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Is it time to stop thinking globally, and to start focusing locally? That’s more or less the consensus among more than 3,700 professional accountants who believe not only has international trade continued to dry up, but that the global economy will continue to erode while those industries that focus domestically will inspire greater confidence.
Doing a quick search, I was able to turn up this. I have seen better sources for this kind of data, but don't have quite the time to commit. I believe companies are looking to offload higher paid workers to take advantage of falling payscales for many occupations, in the name of "staying competitive". It's the shareholders who will benefit for a short time, but there is no reason to believe this will be good for the economy in the long run. This is a very unsustainable practice, in a time when Americans are more focused on paying down debt, instead of spending as much as their credit cards will allow them too.
And when companies can't sustain growth, or even their current size, they inevitably have to introduce the possibility of layoffs. This ultimately puts more into the pool of people looking for work, which drives down wages even more, and does not help to support a consumer based economy. Common sense must be introduced when determining where we are, and where we are going. I believe the economy is on very shaky ground, and people generally don't realize how fragile a position we are in. What is really scary is the rate of appreciation in the equity markets. I don't believe this is an honest reflection of where we really are at.... The pump before the dump.
The expiration of tax cuts along with unemployment programs expiring will have an impact.
Add to that the economic problems in Europe and their impact on the multi-national corporations who are employers here in the US.
When their overall profits are hurt, the reaction will be cutbacks and layoffs in the US.
Add to that the slowing in the BRIC countries.
None of this is bullish for the markets, and if by chance we do see the market begin to correct, that effect begins a feedback loop into the economy.
Many of us have held the view for some time that any improvement in the economy based on the massive amounts of government spending would be unsustainable, and would only temporarily postpone the continuation of the deleveraging that must eventually reach parity with incomes.
Let me add a few elements.
The global economy faces an energy constraint: as it expands, oil prices increase, capping the expansion and slapping the economy back down. Oil prices then contract, allowing room for a modest relative recovery.
Malinvestment, especially in housing in the face of this energy constraint, but also pension and other government-led welfare spending, in the US and Europe has led to value destruction, not value creation.
Value destruction plus deleveraging equals a contraction in the money supply, offset, even somewhat more than offset, by quantitative easing by central banks.
However, globally, manufacturing production remains more or less apace in accordance with global demand, thus only moderate reported inflation rates and not hyper-inflation.
But, indeed governments, especially in Europe, insist on government-led solutions, crowding out the creative potential of the private sector.
We may experience hyper-inflation at some point if the pace of money supply expansion is not met by growth in real production.
If Greece exits the euro in the next month or two, that would be another blast of value destruction, deleveraging, and a contraction in the money supply.
Expect, then, another round of quantitative easing by the major central banks, in part to buoy the equity and bond markets and to keep banks afloat.
If that works, or if Greece manages to stay in the eurozone, expect a return to some sort of relative stability, though at lower levels, and maybe some modest growth, albeit probably temporary until a new phase of the crisis breaks out.
If a Greek exit spirals out of control and contagion spreads, then it is too hard to predict.
Believe what you want, but your beliefs are baseless, without merit, meaningless and banal.
On top of that, your economy recovered nearly 3 years ago.
Now, if you can show me an Economic Law, or an Economic Model where jobs are a mandatory part of any growth in GDP, or where 0.X% growth in GDP translates into N,000 jobs created, or 0.X% decline in GDP translates into N,000 jobs lost, or even where a particular percentage or level of employment is required to sustain any economy, then please do.
Housing was too expensive. It needed to come down. Folks that want prices to go way back up are wanting the same cycle to repeat itself. Its obvious it wasnt sustainable or good for prices to be so darned high.
I think the issue people have is that they have not experienced the recovery. That is, the trickle down didn't make it to them.
So?
Let me get this straight: People sit on their ass waiting for something to trickle down to them and then when nothing happened very slowly they got mad, is that it?
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Originally Posted by andywire
Also, the underlying fundamental problems weren't solved.
Uh, yes, they were.
One reason recessions occur is to eliminate or end that which is grotesquely inefficient -- and yes that includes eliminating jobs (permanently) that are inefficient.
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Originally Posted by andywire
Real estate never recovered, ...
You're absolutely correct -- real estate needs to decline in value another ~20% --- before it has fully recovered from its over-inflation.
Since the Federal Reserve will not alter the reserve rate, then you need to contact your elected representatives and have them enact a law that requires mortgages to be backed by 30% cash capital. That will restrict the pool of money available for mortgages, and drive up the interest rate, instead of having the interest rate be artificially low setting up the potential for another future bubble and collapse.
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Originally Posted by andywire
...the unemployment problem hasn't appeared to improve,..
Why would it? Look, it's not my fault Liberals removed Economics from high school curriculum, but even so, it doesn't appear people have any common sense and are unable to apply even a modicum of logic.
Recessions are about eliminating inefficiency. If 5 Million jobs were permanently eliminated because they were inefficient, then would would those jobs come back?
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Originally Posted by andywire
... more growth in low wage employment opportunities than middle class paying jobs...
Of course. What's wrong with that? Wages are based on Supply & Demand of Labor in a particular Economy. You actually have several hundred economies in the US, you just combine their activities and report it as one economy -- sorry, I thought you knew that.
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Originally Posted by andywire
While GDP DID grow, does anyone discuss WHY it grew?
I don't have access to that information, because the Department of Commerce does not publish it, even though it collects it, so the only thing I can do is make an educated guess.
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Originally Posted by andywire
Ummm, stimulus money, bailouts, things that don't normally happen in a free markets?
I would say government spending played/plays a role, but I don't know exactly how much, and there's no way to calculate it without access to the data (which the Department of Commerce collects but does not publish).
Just because the Fed can point to GDP "growth" - without separating it from rampaging inflation that is consuming everything other than the housing market - doesn't mean the economy is actually doing well.
As for getting rid of "excess jobs," that's a cold and impractical way to look at it. Those people are still out there and still need work. I suppose they're supposed to just lay down and die to help improve the "efficiency" of the system.
No, a jobless Recovery is not a real one, and the current "Recovery" is one in which jobs are continuing to be shed. Unless we're going to measure the health of our economy solely by the balance sheets of corporations while ignoring the suffering of the working class, there is no way to consider the current situation a true Recovery.
Let me get this straight: People sit on their ass waiting for something to trickle down to them and then when nothing happened very slowly they got mad, is that it?
Yes, but people can try all they want. It doesn't mean all that trying will generate results. Lots of people have tried, and have to settle for McJobs these days. I dropped out of nursing school because the classes before me we not finding jobs. Based on what many of my former classmates have told me, most of the graduates are fighting for low paying caregiver jobs and such. Lots of people fighting for McJobs with college degrees these days. Historically, these people should have been buying homes and working professional level jobs. I do believe we have an unnecessarily high number of people chasing college degrees these days, and there is a glut, but success is becoming far more elusive for many. Hence... No recovery noted for a vast cross section of the population.
I'm not arguing the fundamentals behind the way business operates in this country. It all makes perfect sense, and business cannot be blamed for operating in the most efficient manner. Efficiency means getting the most out of each and every worker. This means less workers needed, and an oversupply of labor units. Hence, falling wages are to be expected.
What I am saying is this model may not be sustainable in the long run. Concentration of wealth at the top, reduced spending power of a large portion of the population, so where are the customers going to come from? Business will seek to operate according to the demands of the customer, who will seek the best value, profit margins will become even more slim, and the cycle will continue. If I were operating a business, I would be in the business of operating as efficiently as possible, so I can offer the best value for the customer, no matter how many or how few.
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Originally Posted by Mircea
Uh, yes, they were.
One reason recessions occur is to eliminate or end that which is grotesquely inefficient -- and yes that includes eliminating jobs (permanently) that are inefficient.
Actually, I believe inefficiencies in the economy are what kept a large number of people employed, and supplied $$$ to the middle class to spend. This encouraged growth in the economy, which happens to be a consumer driven economy, and depends heavily on it. Look at the period of growth that we've had in this country. They included low unemployment and growth in business. Can't have one without the other, because we are not competitive enough to be an export driven economy.
Quote:
Originally Posted by Mircea
You're absolutely correct -- real estate needs to decline in value another ~20% --- before it has fully recovered from its over-inflation.
Since the Federal Reserve will not alter the reserve rate, then you need to contact your elected representatives and have them enact a law that requires mortgages to be backed by 30% cash capital. That will restrict the pool of money available for mortgages, and drive up the interest rate, instead of having the interest rate be artificially low setting up the potential for another future bubble and collapse.
Yes, I agree. I would question whether the banks are withholding inventory as a way to prop up houses as well. Wonder how many people who should have had their houses foreclosed on are allowed to stay as a way to prop up housing prices.
Quote:
Originally Posted by Mircea
Why would it? Look, it's not my fault Liberals removed Economics from high school curriculum, but even so, it doesn't appear people have any common sense and are unable to apply even a modicum of logic.
Recessions are about eliminating inefficiency. If 5 Million jobs were permanently eliminated because they were inefficient, then would would those jobs come back?
I think our economy is being manipulated far more than that of Russia or others. Liberal have done a great deal of damage, and it extends very deep. Look at what has happened to our school system, where everyone is a winner for showing up. Our country is simply not competitive, and our youth doesn't stand a chance against that of other countries. We are going to loose our status in the world because of this kind of stuff. Get back to the basics, teach math, bring back vocational programs, and give them a dose of reality. Life is hard, not everyone is going to win, and most of you will do jobs that you find dull, boring, and maybe even low paying. Prepare them for the real world instead of some fantasy utopian society. These young people are going to revolt because the world is not as it was in the brochure.
Personally, I think inefficiencies are what kept unemployment rather low for so long. If you had many small businesses competing for work, they had to hire at least 1 person to fill individual roles. If you have one large company doing all the work, work can be consolidated and done by fewer people.
Let's say I run a business and require a janitor. 1 janitor can do all the work and have 2 hours to be inefficient. Lets say there were 100 other businesses in the area like mine, and they had the same situation. To attract the limited supply of janitors in the area, each business has to offer 40 hours a week worth of work, and pay something of a wage to attract them. With 1 large business taking all the work, those 2 hours of unproductive time can be eliminated by hiring fewer janitors. Since the supply of janitors did not decrease, more workers fighting for fewer jobs and wages drop. Now, apply that to a wide variety of jobs, and that is what has basically happened.
I am not arguing the morals of the matter, business is doing what it is designed to do. That is what business is supposed to do, and that is basically what we are seeing. Just highlighting the situation, and explaining why the average American is not seeing a recovery, while the media apparently has been trying to sell one to the masses. Eventually, they catch on.
Quote:
Originally Posted by Mircea
Of course. What's wrong with that? Wages are based on Supply & Demand of Labor in a particular Economy. You actually have several hundred economies in the US, you just combine their activities and report it as one economy -- sorry, I thought you knew that.
I don't have access to that information, because the Department of Commerce does not publish it, even though it collects it, so the only thing I can do is make an educated guess.
Nothing is wrong. It fits into the principles of economics 101. I was shedding light into the situation of the growth of low paying jobs, thus replacing high paying or middle class income jobs. Some don't believe it because it hasn't crossed their radars yet. I do not believe you can have a traditional recovery under these conditions. You can have something of a stabilization, but we probably won't see a return of the good ol days any time soon under these conditions. I'd settle for a stabilization over a deep recession however.
Quote:
Originally Posted by Mircea
I would say government spending played/plays a role, but I don't know exactly how much, and there's no way to calculate it without access to the data (which the Department of Commerce collects but does not publish).
Economically...
Mircea
Well I am a firm believer that anything the government touches rots. Much better that they keep their grubby paws off. The big fear is the possibility of more policies that will essentially lead to income redistribution. Well, if everyone can't be a winner, we'll have to settle for everyone achieving second best status. Just not the way it should work in my opinion.
Let me get this straight: People sit on their ass waiting for something to trickle down to them and then when nothing happened very slowly they got mad, is that it?
Not exactly, they worked their jobs, paid their taxes, and ignorantly allowed the politicians who were bought by the corporations to change tax policy and trade policies in order to screw the working class.
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Uh, yes, they were.
One reason recessions occur is to eliminate or end that which is grotesquely inefficient -- and yes that includes eliminating jobs (permanently) that are inefficient.
Un, No they were not. The reason the economy crashed and burned was the policies of government and the financial industry. Instead of letting the financial institutions who acted irresponsibly reap the consequences for their actions the government once again screwed the taxpayers and bailed out the criminals just as they were paid to do. So in fact the financial industry was rewarded for their complete lack of ethics and responsibility.
Quote:
You're absolutely correct -- real estate needs to decline in value another ~20% --- before it has fully recovered from its over-inflation.
Since the Federal Reserve will not alter the reserve rate, then you need to contact your elected representatives and have them enact a law that requires mortgages to be backed by 30% cash capital. That will restrict the pool of money available for mortgages, and drive up the interest rate, instead of having the interest rate be artificially low setting up the potential for another future bubble and collapse.
It was not low interest rates that caused the bubble to begin with, it was the ability of the financial industry to write, package, and sell off loans with knowing full well that a large percentage of them were not worth the paper they were written on. We do not need higher down payments; we need banks that service the loans they write.
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Why would it? Look, it's not my fault Liberals removed Economics from high school curriculum, but even so, it doesn't appear people have any common sense and are unable to apply even a modicum of logic.
Liberals and conservatives are only 2 sides of the same coin. Both parties are owned and take their orders from the same people on Wall St.
The only people who benefit from the dumbing down of America are the sleazy bankers, and CEO's who really do not want people to be able to do the math that would enlighten them to the fact they are basically wage slaves working their entire lives for the benefit of the banks and the corporations.
Recessions are about eliminating inefficiency. If 5 Million jobs were permanently eliminated because they were inefficient, then would those jobs come back?
Wrong again, recessions are the direct result of the wealthy stealing the lion’s share of the wealth. If the working people had a larger percentage of the wealth they would be spending it on necessities driving the economy.
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Of course. What's wrong with that? Wages are based on Supply & Demand of Labor in a particular Economy. You actually have several hundred economies in the US, you just combine their activities and report it as one economy -- sorry, I thought you knew that.
Nothing assuming those laws of supply and demand are not artificially altered, say with immigration policies that inflate the labor pool by 20 million workers, or altering trade policies to allow the offshoring of manufacturing without equalizing the equation with tariffs.
Quote:
I would say government spending played/plays a role, but I don't know exactly how much, and there's no way to calculate it without access to the data (which the Department of Commerce collects but does not publish).
Economically...
Mircea
Gee you think! What the wealthy in this country do not understand is they have dug their own graves using their greed and deceit. They are self-assured that they can continue their Ponzi scheme and get away with it as long as they want. The reason they believe this is that they spend way too much time studying how to rip people off, and not enough studying history and what happens when this has happened time and time again in the past.
They allow their egos to persuade them that this time is different and that they have it all figured out.
They will believe that until things begin to spin out of control and the fruits of what they have done come back as revolution or war.
In either case it will result in the falling of financial empires, and suffering beyond comprehension.
Od course they bailed out the banks because the banks bascially were doing what government had encousrage for years. Otherwise we would never have had Fannie and Freddie and not be still bailing them out that started in 2008. One only has to look at the funding provided for people with nothing to buy homes that included down payment assitance to closing assistance to see for decades getting people into homes they couldn't afford based on appreciation was just part of wealth sharing as congress saw it.Heck for the last two eyars before the housing crash many like Barney Frank even refused to allow a audit of Fannie and Freddie and said we can always bail them out.Everyone bascially was happy has long as it created wealth on paper.The wealthy haven't dug their own graves;congress encourage giving people shovels and lenders provide shovels which many dug their own graves with.Many actuallly sold those graves for high profit to others who thought they could do the same for a high profit.They just happened to be standing in the grave when the bubble burst.The tragedy is that they grabbed others who loss their jobs and took them into the grave with them.
Last edited by texdav; 05-25-2012 at 11:50 AM..
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