Seeking Alpha


Send Message
View as an RSS Feed
View kertch's Comments BY TICKER:
Latest  |  Highest rated
  • Durable And Capital Goods Tank In November [View article]
    Your assessment is only partially correct. Industries with high labor costs, like textiles and electronic assembly, left developed nations long ago. The U.S. is still the world's largest manufacturer. If labor was the only issue there would be no company left manufacturing in the U.S. Rather than quoting a few articles which are merely anecdotes, why don't you go to one of your local world-class manufacturers the LA basin and ask them why they haven't moved to China yet. Why don't you email operations at a large German company and ask them why they don't move all manufacturing to India. Even easier, why not call a software developer (definitely a high labor cost industry) in SanFran or Silicon Valley and ask them why they operate in high cost California rather than Omaha, NE or Bangor, ME. To say that labor costs are the primary cause of capital flight is overly simplistic and not supported by the facts. I know the VP of human resources at a global semiconductor corporation that moved their manufacturing out of Arizona to Malaysia AND Oregon. Labor costs were not the deciding factor. Rather than relying on theory, try doing some research on actual manufacturing companies that operate in the U.S. and find out the facts.
    Dec 25, 2014. 05:54 PM | Likes Like |Link to Comment
  • Durable And Capital Goods Tank In November [View article]
    The question to be answered is "Why has capital formation and business investment been declining in the U.S.". The pat answer seems to be "Capital migrates to lower wage countries". However, this is only true for labor intensive industries. Capital intensive industries, like aerospace, chemicals, semiconductor, and energy production, still thrive in developed countries with comparatively high wages. In most of these industries, labor is less than 10% of their total cost over the lifetime of the manufacturing operation. It's the total cost of financing, permitting, building, staffing, operating, regulations, taxes, and legacy provisions, and the stability and predictability of all these factors, that have the greatest impact regarding the decision on where a company will locate it's next manufacturing facility.
    Dec 24, 2014. 04:39 PM | 1 Like Like |Link to Comment
  • I'm Not Buying It-- Not The Wall Street Rip, Nor The Keynesian Rap [View article]
    Before Apple produced the first IPhone, where was the demand? No one demanded IPhones until Apple began producing them. Ten years ago no one demanded that Apple invent and produce an IPhone. You can't demand something that doesn't exist. Additionally your characterization of supply-side economics is incorrect.

    Supply side economics addresses constraints on supply as a way to increase production and economic activity. When costs for cell phone producers go down, they are able to lower their prices, thus increasing sales of cell phones and lowering costs for customers. Thus:

    Supply side economics: Apple lowers the cost of producing Iphones, the price goes down, therefore consumers will now buy more of them.

    Where does a "consumer" get money to consume things? The only answer is; "from their own production (work) or someone else's production (redistribution)". If you can name another source let's hear it. Without production there is nothing to consume.
    Dec 20, 2014. 03:27 PM | 2 Likes Like |Link to Comment
  • The Fracturing Energy Bubble Is The New Housing Crash [View article]
    Good to see you commenting again Micheal. I always get something new about your perspective from your comments. As someone with a science background, I find that during growth the cycles basic science suffers while applied science flourishes, later in the cycle applied science suffers as engineering flourishes. Deep scientific questions loose appeal as applied science becomes more and more mundane.
    Dec 19, 2014. 01:22 AM | 1 Like Like |Link to Comment
  • I'm Not Buying It-- Not The Wall Street Rip, Nor The Keynesian Rap [View article]
    "So, where does the producer's "income" come from if not from customer demand? "

    The producer has to produce something for the customer to demand. Products don't just pop into existence. The producer's income comes from the consumer's previous production - how else would the consumer be able to pay? Without production there is nothing to consume. Demand-side economics is no less flawed a concept as supply-side economics.
    Dec 18, 2014. 06:47 PM | 2 Likes Like |Link to Comment
  • The Curse Of Keynesian Dogma: Japan's Lemmings March Toward The Cliff Chanting 'Abenomics' [View article]
    Hello David,

    "There is nothing that the Bank of Japan can do about that, that is an industrial issue beyond the scope and power of any central bank"

    Wrong. Two points:

    The central bank can make things worse. By pushing below-market rates they encourage capital to flee to countries that offer a better return. You won't attract capital by paying almost nothing for its use.

    Abenomics is not the least-bad option. It's the least scary. Default might be painful but it allows nations to start over. The current Japanese policy just drags out the economic pain. It's done so for decades, and an entire generation may never see growth.
    Dec 18, 2014. 06:02 PM | 1 Like Like |Link to Comment
  • The Curse Of Keynesian Dogma: Japan's Lemmings March Toward The Cliff Chanting 'Abenomics' [View article]
    Japan's "flaccid" economy has cost them trillions in additional debt. Lacking growth, how much more debt can Japan handle? Even if they get growth, how much will they need to handle a 230% debt to GDP ratio? They are most likely past the point of no return. The debt to GDP ratio will continue to grow until it cannot be sustained any more, then default will be the only option. It's default sooner or default later. Given its demographics, its shrinking manufacturing base, and its shift from a current account surplus to a current account deficit, can you tell me a way for Japan reduce it's debt to GDP ratio without default or devaluation? Is there even a way to halt its increase? I don't think so.
    Dec 17, 2014. 05:40 PM | 1 Like Like |Link to Comment
  • The Curse Of Keynesian Dogma: Japan's Lemmings March Toward The Cliff Chanting 'Abenomics' [View article]
    Japan will default on its debt anyway sooner or later. You might as well accept it. There is no possible way that they will be able to get their debt/GDP ratio down to a reasonable level through growth alone. Debt default, currency devaluation, or a combination of both is the only realistic outcome.
    Dec 17, 2014. 04:18 PM | 1 Like Like |Link to Comment
  • The Curse Of Keynesian Dogma: Japan's Lemmings March Toward The Cliff Chanting 'Abenomics' [View article]
    The Japanese should have started swimming for the shore twenty years ago. Now with the shore almost out of sight they might not make it. Japan had a chance to liquidate bad debt back in the late eighties and early nineties. Instead they chose to protect their politically connected Keiretsu, conglomerates where the banks are tightly intertwined with industry. The time for a monetary policy "fix" is long past. The Japanese economy has not grown, it's almost demographically impossible, so the "spend, inflate, and grow your way out" policy was doomed from the start, but is a complete waste of time now. Right now the only way out is a major credit default and reset, however that's unlikely since it's too scary for most people to contemplate. Instead they will keep believing that the NEXT round of debt financed spending will be the one that saves them. Unfortunately the debt default (or hyperinflation) will happen anyway once Japanese debt levels become unsustainable. The only question is "when?". The needed Japanese reset will be their opportunity to restart their economy - if they choose wisely. The Japanese spent 30 years creating wealth and constructing an industrial economy. They'll end up having spent about the same amount of time destroying their wealth and deconstructing their economy.
    Dec 17, 2014. 11:38 AM | 1 Like Like |Link to Comment
  • The Curse Of Keynesian Dogma: Japan's Lemmings March Toward The Cliff Chanting 'Abenomics' [View article]
    If you want to help the Japanese worker you'll have to buy a Lexus LS460. They're still made in Japan.
    Dec 17, 2014. 12:09 AM | Likes Like |Link to Comment
  • The Curse Of Keynesian Dogma: Japan's Lemmings March Toward The Cliff Chanting 'Abenomics' [View article]
    Abenomics is like a life preserver all right. Except that the boat went down 500 yards away from the beach, and the sailor is told if he tries to swim for it, he'll drown. So he holds onto the life preserver as it gradually drifts further and further out to sea. Abenomics, like the life preserver, might seem to be helping but in the long run is just a death trap.
    Dec 17, 2014. 12:08 AM | Likes Like |Link to Comment
  • The Curse Of Keynesian Dogma: Japan's Lemmings March Toward The Cliff Chanting 'Abenomics' [View article]
    Why would anyone want to invest capital in a country where it's central bank has dictated that there be no return on capital? Abenonics made it better? Your self-contradictory ideas never cease to amuse me.
    Dec 17, 2014. 12:00 AM | 1 Like Like |Link to Comment
  • Duck And Cover-- The Lull Is Breaking, The Storm Is Nigh [View article]
    The scenario I think is most likely is that goods and services are cheap, but nobody has the money to pay for them. It's the great depression all over again.
    Dec 12, 2014. 01:47 PM | Likes Like |Link to Comment
  • This Time Is The Same: Like The Housing Bubble, The Fed Is Ignoring The Shale Bubble In Plain Sight [View article]
    "Of greatest interest is that they noted that there were no unique "Anti-Bubble Monetary Policies". Any policy that would suppress bubbles would suppress normal business activity as well."

    There would be no need for Fed anti-bubble policies if there were no Fed induced bubbles in the first place. A more neutral Fed policy would be much better than the binge-purge type of policy we've seen for the last few decades. Why can you not accept that sometimes "do nothing" or at least "do less" is the best course of action? The Fed should not be trying to manage the economy by itself. They should back off and insist that government take up their obligation to enact an effective fiscal policy. Fed has become an enabler of a federal government dedicated to spending all it's time on issues irrelevant to the economic health of the nation. This trend is ineffective, dangerous, and shows a great amount of hubris on the part of the Fed. They may admonish Congress and the administration for lack of a constructive fiscal policy, but then they go on and try to do the government's job anyway. It really shows incompetence on the part of all parties involved.
    Dec 11, 2014. 01:40 PM | 4 Likes Like |Link to Comment
  • Only Yesterday---How The Federal Debt Went From $1 Trillion To $18 Trillion In 33 Years [View article]
    As I heard someone once say: "Denial is the most powerful force in human history."
    Dec 9, 2014. 03:58 PM | Likes Like |Link to Comment