created is highly liquid and can be used as collateral to finance business loans. Much better collateral IMHO than the RMBS paper that was being used for similar purposes a little while ago. This process will work. There is no reason to doubt this.
The question going forward is how to deal with the inevitable inflationary pressures. All that government paper is just going to be rocket fuel for the next bubble.
Some basic controls on leverage are necessary. Why should we be complacent while banks and hedge funds leverage out 100:1 to create fortunes for themselves? They rely on the services of the Reserve Banks and the Treasury to provide the systemic liquidity that underlies the prospect of delivering such fortunes. When that liquidity is gone, they are essentially asking taxpayers to foot the bill.
Systemic liquidity is a service to speculative investors. If they are so hot, then they should pay for this service. Some kind of liquidity insurance should be demanded of folks who rely on liquidity to unwind huge positions. Currently they get it for free -- from us.
yes, right-wingers are all up in arms about so-called "legislating from the bench", or other similar euphemisms where the people's interests might actually prevail over the monied plutocrats.
Of course the most egregious example of this was the 2000 Bush vs. Gore ruling where the Supremes (along partisan party lines) ordered the Florida recount halted and GWB (s)elected as president.
What was their catch-phrase after that ? -- "Get over it"?
On Jun 06 12:41 PM Jimbo wrote:
> "The Supreme Court passed a law", nun beat me to the punch by commenting
> on this phrase. I don't know if the author's choice of words is deliberate
> or unintentional, but it does speak the truth. One of the problems
> facing this country is that the courts have assumed the role of a
> legislature, bypassing the actual legislatures. Certain pressure
> groups are pleased with this because they don't have to subject their
> agenda to public scrutiny.
The Supreme Court adjudicates(last time I checked) and the Congress legislates.
My cell phone holds more computing power than was available on most university campuses in 1970. The MRI machine that saved my wife's life didn't exist in 1970. I'd have to say that my quality of life and standard of living have increased quite nicely in the past 40 years. Shadowstats should rename itself LinearTrendsExtrapolat...
What the silly repugs don't understand is that you can't spend gazillions on a war, give tax rebates, give yet more money to corporate welfare, completely deregulate the financial industry (fox watching the chicken coop, for sure), keep interest rates ridiculously low for years and years during a MASSIVE bubble, and expect the economy to survive.
The muslims knew something that you don't. They knew they couldn't bring us down militarily, but they could economically. Chasing after weapons of mass destruction, my a$$!!!
We don't have the money to pay for schools and roads, but we got money to fight windmills over in Iraq. For WHAT!!!!????
The muslim world will win because we are stupid and did just what they were hoping we would do. Now when there is a real threat, like say from Pakistan or North Korea, we can't AFFORD to do anything. When China tells us to sit down and SHUT UP, we do -- why? Because they OWN US. (Check out what happened when we tried to do something about N Korea at the UN a couple of years ago and China shut us up) Get it? Real simple. We don't get to be the big bully anymore. We are DONE. And the sad thing is, we did it to ourselves.
On Jun 05 10:35 PM rockingandrolling wrote:
> Keep dreaming...Democrates don't know how to think....they function
> on emotion only....they think the gov. has all the answers...they
> want to change the world by talking, showing weakness....never works.
>
>
> As far as the government spending your money...quit electing the
> democrates....better yet - push for term limits....
>
> Too many aliens allowed to enter the country...this is the problem.
> They have no allegiance to our country.
>
> Close the borders...enforce our laws...and we will have work for
> our people.
>
> Instead of worrying about disasters happening to us - we should
> start creating disasters to the ones that would think of harming
> us. Why should we worry about this....As an example: Iran wants the
> nuculear bomb...I say give it to them . Drop a couple on them and
> let the rest of the world know that we will take them out the same
> way if they even think about screwing with us.
>
> Take out N. Korea too...
>
> I say take the battle to the enemy....
>
mindyourpolitics.blogs...
To date, the only known, proven way we have come up with to prevent big business from distorting markets to its advantage wherever possible (arguably preceisely the sort of self-interested behavior on which "free and fair" markets supposedly thrive) is through regulation - notably, in this country, antitrust laws, fair trade and consumer protection regulations and regulation of the financial markets (Glass-Steagal, for example). Unfortunately, we have spent the past 30 years either formally repealing or failing to enforce these protections - all supposedly in the name of letting the "free markets" thrive unfettered by pesky and misguided government regulation.
Furthermore, the notion that free markets are always more rational and beneficial than economic planning is naive at best. History has shown that free unregulated markets inexorably lead to boom and bust cycles which at the end of a day could hardly be conisdered of much benefit to anyone except maybe for a few speculators who are lucky enough to have consistently won their bets. I say "lucky" because the extreme volatility inherent in these boom/bust cycles tends to be more the product of irrational exuberence and doomsaying than of discernable trends and underlying "fundamentals" which form the basis for the educated guesswork of forcasting.
While "normal" market fluctuations create healthy opportunity, even the luckiest gamblers eventually lose; however, as the existence of organizations like Gamblers Anonymous will attest to, many gamblers are nonetheless drawn to keep gambling like moths to a flame. And, in view of our apparent increasingly religious devotion despite the increasingly severe market crashes, fiscal and monetary crises and recessions we have sustained since the current, Smithian "free-market" revolution began, it would seem that we have developed a sort of addiction to deregulation, telling ourselves that it is the answer to all our problems even when those probelms are directly traceable to it.
Unfortunately, the mass devastation and insecurity wrought by unbridled economic instability (regardless of the causes) can ultimately lead to political instability and despotic totalitarianism. That is precisely what happened in post-WWI Germany.
Even more curious to me is your condemnation of "advocacy" groups and the media. While bowing down to special interests can be a major mistake on government's part, and that irresponsible media can greatly exacerbate irrational behavior on the part of the public, on the ohter hand, I'm not sure that these behaviors aren't also manifestations of self-interest which anti-regulatory, free-market theory would in fact protect.
On Jun 05 12:08 PM MarkitWacha wrote:
> However, look around and you'll see less pollution from U.S. factories.
> While I agree with your article, the ruse the US is playing is actually
> improving our standard of living. It's just not sustainable. It was
> great while it lasted--McMansions everywhere, plentiful white-collar
> jobs, few factories.
>
> We're beginning a trend in the other direction now, and new factories
> will have reason to locate in the US as the price of shipping rises
> to its true cost, while a balancing act continues in the price of
> labor.
>
> Hopefully, the abundance of aggressive Wall Street types will mean
> more entrepreneurs tackling projects across the country. This recession
> could be a good thing. My business is booming.
The success gained by utilizing the LCC “Low Cost Country” as a supply chain or as a finished goods exporter can be difficult to realize even when most factory workers cost above $30 an hour in developed countries last year and below $1.50 in China and $1.2 in India. Asia’s true capability (Cpk) is low, special cause variation is rampant in the product chain and internal quality is resource intensive, while mature experience is fleeting. Many multinationals are reporting equal unit costs to their home countries for the required or dedicated (MIM) Manufacturing Integration Management.
"Term limits" are a Republican talking point to make us take our eye off the ball of the real problem: Campaign finance reform.
Take away the influence of big moneyed corporations on politicians and it's a whole different ballgame.
And you talk of immigrants having no allegience to our country?
What about the big multi-nationals outsourcing and moving headquarters to Dubai? You have been brainwashed by the far right.
Right wingers, on this discussion topic, do have valid arguments here.
NOT YOU!
On Jun 05 10:35 PM rockingandrolling wrote:
> Keep dreaming...Democrates don't know how to think....they function
> on emotion only....they think the gov. has all the answers...they
> want to change the world by talking, showing weakness....never works.
>
>
> As far as the government spending your money...quit electing the
> democrates....better yet - push for term limits....
>
> Too many aliens allowed to enter the country...this is the problem.
> They have no allegiance to our country.
>
> Close the borders...enforce our laws...and we will have work for
> our people.
>
> Instead of worrying about disasters happening to us - we should
> start creating disasters to the ones that would think of harming
> us. Why should we worry about this....As an example: Iran wants the
> nuculear bomb...I say give it to them . Drop a couple on them and
> let the rest of the world know that we will take them out the same
> way if they even think about screwing with us.
>
> Take out N. Korea too...
>
> I say take the battle to the enemy....
>
On Jun 05 03:14 PM Tony Petroski wrote:
> The author: "This fact stares us in the face everyday, though no
> one really notices it. In the early ‘70s, typically one parent worked
> and the other stayed home. Today, BOTH parents work and most Americans
> are barely getting by."
>
> I was around in the '70's. Actually, both of my parents worked then.
Tony, your parents both working in the 70s doesn't debunk the author's point. MOST American households BY FAR didn't have both parents working in the 70s.
So kitchen countertops have graduated from formica to granite.... is this your measure of wealth? And all that central air that people didn't have in the 70s, well, it takes energy to run it, and more energy means more $ going to the Saudis. Oh, and if you want to really see high speed internet, go to Japan... or just about any other developed country, where they have better Internet than us. DSL... pffft!
Our standard of living has grown, yes, but it's all built on a house of cards: CREDIT and TRANSFER OF WEALTH. Well, there's a Salada tea bag with a funny line that isn't really so funny any more: "Americans have the highest standard of living in the world. Too bad they can't afford it."
I see a lot of people lauded Tony for his comments. They bought Tony's observation that because his parents both worked in the 70s, that must have been the norm. Someone even mentioned the granite countertops. Maybe they think granite is kept in Fort Knox, LOL! There's a lot of twits out there! And I think they all base their beliefs on personal experience like Tony obviously does.
Where are the bread lines and soup kitchens?.
============
On Jun 05 11:48 AM JudeJin wrote:
> advance in technology created much of the illusion of rising living
> standard.
>
> in reality the american families are much more broke than in 1929!!!
> would correct spelling of Mr. Summers' company name logo increase
> the credibility of his writings and advice?
You should learn of what you speak before opening your mouth. First, it is Mr. Summers company and he can name it and spell it any way he sees fit.
Second the spelling is correct. Omni means all encompassing or everything or just all of something it is tied to. The latter half of which omni is describing is sans. A word in itself usually used as a descriptive to an action. Mr Summers is using two descriptors with no actual thing being described but in so doing has come up with a a self describing descriptive. Rather sophisticated and does what he had intended it do. Make one think of the name and thus remember it. When you do reach the answer to his company name, it is saying his company is looking at all variables available from the past in all conceivable ways that are available to be had. I don't know for sure what you think he was trying to spell, but will assume it to be sense and not sans. Which to an investor looking for an advisor with some sense would probably steer clear of because the meaning one gets from omnisense is a rather lame or way too geared to self promotion. Not what you want your clients to think or feel about you and your advisory companys role in your investment accounts.
On Jun 09 06:00 PM kalyson wrote:
> What a dummy. Oh, yeah, if it weren't for the democrats we'd have
> paradise. Sure. After 8 years of incompetence and stupidity under
> the complete control of the repugs (house, senate, executive) that
> accelerated the destruction of our economy, you have some nerve talking
> about democrats.
>
> What the silly repugs don't understand is that you can't spend gazillions
> on a war, give tax rebates, give yet more money to corporate welfare,
> completely deregulate the financial industry (fox watching the chicken
> coop, for sure), keep interest rates ridiculously low for years and
> years during a MASSIVE bubble, and expect the economy to survive.
>
> The muslims knew something that you don't. They knew they couldn't
> bring us down militarily, but they could economically. Chasing after
> weapons of mass destruction, my a$$!!!
> We don't have the money to pay for schools and roads, but we got
> money to fight windmills over in Iraq. For WHAT!!!!????
> The muslim world will win because we are stupid and did just what
> they were hoping we would do. Now when there is a real threat, like
> say from Pakistan or North Korea, we can't AFFORD to do anything.
> When China tells us to sit down and SHUT UP, we do -- why? Because
> they OWN US. (Check out what happened when we tried to do something
> about N Korea at the UN a couple of years ago and China shut us up)
> Get it? Real simple. We don't get to be the big bully anymore. We
> are DONE. And the sad thing is, we did it to ourselves.
I say, "Ditto!"
Article was a good summary. It sparked huge thoughts and constructive comments. Keep it up!
Last time I checked, there was an imbalance between wages paid to US workers vs. China, Mexico, Phillipines, India etc.
As long as that imbalance exists, and there are no barriers to trade (i.e. taxes on imports, quotas, etc.) the US will loose jobs. As those foreign markets produce more skilled workers, the job loss begins to rise vertically up the chain (thus the Inidan "back office" and "customer support").
The problem is, if we set up trade barriers to protect our own workers, then so will the other countries. We export a lot of our products, so that would cause more sufferring.
I can see no answer to the falling standard-of-living-of-... other than to wait and allow the US to fall and the Chinese to rise, until the 2 meet in parity. It will be a big change for both communities.
I enjoyed the Comments more than the Article, and the Article was good!
Jim Pearson
To tell you the truth... to me there is no solution to fix the problem and all that you can do is to get ready (as I have done) for what is to come.
On Jun 05 09:56 PM thiazole wrote:
> Move to a grass hut with no electricity, TV, running water, etc,
> and you'd be surprised at what you could afford. Hell, just move
> to Nebraska or Wyoming and you'd be shocked at how little money it
> takes to get by.
>
> Also, if you think being cash rich and time poor is bad, you should
> be thrilled with this recession since it is making many people cash
> poor and time rich.