Employment Numbers Uniformly Horrible 53 comments
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Well, we might as well get this out of the way now. The employment numbers were uniformly horrible. Let’s jump into this cesspool.
First the numbers. From the DOL, initial claims for unemployment insurance were down 16,000 to 614,000 while the four-week moving average declined 2,750 to 615,250. That, of course, is not the big news. That comes from the BLS and they reported that 467,000 jobs were lost in June. The unemployment rate stayed about the same at 9.5%. This is a major setback as it reverses a trend of declining rates of job losses. These charts from the BLS pretty much tell the story.
click to enlarge
This from the Curious Capitalist, who puts this recession in its awful perspective.
Here are the reactions of economists on the WSJ Real Time Economics Blog:
This was a very ugly labor market report, and there is no amount of lipstick that can improve its image. Indeed, not only does it suggest that the pace of job losses in the U.S. remains very high, it bucks the trend of four consecutive months of improvement in the pace of job losses. Moreover, with conditions in the U.S. economy continuing to be very weak, there is little to suggest that a turnaround in U.S. labor market conditions is on the horizon. –Millan L. B. Mulraine, TD Securities
Yes, the drop in payroll employment has moderated from the 700,000+ results reported over the winter when panic and paralysis was the order of the day. But, private sector job losses in excess of 400,000 this deep into a recession cannot be viewed as anything but terrible news. –Joshua Shapiro, MFR Inc.
The headline payroll drop overstates underlying job losses because of the 49,000 decline in federal employment, which was largely due to the layoff of temporary census workers (which boosted payrolls in April)… Nonetheless, the rate of private sector job losses is slowing (the peak rate of job losses was the November–February period) and we expect that trend to continue… We are encouraged that both the narrow and broad measures of unemployment rose only marginally in June and this, along with the slowing in the rate of private sector job losses, further suggests that the recession is drawing to a close. –RDQ Economics
The payroll number is very disappointing. We had hoped to see a third straight movement back towards the 200,000 or so implied by the level of jobless claims, but instead the gap widened again, suggesting gross hiring remains extremely weak. The deterioration from May was mostly in services… In short, labor market is still terrible; don’t be swayed by a small unemployment rate rise. Wages will soon be falling outright, a classic deflation signal. –Ian Shepherdson, High Frequency Economics
Services and construction accounted for most of the steeper declines with bigger layoffs prevalent across most industry groups. On a slightly less discouraging note, job losses in manufacturing were the smallest since last November. Excluding the motor vehicle industry, declines in manufacturing jobs have gotten progressively smaller for six straight months. –Nomura Global Economics
We have a suspicion that the influx of school leavers into the labor market may have been a factor as well, as the numbers finding jobs appear to have been lower than allowed for in the usual seasonal adjustments. The alternative household survey measure shows an 83,000 decline in employment among 16 to 19 year olds last month, while the unemployment rate for that age cohort jumped to 24.0%, from 22.7%. As a result, teenagers accounted for 22% of the 374,000 decline in household employment despite making up only 11% of the labor force. –Paul Ashworth, Capital Economics
The larger than expected decline in private payrolls reflected a quickened pace of job loss in sectors such as construction and temp help. Meanwhile, the decline in census-related jobs in the government sector appeared to be right in line with our expectation (-50,000). Also, it’s worth noting that employment at auto dealers fell only 9,000 during June and we are likely to see much sharper declines in this category over the course of coming months. –David Greenlaw, Morgan Stanley
Interestingly, the only areas that showed any growth in employment were the already bloated sectors of education and health care. As a nation we already spend too much, and employ too many people, in these industries. Our current economic problems will not be solved by hiring more teachers and medical technicians. Our ultimate recovery must be led by a resurgence in manufacturing, which according to today’s numbers, continues to spiral lower. –Peter Schiff, Euro Pacific Capital
The worst of the contraction may be behind us but the economy is still in consolidation and will be through year end. Specifically, the 467,000 decline in payroll jobs was about 100,000 more than the Street had been anticipating. The composition of the job loss was also well balanced with goods producing firms cutting staffing levels by 223,000 as service producing cut employment by 244,000. –Steven Ricchiuto, Mizuho Securities
Job losses and the weak average hourly wages data suggest weak consumer incomes and thereby consumer spending. The second half gain in GDP will be dominated by federal spending. The test will be if much of the transfer payments are saved, not spent. In the personal income data released last week you saw that most of the money was saved. –John Silvia, Wachovia Economics Group
The green shoots in the job market are hard to find. Businesses are determined to trim costs by cutting payrolls. Expecting sluggish recovery in demand in the foreseeable future, employers want to make sure that a sustained economic recovery is here before hiring. The job market will become the Achilles’ heel of the coming recovery. –Sung Won Sohn, Smith School of Business and Economics
The details of the June employment report show a distressing degree of slack in the labor markets and a significantly weaker track for personal income. These trends will continue over coming months, and the process of reversing them will be a lengthy one. –Richard F. Moody, Forward Capital
OK, we know employment is a lagging indicator and there have been some positive signs in other metrics so let’s not slit our wrists. At the same time, we are digging a hole that is so deep that crawling out of it is going to take years.
All of these people do have to find jobs again sometime and I suspect, as do many others, that the numbers understate the extent of the problem. There are a lot of people working for ten or twelve bucks an hour that used to make multiples of those numbers. That’s what you do to survive. So as we all probably know intuitively, the truth is worse than the picture the numbers paint.
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This article has 53 comments:
This is getting real serious folks. Nothing that we are doing is working. The stimulus missle hit somewhere else. Either that or no matter how much money we pour down this de-leveraging hole matters, it swallows it like candy. If thats the case then we are going through a complete economic morphing, that will end in a different America altogether.
I think Peter Schiff has a point in bringing back our manufacturing jobs, but that would mean protectionism and that opens a whole new kettle of fish.
Yes we have to pursue manufacturing that is where bulk of the jobs are (which we have lost). All this paper shuffling nonsense and 'services' simply will not get us out of this recession.
As far as manufacturing...are you kidding me? Workers in China work a for a few dollars a WEEK...no benefits, no retirement, no excessive corporate taxes and NO regulatory/environmental matters to deal with. We can NOT compete.
Bottom line....the standard of living in this country will be going down for many years.
What's troubling is that the spinmeisters insist on moderating the impact of job losses in virtually every sector that's not supported by government. Education and health care, as Peter Schiff said, are some of the most bloated industries in existence.
One wonders what will happen with health care employment if the reform bill passes. Perhaps that sector of the labor force will contract in response.
Then where will you find the new jobs? Government will be the only expanding employment sector. And as we've seen, government jobs don't add to productivity or income.
They subtract from both.
So the essential thing to do is to keep the job you have and hope your company stays in business. Because if you don't, there will be lots of competition for the jobs that remain.
As the captain on Hill St. Blues said, "Be careful out there."
The current policy of the Government is to tax the productive and subsidize the unproductive : feed the fat and starve the muscle.
Hardly a surprise to any objective observer that jobs, income and wealth continue to de destroyed in the economy.
The government is producing oceans of vinegar while claiming it is producing barrels of fine wine.
In the first half of the year, many Americans patiently believed the government and looked forward to tasting the fruits of its efforts in the Summer. Well, now they have had their first sip........
When GOOG and MON, two of the most dynamic companies in our economy are laying people off, then it provides tremendous support to El Erian's argument that in this recession unemployment is indeed a leading (or at least coincident) indicator.
The problem there, of course, is that we'll see a return to the same type of exploitation we have seen in the past. The bottom line is that with uneven labor laws in different Countries, corporations are free to set up shop near the lowest common denominator and exploit the hell out of their workforce. Countries are forced to compete against each other to lure jobs to their shores, and in doing so expose their citizens to degraded work environments and lower wages.
The US has far to fall before sea level rises high enough to meet them. I wouldn't call it an "economic morphing", I'd call it a global wealth balancing and massive shift in power from governments, democracies and small businesses to multinational corporations.
On Jul 02 01:44 PM conceptwizard wrote:
> I guess I should have bought that 10 acres of woodland in Maine.
> Plant a vegetable garden, cut some wood, shoot a moose and barter
> my eggs and milk from my cow.
> This is getting real serious folks. Nothing that we are doing is
> working. The stimulus missle hit somewhere else. Either that or no
> matter how much money we pour down this de-leveraging hole matters,
> it swallows it like candy. If thats the case then we are going through
> a complete economic morphing, that will end in a different America
> altogether.
>
> I think Peter Schiff has a point in bringing back our manufacturing
> jobs, but that would mean protectionism and that opens a whole new
> kettle of fish.
It doesn't matter what you do with manufacturing, the inevitable trend is increased efficiency and fewer people needed to make the same thing.
China is subject to the same problems; in fact they are losing more manufacturing jobs than any country.
We went through this trend with the farms, and now we are seeing it in the factories.
With fewer and fewer employees needed to produce the goods needed for a comfortable life style the question becomes what shape work will take in the future. Health care and education are resistant so far to automation, other services will no doubt grow too.
What we are seeing is not just an economic cycle, but it is overlayed by long-term secular trend influencing the way our society will work in the future. Trying to grow manufacturing is just not a tenable policy, and any effort to do it is bucking the tides.
On Jul 02 03:54 PM billddrummer wrote:
> Manufacturing employment in the US has been declining for 45 years
> in a row, and just because people think that 'bringing back manufacturing'
> is a good idea won't reverse a two-generation long trend.
>
> What's troubling is that the spinmeisters insist on moderating the
> impact of job losses in virtually every sector that's not supported
> by government. Education and health care, as Peter Schiff said,
> are some of the most bloated industries in existence.
>
> One wonders what will happen with health care employment if the reform
> bill passes. Perhaps that sector of the labor force will contract
> in response.
>
> Then where will you find the new jobs? Government will be the only
> expanding employment sector. And as we've seen, government jobs
> don't add to productivity or income.
>
> They subtract from both.
>
> So the essential thing to do is to keep the job you have and hope
> your company stays in business. Because if you don't, there will
> be lots of competition for the jobs that remain.
>
> As the captain on Hill St. Blues said, "Be careful out there."<br/>
On Jul 02 04:36 PM Steak wrote:
> Good colletcion of thoughts, but this "unemployment is a lagging
> indicator" thing is really getting old.
>
> When GOOG and MON, two of the most dynamic companies in our economy
> are laying people off, then it provides tremendous support to El
> Erian's argument that in this recession unemployment is indeed a
> leading (or at least coincident) indicator.
On Jul 02 04:46 PM Marginalthoughts.com wrote:
> I don't think he's advocating protectionism. I think he's advocating
> a global balancing of labor supply and demand with no human rights
> or labor laws mucking up the free markets.
You seem to think that we're not moving inexorably toward a socialistic style of life now. And if your moniker is accurate, socialism won't be able to compete with the Chinas, Indias and Eurozones of the world.
Protectionism increases costs for all traders, discourages international cooperation, fosters discord among trading partners, promotes retailiatory trade barriers from other nations, and results in a lower standard of living for everyone.
Why some think this is a good idea eludes me.
Unlike China for example, we do not require foreign auto companies operating in the US to form joint ventures with domestic firms - a form of forced technology transfer. And there are probably other examples of non-tariff barriers to trade, both here and in China.
The point is that we have already made a decision to "protect" certain areas of the US economy, food and defense for example. So it is a relatively short leap to expand the list of protected domestic industries. We can already see signs of this in the cap and trade legislation's provisions for outright tariffs, though I expect this to be removed in the Senate, if the bill even makes it to a vote there. Eventually we may get to the point where we no longer require inventing reasons for trade protectionism.
I am actually very interested in any real information, concrete data, or even anecdotal tidbits that demonstrate how the most recent wave of globalization has on balance benefited American citizens. I mean "real" in the sense that it is not derived from a theoretical abstraction, it is not parroting the words of Ricardo, or Pareto, or Friedman, or any other economist. Mostly because I still cling to the econ in I took about a million years ago, where I was taught that we are all better off with so called "free trade," even though I see abundant evidence that it just isn't working out the way it was supposed to.
On Jul 02 06:14 PM Socialism cannot compete! wrote:
> And what exactly is wrong with protectionism? As an alternative
> to our jobs being siphoned off by countries that have absolutely
> zero standards for pollution, working standards, and fair wages?
> Maybe it's about d@mn time we put America first!!!
In California, although those getting IOUs are not going into unemployment (they just work sort of for free as in medical interns etc.) they will be curbing spending due to lack of "working capital". Seasonally, if summer doesn't get an employment bump usually you are not looking to reverse the trend until the holiday season starting around the end of September.
And don't depend on the Fed and the government. With the government consuming 12.5% of GDP they are the only ones more bloated than healthcare. What does healthcare do when over 10% of the people don't have health insurance and an increasing number completely depend on government medicare and medicaid coverage? That is why healthcare can't go it alone. Eventually if this sector buckles we can look forwards to another cycle of unemplyment.
So what is causing the steady rise in unemployment. Clearly, since this downturn is moderately deep and not swift, it has worked its way deeper so that it no longer justs touches consumer goods, housing, and banking but now is burning its way through services. I personally believe it would have been better to have a severe collapse and a rapid recovery from a very depressed base than go the way of Japan with QE which leads to long term stagnation and a prolonged economic contraction (In the only known case that means decades of economic turmoil).
Now that businesses of all sorts are coming to realize Fed and government policies are leading to propping up a unhealthy system that is leading to constant erosion, can you blame them for deciding things will not be getting better for some time and cutting back. There is no need for excess when contraction continues year after year. I really feel sorry for the young. They are joining the Japanese in America's version of the lost generation.
Now only the question remains. Will the fed and treasury offer inflation with it's cup of sour economic grapes.
Market sniper is correct- true unemployment is vastly higher .
Bark- -I went for a drive today in North metro Atlanta -The number of shuttered storefronts was utterly distressing !--AND these self-employed folks DON'T count in the governments unemployment numbers .By the looks of what I witnessed today , The COMMERCIAL real estate sector truly is an accident waiting to happen !
we dont need the rest - we are the best!
Not only that, Chinese manufacturers do NOT work under the same environmental, human right, labor right, quality control, and safety standards.
Unchecked globalization has destroyed not only blue collar workers' families, but also the global environment, consumer welfare, consumer confidence, anti-corruption efforts, our beliefs of human right protection and fairness, ...
What is more dangerous? Saddam Hussein or fake and corrupt communism?
I believe no contemporary, educated human being is anti-free-trade. However, I believe most of us with or without a college degree are anti-unfair-corrupt-fr...
Who will be supply the planes that China, Russia and India need? Boeing or Airbus?
How deluded does a Nation have to be to think they can run a protectionist economy whilst still be the World Reserve Currency, and even then thinking that they are the best, even though they withdrawn from the competition?
Like Jackson said, "I am looking at the Man in the Mirror", although whether he did it too often or not frequently enough is difficult to say. It is not surprising that China regards America as decadent. Even most of your hereos are bloody junkies. Yes, how many of you actually think of Elvis as a Junky? To many, he was the American dream!
Policeman: I also support free trade but what you are selling is harmful!
Drug dealer: Really? How many people are actually killed by drugs every year? Show me some figures!
Policeman: I don't know. Many research shows that drugs have a lot of harmful effects on human health.
Drug dealer: Perhaps, you just have a high health standard. Most people don't die after taking drugs anyway and they are all happy after taking drugs. BTW, we don't just earn the drug monies; we spend the drug monies to boost the economy too! After all, who help buy those private jets and luxurious houses?
In the name of free trade, perhaps Walmart should consider selling drugs in their stores. That certainly reduces unemployment. Where would the drugs come from? Possibly Taliban. Anyone has any problem with that? You protectionist!
BTW, China must hold U.S. government bonds. That's the only way they can earn some interest from their U.S. currency reserve. Why does China hold U.S. dollar reserve? Because China needs to control its exchange rate to boost its exports to the U.S. Can China dump its T-bond holding? NO. Unless the communists would like to commit suicide. The Chinese Yuan could appreciate by at least 30% overnight. Who will then buy any low-quality commodities from China?
On Jul 03 12:52 AM Dave Wrixon wrote:
> Go on. Do your protectionist thing.
>
> Who will be supply the planes that China, Russia and India need?
> Boeing or Airbus?
>
> How deluded does a Nation have to be to think they can run a protectionist
> economy whilst still be the World Reserve Currency, and even then
> thinking that they are the best, even though they withdrawn from
> the competition?
>
> Like Jackson said, "I am looking at the Man in the Mirror", although
> whether he did it too often or not frequently enough is difficult
> to say. It is not surprising that China regards America as decadent.
> Even most of your hereos are bloody junkies. Yes, how many of you
> actually think of Elvis as a Junky? To many, he was the American
> dream!
The trade imbalance is there essentially because the US gets the goods for free. They do not reciprocate with articles of similar value, instead they just issue endless FED IOUs. It is a ponzi scheme pure and simple, and like ponzi schemes it is ultimately finite. When the maths no longer stacks up they collapse, and that is precisely what is going to happe to the dollar.
On Jul 03 01:35 AM Arthur Hau wrote:
> Drug dealer: I support free trade!
>
> Policeman: I also support free trade but what you are selling is
> harmful!
>
> Drug dealer: Really? How many people are actually killed by drugs
> every year? Show me some figures!
>
> Policeman: I don't know. Many research shows that drugs have a lot
> of harmful effects on human health.
>
> Drug dealer: Perhaps, you just have a high health standard. Most
> people don't die after taking drugs anyway and they are all happy
> after taking drugs. BTW, we don't just earn the drug monies; we spend
> the drug monies to boost the economy too! After all, who help buy
> those private jets and luxurious houses?
>
> In the name of free trade, perhaps Walmart should consider selling
> drugs in their stores. That certainly reduces unemployment. Where
> would the drugs come from? Possibly Taliban. Anyone has any problem
> with that? You protectionist!
>
> BTW, China must hold U.S. government bonds. That's the only way they
> can earn some interest from their U.S. currency reserve. Why does
> China hold U.S. dollar reserve? Because China needs to control its
> exchange rate to boost its exports to the U.S. Can China dump its
> T-bond holding? NO. Unless the communists would like to commit suicide.
> The Chinese Yuan could appreciate by at least 30% overnight. Who
> will then buy any low-quality commodities from China?
how to get taller
One simply needs to look at the exchange rate from 1980's to the present to see how the Chinese communists manipulated their exchange rate.
BTW, the term "foreign exchange reserve" is kind of like a misnomer. To be more technically correct, it should have been called "accumulated balance of payment." When country A has an increase in net foreign investment or net exports, country A's currency tends to appreciate. To stop it from appreciating, country A has to sell its own currency in the market and in turn receives foreign currencies (just like selling more apples in the market makes the price of apples cheaper). The foreign currency accumulated as a result this operation is called "foreign currency reserve!"
In the free floating exchange regime, a government does nothing and will not "gain" any foreign reserve. The Chinese communists aren't simply investing the U.S. government bonds for no reason. They have accumulated U.S. dollars from their manipulation of their exchange rate. To get some "risk-free" interest at all, they have to use their U.S. dollar holding to buy U.S. government bonds. Of course, if they are willing to take some risk, they can buy up some U.S. real estate properties (just like what the Japanese did in Hawaii many years ago) or even companies (well, they have been doing this in Australia for strategic reasons already!).
If the Chinese communists stop sucking up more and more U.S. dollars, and hence U.S. government bonds, the current Yuan/Dollar exchange cannot be sustained! If the Chinese communists are stupid enough to start selling U.S. assets (or any other foreign currency denominated assets), Yuan will appreciate back to its original level 30 years ago, that is, by at least 3 times! Would anyone still want to buy any junk from Walmart when it becomes 3 times more expensive?
On Jul 03 02:57 AM Dave Wrixon wrote:
> If this were true then they would hold the majority of their bonds
> with their largest trading partner which is the Eurozone.
>
> The trade imbalance is there essentially because the US gets the
> goods for free. They do not reciprocate with articles of similar
> value, instead they just issue endless FED IOUs. It is a ponzi scheme
> pure and simple, and like ponzi schemes it is ultimately finite.
> When the maths no longer stacks up they collapse, and that is precisely
> what is going to happe to the dollar.
US was one of the few countries not to sign Kioto protocol, so don't complain about environmental standards of other countries.
What more do you want to to for america.
On Jul 02 06:14 PM Socialism cannot compete! wrote:
> And what exactly is wrong with protectionism? As an alternative to
> our jobs being siphoned off by countries that have absolutely zero
> standards for pollution, working standards, and fair wages? Maybe
> it's about d@mn time we put America first!!!
> US was one of the few countries not to sign Kioto protocol, so don't
> complain about environmental standards of other countries.
> What more do you want to to for america.
NOT TRUE! Only advanced nations were asked to sign the Kyoto. All so-called developing countries, including China (which btw is the de facto most polluting country in NOx and SO2), were not asked to sign and therefore have NOT signed the Kyoto just like the U.S.
The U.S. definitely should sign the Kyoto. However, if China does not sign it and all U.S. manufacturers move to China to escape from the new environmental standards, the world will be like a smoking hell!
China is already a smoking hell. And if anyone cares to go to youtube, you will find a short vid shot by a guy in Quam showing the polluting smog blown from the direction of China to Quam! Yes, a thick layer of NOx was carried by wind and reached all the way to Quam.
www.youtube.com/watch?...
Where the education for future workers can help is in addition to more technical training, more creativity-type & entrepreneurial training will be necessary.
On Jul 02 05:32 PM bricki wrote:
> Manufacturing jobs have been declining because of increasing efficiency.
> The US still manufactures almost twice "stuff" as much as China does,
> but the jobs are going away because each year efficiencies cut the
> number of workers needed to make the same thing.
>
> It doesn't matter what you do with manufacturing, the inevitable
> trend is increased efficiency and fewer people needed to make the
> same thing.
>
> China is subject to the same problems; in fact they are losing more
> manufacturing jobs than any country.
>
> We went through this trend with the farms, and now we are seeing
> it in the factories.
>
> With fewer and fewer employees needed to produce the goods needed
> for a comfortable life style the question becomes what shape work
> will take in the future. Health care and education are resistant
> so far to automation, other services will no doubt grow too.
>
> What we are seeing is not just an economic cycle, but it is overlayed
> by long-term secular trend influencing the way our society will work
> in the future. Trying to grow manufacturing is just not a tenable
> policy, and any effort to do it is bucking the tides.
On Jul 02 06:51 PM billddrummer wrote:
> To socialism cannot compete!
>
> You seem to think that we're not moving inexorably toward a socialistic
> style of life now. And if your moniker is accurate, socialism won't
> be able to compete with the Chinas, Indias and Eurozones of the world.
>
>
> Protectionism increases costs for all traders, discourages international
> cooperation, fosters discord among trading partners, promotes retailiatory
> trade barriers from other nations, and results in a lower standard
> of living for everyone.
>
> Why some think this is a good idea eludes me.
On Jul 03 05:52 AM Vienna wrote:
> You have always been putting america first ! Your poured your toxic
> assets all over the world, bombed countries to fund your military
> complex, and buy tons of cheaps stuff from poor people to generate
> massive revenues for your corporations.
> US was one of the few countries not to sign Kioto protocol, so don't
> complain about environmental standards of other countries.
> What more do you want to to for america.
you are right we are following this. As far as we can figure out here everything he tries to do regarding savings incentives is constantly being blocked by other parties.
Is this true?
On Jul 03 11:53 PM Market Sniper wrote:
> I suppose the USA should put Austria first, right Vienna? LOL..we
> did. We elected one of your native sons as governor of California.
> Look what THAT did for us, first state to be going bankrupt. LOL
>
Simply picking a camp or team and blindly repeating the brainless talking points without independent judgment and analysis makes reading most of those comments depressing and hopeless.
At the invasion of Iraq, 75% of Fox News viewers believed S. Hussein was behind 9/11. When most, even uneducated, people in the world know that nothing could have further then the truth. When will we cease to be so ignorant?
And how much exactly directly and indirectly will this little adventure cost us, 3, 5 or 10 trillions?
I guess this ignorance is a great opportunity for many to abuse and profit from. So continue being stupid all the way to the poor house.
Happy 4th!
I fully agree with your comments, and I really enjoy the discussion here as opposed to the typical hollywood, wall streat, jim cramer supificial bullshit that has been presented to us in the name of the US.
Many people think that is what the US is like. I lived in Sacramento 1997 for 8 month and have audited 15+ automotive factories in the US.
I studied automation and robotics, and back in 1998 we allready discussed the future develpment of society, if automation would continue in this speed. In Austria we are largly able to compete with CEE and also China in large parts of mechanical engineering, due to high investments in automation.
Since US always like numbers and charts:
en.wikipedia.org/wiki/...
and now export per capita: we are fully socialistic, have absolutly no ressources, on place 11 after mostly oil exporting countries:
en.wikipedia.org/wiki/...
While I was seeing GM plants and can give the following comparrison:
GM: one production line for one car - dot.
Austria: one prodcution line for 4 cars, JIT and JIS
So if one type of car does not do well we can speed up the production of another type relativly quick. At Gm from 3 lines one was at 30%, one at 60% and the third one was at 200% (which could only supply 100% of course). Whenever I tried to start a discussion about the procedure (or about religion), the reaction was allways the same. Please do not tell us what to do, we are the greatest nation, and where the first ones to use assembly lines.
On Jul 02 05:32 PM bricki wrote:
> Manufacturing jobs have been declining because of increasing efficiency.
> The US still manufactures almost twice "stuff" as much as China does,
> but the jobs are going away because each year efficiencies cut the
> number of workers needed to make the same thing.
>
> It doesn't matter what you do with manufacturing, the inevitable
> trend is increased efficiency and fewer people needed to make the
> same thing.
>
> China is subject to the same problems; in fact they are losing more
> manufacturing jobs than any country.
>
> We went through this trend with the farms, and now we are seeing
> it in the factories.
>
> With fewer and fewer employees needed to produce the goods needed
> for a comfortable life style the question becomes what shape work
> will take in the future. Health care and education are resistant
> so far to automation, other services will no doubt grow too.
>
> What we are seeing is not just an economic cycle, but it is overlayed
> by long-term secular trend influencing the way our society will work
> in the future. Trying to grow manufacturing is just not a tenable
> policy, and any effort to do it is bucking the tides.
www.wealthalchemist.co.../
Market is going down down down
Protectionism is a tax on the people in the country that imposes the tariff. It is a wealth transfer internal from consumers to inefficient producers. It distorts capital flows by putting capital to work or leaving capital in industries or sectors that are not able to compete globally. Over time it is self defeating and leads to lower productivity and lower growth and wealth creation.
It does not matter if othe countries have high tariff walls or engage in other "unfit" practices. Those practices do not hurt us. They only hurt their own citizens. Let them.
By adopting free trade - forget fair that is a nonsense - you help your own people - and you do that no matter what others are doing.
This is a tough thing to grasp for a lot of people. But comparative advantage works. It works on a personal level, at the family level, at the city level and the national level. It is a powerful principal.
We don't grow our own food. We dont do a lot of stuff that other people can do better. We trade with them. We buy food from the farmer even though he does not buy anything from us. Think about it. If I am an accountant and even if the farmer does his own taxes - it is still better for me to trade with him. I am better off. I am richer by doing accounting work vs. growing food. To not trade hurts me. Not him. Just think people.
This is the real problem to guard against. Stupid knee jerk policies that are based on faulty logic or rooted in some mercantilist pre Ricardo philosophy. These "bad" numbers - are expected. What else do you expect a tthis point in the recovery? This is a recession. It was almost a depression. They are getting better. Initial claims are slowly improving. That is the number to watch. Payroll numbers will bounce around. You need to look at trends. Other numbers are better.
Protectionism and favoring one sector over another are just dead ends.
And another thing. Health and education are key sectors. They form an important part of the infrastructure of this country. A smart and health populaiton is a productive one. Relative producitivity and growth in productivity drives economic growth. It is what enables US workers to make much more than their counterparts. When you look at relative wage rates - always adjust for relative productivity. Some jobs can be sent to China or India but not all and the ones that go contribute to growth in this country. Think about it. Don't just spout of Fox News/Lou Dobbs nonsense.
That's all.
On Jul 03 02:52 AM manya05 wrote:
> rosey99, I am with you. Looking around the world I see no example
> of country that has managed to lift the standard of living of their
> people without a serious dose of protectionism (sometimes overt,
> but usually disguised in cultural quirks). A completely open economy
> in a small country can only be ravaged by outside forces. The US
> economy could afford more openness because of its size and strength,
> but even it has taken the toll and is now a prizefighter teetering
> toward the canvas as a result of too much free trade. I am no economist,
> but I think implicit in the credo of free trade as a path to wealth
> is that everyone will adhere to the same credo, and the trade will
> be free and fair. None of these conditions are attainable in practice,
> thus the theory is flawed and it needs to be abandoned.
Strategic reductions of employees in anticipation of bad economic data or the real expectation of a business downturn may signal a shift in thinking towards capital preservation. Especially at companies that are potentially at risk anyway. More can be done with fewer people. The deadwoods gotta go and the frills are being pinked slipped at the same time. It's about survival. And let's face it, virtually every medium and large business has areas that can be consolidated right now today. Especially where next quarters earnings are concerned.
In this environment, strategic reductions of employees makes some sense especially considering costs associated with terminations, benefits, retraining etc. Larger companies have to think ahead of the game on this issue.
Since most of the losses were in services though it seems to me that hiring that was done in anticipation of the busy summer season, tourism related etc have now started paring back numbers as sales have not fully materialized.
This can not bode well for the winter months if the economy does not start to correct and right itself in any meaningful way.
I disagree, even though I'm well below the socioeconomic level of the leaders of this country.
And I'll keep disagreeing until I die.
On Jul 03 01:08 PM history repeats wrote:
> some like to call the euros socialists, and china protects its markets
> like crazy, so you are saying that we won't be able to compete with
> protectionists and socialists if we engage in socialism and protectionism.
> do i have that right?
We've been speculating locally about how many companies won't make it through next winter.
I think you're spot on--that more pain is in the offing next January.
> No.
>
> Protectionism is a tax on the people in the country that imposes
> the tariff. It is a wealth transfer internal from consumers to inefficient
> producers. It distorts capital flows by putting capital to work or
> leaving capital in industries or sectors that are not able to compete
> globally. Over time it is self defeating and leads to lower productivity
> and lower growth and wealth creation.
Uncontrolled capital will always flow to the most corrupt places.
That's why oil companies try to invest their money in Burma to tap into its natural gas resources. After all the Burmese juntas will try to clear up all the land occupied by the minorities in the natural gas rich areas for any oil company so that they can use the investment money to buy more weapons to suppress their countrymen.
That's why manufacturers from all over the world try to invest in China to evade from international pollution codes. After all the communists either get more corruption money from dirty manufacturers or are themselves dirty manufacturers. They are more than willing to sacrifice human lives to get rich over-night and to launch their anti-American campaign.
For all free capitalists in the world, the good news is North Korea will soon open up its borders to welcome you! BTW, for every $10 you invest, $2 will contribute to the building of a nuclear bond that is sufficiently large to wipe out the entire CA!
Are we supporting free trade? Or are we supporting evil dictators and polluters? You can now raise your hands!
It is not just saving jobs in the U.S. It is also the support of democracy, the control of global environmental pollution, the support of human rights and labor rights, intellectual property protection, ...
Until some dictatorial countries like China decide to comply with international standards in human rights, labor rights, environment protection, copyright protection, ..., the costs of the so-called free trade will always out-weight the benefits, not only to the common people in advanced nations but also to the common people in the dictatorial regimes.
All across America people are making the tough choices and cutting back. Some of those cuts aren't "politically acceptable" with the spouses. That's just too bad because that's how it is. Government should not be permitted to continue their pork spending in the name of political appeasement. If there was ever a time to scale back government and have a legitimate excuse for doing so, this would be that time.
On Jul 02 04:14 PM Poor Texan wrote:
Raising taxes is necessary because there is no politically acceptable way to cut government employment or expenses as we are seeing in California.Murphy's law.
If we were talking about a playing field that had a good referee, you would be right on. The reality of the game is that we have been giving manufacturing (jobs) away for decades. Given this, it is going to be extremely hard for us to provide jobs for our citizens. Protectionist policies in this fourth quarter of the game should be looked at if we are to make any attempt to get back in the game. I see no indication that our coach, manage, and owners want us to compete.
On Jul 02 06:51 PM billddrummer wrote:
> To socialism cannot compete!
>
> You seem to think that we're not moving inexorably toward a socialistic
> style of life now. And if your moniker is accurate, socialism won't
> be able to compete with the Chinas, Indias and Eurozones of the world.
>
>
> Protectionism increases costs for all traders, discourages international
> cooperation, fosters discord among trading partners, promotes retailiatory
> trade barriers from other nations, and results in a lower standard
> of living for everyone.
>
> Why some think this is a good idea eludes me.
The country is going thru some sort of metamorphous at this time and what is going to emerge is going to be ugly. Obama and the Congress seem to think we can spend ourselves into prosperity but those that are buying our paper are going to rebel. Weve just created another bubble...treasuries that are going to go down with a thud sooner than later.....no solution in sight except prepare for the worst and hope for a surprise...this is a Depression not a Recession believe it or not...lets call a spade a spade.
Here is what I need to do to hire a US worker:
Interview a variety of people to make sure I am in compliance with EEOC regulations. After I find someone, I need to get them to fill out I-9 and W-4 forms. I need to file these forms with the government and have them on hand in case I get audited. Now, I need to pay the employee. In addition to their pay, I need to collect FICA, FUTA, SUTA, Workers Comp. Fortunately, I live in Texas, so there are no state, county, or city taxes to also collect and remit. Each quarter, I need to file form 941 and annually, form 945 with the IRS. The IRS can then audit me and tell me that I've done something wrong in this and assess penalties and interest. To be safe, I'm probably going to need to retain the services of a CPA and/or attorney to make sure I am doing all this right. Now I've got the person hired, if they don't work out and I need to let them go, my SUTA and FUTA taxes will go up. Soon, I'll also have to worry about providing health insurance for employees as well.
If I hire an Indian, I cut them a check each month.
Oh, and the Indian is about 1/3 the price (and hard working).
Could someone please help me and explain why I should go for the US worker?
What goes down then does goes up. Bet on it.
Where do you think we are going?
Think about it.
Back to the unfortunate reality ... Schiff may be to optimistic regarding consumer spending recovery. There should be no protectionism, nor will any be needed -
China's domestic mkt will begin buying and of course will love US brands.
Lower dollar will attract China into the US; will attract US companies back, etc and etc.
However, this transition will take a while to take place. We just need patience, which unfortunately means slightly lowering the once too-good-to-be-true and imperialist-like US living standards. Simply put, we need to come back to reality.
On Jul 02 01:44 PM conceptwizard wrote:
> I guess I should have bought that 10 acres of woodland in Maine.
> Plant a vegetable garden, cut some wood, shoot a moose and barter
> my eggs and milk from my cow.
> This is getting real serious folks. Nothing that we are doing is
> working. The stimulus missle hit somewhere else. Either that or no
> matter how much money we pour down this de-leveraging hole matters,
> it swallows it like candy. If thats the case then we are going through
> a complete economic morphing, that will end in a different America
> altogether.
>
> I think Peter Schiff has a point in bringing back our manufacturing
> jobs, but that would mean protectionism and that opens a whole new
> kettle of fish.