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Because there was real demand for the Yen as Japan was a creditor nation as well as a high productivity exporter, thus the rise in value of Yen allowing assets to significantly decrease in cost. America is a debtor nation and a low productivity importer. High inflation or hyperinflation will be the theme moving forward, just as it was in Argentina.
Calling the US a "low productivity importer" is absurd. We are still one of the top exporting nations, not only that the rest of the world relies on a number of our products. With the exception of natural resources the US doesn't need much from other nations (And even here there is only one that is important and can be replaced over time).
Comparing the US to Argentina is apples to oranges. If the dollar collapsed it would just return production to the US. The vast majority of products we import could easily be manufactured in the US. I'm not sure why people making these predictions think it would be hard for the US to get back into low skill manufacturing. You can get apparel, textile, electric etc etc manufacturing up and running within months. On the other hand the products that the US creates can't easily be manufactured. China after decades still is very far from competing with US high tech industry.
Seriously, its as you guys are completely unaware of what is produced in this country and how many factories are still around. Its mental masturbation from people that haven't even stepped foot in a factory.
Anyhow, "inflation and hyperinflation" were the theme 6~12 months ago. Even here on city data that is what most were talking about...ironically most of your pals are gone now. Deflation is going to be the the theme moving forward, it already is.... The markets aren't behaving anything like they would if inflation was the worry..... The inflation story you are giving is simply abstract speculation largely dreamed up by sales man.
Calling the US a "low productivity importer" is absurd. We are still one of the top exporting nations, not only that the rest of the world relies on a number of our products. With the exception of natural resources the US doesn't need much from other nations (And even here there is only one that is important and can be replaced over time).
Name something the US produces that the world cannot get from a suitable substitute nation (in spades). I must've been reading the wrong numbers, because it seems we have a substantial trade deficit to this day, and widening over a trendline.
I like the "return manufacturing to the US". I suppose the raw materials to produce these vanished factories will just magically appear out of our rear ends? Oil? Ah, heck, I'm sure the camel riders will offer us some with worthless green paper things. That sucking sound resulting from a brain drain as Americans leave to work abroad? Heck, we can just close down the borders to prevent them from leaving. Worked well for the Eastern European bloc, right?
I still see China growing, albeit at a slightly slower pace. Singapore is doing just dandy too.
The dollar/bond bubble is the mother of all bubbles, bigger than dot bomb and real estate combined. Should be interesting to watch that one pop too. Well, interesting in a self-deprecating way I suppose.
If it makes you feel better, reinforce your point with some sprinklings of Irwin Schiff-isms.
Name something the US produces that the world cannot get from a suitable substitute nation (in spades).
Don't you work in the computer industry? You don't need to look any further than your own computer for the answer to this question. But there are a number of other things too, like industrial robotics, military equipment, chemicals etc.
Quote:
Originally Posted by ViewFromThePeak
I must've been reading the wrong numbers, because it seems we have a substantial trade deficit to this day, and widening over a trendline.
I like the "return manufacturing to the US". I suppose the raw materials to produce these vanished factories will just magically appear out of our rear ends? Oil? Ah, heck, I'm sure the camel riders will offer us some with worthless green paper things. That sucking sound resulting from a brain drain as Americans leave to work abroad?
Come to Los Angeles I and I will show you a number of "vanished" apparel manufactures, textile companies and a variety of other manufactures. These companies still exist, just in smaller numbers than before. It wouldn't take much to expand them. Office space can easily be rezoned and converted within months into industry space. Again, the issue here appears to be that you've never stepped foot in a factory.
If the oil producing nations can purchase US goods with the "green paper things" then they aren't worthless at all. These nations produce very little and the US has many items to trade from food to high technology. In a relatively short period of time the US could remove its dependency on oil if there was a strong desire to do so....
Anyhow, you believe rather erroneously that the US doesn't produce anything. Of course you guys don't actually show data to support this view, rather rely on myopic arguments that only reasonable to someone that has little knowledge of manufacturing. The US exports just a bit less than China and the manufacturing sector is the 2rd largest sector in the US economy in terms of sales/receipts (Include construction and its the largest).
Lastly, a trade deficit in no sense implies the US does not produce anything. Its just that you won't see most of these products at your local Wal-mart. You are mistaking a trade deficit as an indication that the US doesn't make anything but all it indicates is that the US is consuming to much in relation to its productive capacity. Also, the trade deficit is declining.
Quote:
Originally Posted by ViewFromThePeak
I still see China growing, albeit at a slightly slower pace. Singapore is doing just dandy too.
If China grows slows below 3% or so the country could collapse... You can't compare the rates of growth in developing nations to developed nations. 3% growth in China will feel like a recession here, an actual recession in China will likely mark the end of the Communist Party.
Singapore is officially in a recession, so no idea what you are talking about in this case.
Quote:
Originally Posted by ViewFromThePeak
The dollar/bond bubble is the mother of all bubbles, bigger than dot bomb and real estate combined.
There is no bond bubble in general (in fact many bonds may be under valued at this point), it is only with federal bonds where this is a possibility. But the behavior here really isn't that of a bubble, the prices on these bonds is being driven up by a rush to safety not because people are trying to flip the bonds to a greater fool.
Suggesting that the dollar is a bubble really makes little sense. The dollar has been declining for years and only recently has increased against a number of other currencies. The dollar is still lower than it has been historically. This doesn't mean it won't drop more, but calling it a bubble is to simply to misuse the word. If anything there has been a "bubble" in a number of other currencies, most notably the Euro.
What happens with the dollar depends on how the US does compared to other nations. The world is going to go into recession soon, its not clear who is going to be worse off. At the moment the markets aren't crying out "the US".
We do produce a lot here, but we don't do it effectively or smartly. We've lost our edge and creativity in a lot of ways. Detroit is the obvious example, although other technology, clothing and energy industries could also be named. The reasons are as much cultural as they are due to government.
Government policy and cultural changes have simply made the consumption and debt side of the equation balloon so far out of control that they mask the production and savings part, which still exists, albeit weakened as a result of outdated labor influences, environmental laws and other big brother regulations.
Once the common man drops the "keep up withe Jones'" mentality and the government stops encouraging this mentality through cheap credit, and once we realize that energy and industrial production has advanced to the point where we don't need onerous 20th century labor and environmental regulations - we'll be just fine.
As much as I like Peter Schiff's overall analysis, I do agree that his comparisons with Zimbabwe and Argentina are a stretch, to say the least. America has everything that those countries don't - highly educated workforce that draws skilled and unskilled labor, rule of law, solid (albeit strained) infrastructure. All of that serves as serious means to support the dollar. Schiff also horribly underestimates the degree to which other countries pursue the same bad policies that the Fed and the Treasury Department do.
Doesn't Argentina have some of those things? It's a developed country.
Quote:
Originally Posted by StoneOne
As much as I like Peter Schiff's overall analysis, I do agree that his comparisons with Zimbabwe and Argentina are a stretch, to say the least. America has everything that those countries don't - highly educated workforce that draws skilled and unskilled labor, rule of law, solid (albeit strained) infrastructure. .
We do produce a lot here, but we don't do it effectively or smartly. We've lost our edge and creativity in a lot of ways. Detroit is the obvious example, although other technology, clothing and energy industries could also be named. The reasons are as much cultural as they are due to government.
How have we lost our edge in key industries? Because Autos aren't doing well? This isn't actually only half true, GM is doing pretty well outside of the US.
I really don't see any other country leading the way in industries that are likely to be important in the future either. The US still has most of the top universities.
On this topic I have to side with Humanoid. In addition to all the obvious "stuff" that is actually build/assembled/grown/formulated on the soil of the USA (and it is a huge amount, despite the nay sayers) is all the knowledge and "know how" that we have. "High value exports" include not just physical objects but "thought leadership", an awful lot of which IS paid for, but not directly in "retail" type transaction. Instead it is a combination of overhead and sunk costs that makes US designed goods profitable for decades no matter where they are ultimately "put on an assembly line".
I can guarantee you that there no Swiss bloggers crying into their fondue about their lack of "auto manufacturing jobs", or worried that they've lost their greatness because Casio sell more watches. And "gold bugs" should note that when the Swiss import gold it is generally used in a "value added industrial processes" to produce luxury jewelry/watches, NOT as some kind of ancient account balancer...
People need to get down to US ports on the Gulf of Mexico and see what the US actually does ship around the world...
How have we lost our edge in key industries? Because Autos aren't doing well? This isn't actually only half true, GM is doing pretty well outside of the US.
I really don't see any other country leading the way in industries that are likely to be important in the future either. The US still has most of the top universities.
GM and Ford build cars in other countries that are practical and that people want to buy. Ford recently said that their 65mpg diesel car that's going to be built in Europe wouldn't be marketable in the states. It's as if they don't even try to be imaginative and anticipate market changes here.
I drive a Toyota, but I would honestly prefer to drive a GM car, as I think GM styling and comfort is superior to what Japanese cars offer. The problem is what's under the hood is inferior. I would like nothing more than to buy a GM car with the same longevity and fuel efficiency of my Toyota. I just don't see that happening given GM's failed leadership and corrupt union arrangements.
GM and Ford build cars in other countries that are practical and that people want to buy. Ford recently said that their 65mpg diesel car that's going to be built in Europe wouldn't be marketable in the states. It's as if they don't even try to be imaginative and anticipate market changes here.
You just stated that they lost their "edge and creativity" and now you are sitting an example of Ford being innovative in their diesel line. It has nothing to do with them being "imaginative" the US market isn't interested in these sorts of cars. No amount of marketing is going to change this fact short term.
The US autos got hit by a short term increase in gasoline costs now they are being hit (like all auto companies) by changes in lending standards which are reducing their sales. Last I heard its hard to get an auto loan now without a 700+ plus credit score and they aren't allowing you to roll your old balance (when your trade in is worth less than the loan balance) into a new loan as they did just a bit ago.
The problem with the US auto makers is NOT their product line which have been largely successful over the years both in the US and some other nations. Its their business model. Toyota and Honda are both lean, in fact Toyota developed so called "lean production" make when it dealt largely with textiles many decades ago. Toyota and Honda both don't have a heavily unionized work force. They don't have nearly as much legacy costs. As a result Toyota and Honda are able to handle changes in cash flow better than the US auto makers. The US auto makers require a certain cash flow just to keep things going and can't adjust quickly enough when the markets change (in either direction really).
Regardless, you seem stuck on one industry. What is going on in this industry says nothing about what is going on in others.
Quote:
Originally Posted by StoneOne
I drive a Toyota, but I would honestly prefer to drive a GM car, as I think GM styling and comfort is superior to what Japanese cars offer. The problem is what's under the hood is inferior. I would like nothing more than to buy a GM car with the same longevity and fuel efficiency of my Toyota. I just don't see that happening given GM's failed leadership and corrupt union arrangements.
GM and Ford trucks last forever, these have been their bread and butter for years. Some of their cars aren't built nearly as well but they aren't intended to be high quality autos. They are some of the cheapest cars on the market.
As far as fuel efficiency goes there is no difference whatsoever. If you compare similar cars with similar engine sizes they get the same gas mileage.
Speaking specifically of autos I can say that there is a "legacy" problem not just in regards to the workforce and its costs, but also of product mix and sales channel.
I recently DID go shopping for a smaller more fuel efficient sedan. The whole experience was dismaying at the Chevy and Ford stores I went, especially compared to the Toyota and Honda stores. The shear number of Honda & Toyota dealers is far smaller, so they do not compete with one another as dramatically, they don't have as many different vehicles, they don't have other vehicles that you "price yourself into" by equipping that 'basic' car with the kinds of features that do make commuting more pleasant. While ultimately I did NOT "pull the trigger" on any vehicle (sticking with my beater!) I would have had real reservations about spending money with a Ford or Chevy store that might be gone compared to robust looking Honda or Toyota stores. I don't know how that would change...
That said, the Honda Civic and Toyota Corollas that I considered are made in the US, just like the Ford or Chevy, so that "edge" that is lost on America workers was not apparent to me...
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