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I'm sure this is known but why isn't it being pushed more by the media/politicos?
The greatest costs in off shoring decisions are labor and transportation costs.
The labor costs are being taken care off by the steady devaluation of the USD/ appreciation of the Yuan. The high oil price is further compressing incentives to offshore due to higher transportation costs.
Of course US consumers are suffering as a result of the high oil prices but the more optimal situation is better job growth with high oil prices than worse job growth with lower oil prices. Whether the price of oil is $50 or $100 makes no difference when people don't have jobs. At least the above is the way that the politicos/feds see it imo.
I'm sure those facing home foreclosures because they have to choose between buying gas to get to work, and paying their mortgage, will find lots of comfort in this thread with no substance.
Furthermore, did you ever think that the decreased demand on the economy, making it difficult to create jobs, is due to people having no disposable income due to high oil prices?
Yesterday we decided to not take a vacation planned presidential weekend for this very reason.
I'm sure those facing home foreclosures because they have to choose between buying gas to get to work, and paying their mortgage, will find lots of comfort in this thread with no substance.
Furthermore, did you ever think that the decreased demand on the economy, making it difficult to create jobs, is due to people having no disposable income due to high oil prices?
Yesterday we decided to not take a vacation planned presidential weekend for this very reason.
Yeah, I'm glad I'm not the only one who thought the OP wasn't making any sense.
I'm sure those facing home foreclosures because they have to choose between buying gas to get to work, and paying their mortgage, will find lots of comfort in this thread with no substance.
Furthermore, did you ever think that the decreased demand on the economy, making it difficult to create jobs, is due to people having no disposable income due to high oil prices?
In one sese you're correct. However, the feds and politicos know this as well and could crush the oil price within weeks if they wished. A substantial portion of the oil price now is due to speculation. They could stop this fairly easily via the CFTC and some new regulations. " They're in the pockets of the Bankers!". Yes, sometimes. In this case most of the speculating firms are smaller shops and larger international commodities trading firms (Glencore, Trafigura, etc) so the "Banker's pockets" arguments is moot. Even if the major banks were participating in oil speculation would their power be enough to offset the rest of corporate America whose margins are suffering from the high oil price?
There's a reason high oil prices seem to be OK with the powers that be in the US and I think it has to do with the scenario in the original post. In fact, an argument could be made that the Feds and FED are driving the high oil price by heavily devaluing the USD since QE1 began.
The truth about our demand driven economy at ~70% is that it is not sustainable. It needs to be more in the range of 60-65%. High oil prices knocking down demand is not a bad thing so long as exports increase as a result in the medium to long term. We've exhausted home grown demand. It will never be as high as it was before the last downturn due to a number of factors (namely consumer credit availability/ willingness of consumers to take on debt/ wage deflation). The days of sustaining meaningful jobs growth only from internal demand are gone. Internal demand will not drive most of the new jobs anymore.
Btw, those who are truly choosing between servicing their mortgage and getting to work are already truly ****ed and should probably leave the house to the mortgage note holder.
Last edited by wawaweewa; 02-08-2012 at 10:10 PM..
Yeah, I'm glad I'm not the only one who thought the OP wasn't making any sense.
What exactly doesn't make sense?
Service sector jobs are exhausted. Government employment is exhausted. Americans are and will be poorer (wage deflation/ lower economic growth/ lower government spending) for the foreseeable future.
Which sector has growth potential that can vacuum up lots of unskilled or low skilled unemployed displaced by the contraction in the service sector? Manufacturing.
If you want to get manufacturing jobs back to the US or at least those mfg jobs which are on the higher end, then the cost gap between off-shoring and domestic needs to be narrowed.
A substantial portion of the oil price now is due to speculation.
No matter how often a lie is repeated, it is still a lie.
Speculators are not married to the long side and are just as likely to sell short as to buy long, depending on market factors.
At this point in time, an important market factor is the uncertainty over the availability of supply that could be disrupted should the Iranian situation turn more volatile.
... the more optimal situation is better job growth with high oil prices than worse job growth with lower oil prices. Whether the price of oil is $50 or $100 makes no difference when people don't have jobs. At least the above is the way that the politicos/feds see it imo.
Certainly the price of gasoline and heating oil and other distillates that would yield a price of crude oil at $50 vs $100 a barrel would make a significant difference in economic output and would be a major job creator across all industries.
At least the above is the way that the politicos/feds see it imo.
Other than the hard Left who wants high prices to make green energy appear to be a valid economic alternative, what politicos/feds are you claiming to be in favor of high prices?
I'm sure this is known but why isn't it being pushed more by the media/politicos?
The greatest costs in off shoring decisions are labor and transportation costs.
The labor costs are being taken care off by the steady devaluation of the USD/ appreciation of the Yuan. The high oil price is further compressing incentives to offshore due to higher transportation costs.
Of course US consumers are suffering as a result of the high oil prices but the more optimal situation is better job growth with high oil prices than worse job growth with lower oil prices. Whether the price of oil is $50 or $100 makes no difference when people don't have jobs. At least the above is the way that the politicos/feds see it imo.
You have no idea what you're talking about ... absolutely incoherent nonsense.
Higher energy costs negatively affect every sector of the economy, across the board, with the exception of the petroleum industry. Your theory of a crashing dollar and higher transportation costs leading to a return of manufacturing is absurd. A heck of a lot of off shoring results in huge savings in labor costs which account for roughly 25% of ALL manufacturing costs. Furthermore, many transnationals have opened manufacturing facilities in the countries that they intend to sell those products ... so they net two benefits ... cheaper labor and lower transportation costs.
So how on God's green earth do you come up with an idea that INCREASED TRANSPORTATION COSTS coupled with increased labor would encourage a return of that manufacturing here in the US?
The only thing that will cause manufacturing to return here is to reverse all of the policies that facilitated that manufacturing exodus in the first place.
The repeal of these dastardly trade agreements like NAFTA, GATT, etc., and the imposition of trade tariffs and tax incentives for US based corporations to return manufacturing here.
In other words, government and corporations would have to operate under the rule of law again, which is unlikely to happen unless they have 20 or 30 Million pitch forks stabbing them in their corrupt arses.
You have no idea what you're talking about ... absolutely incoherent nonsense.
It certainly is incoherent nonsense is to everyone but a hard Leftist.
Quote:
Originally Posted by GuyNTexas
The only thing that will cause manufacturing to return here is to reverse all of the policies that facilitated that manufacturing exodus in the first place.
The repeal of these dastardly trade agreements like NAFTA, GATT, etc., and the imposition of trade tariffs and tax incentives for US based corporations to return manufacturing here.
It's the tax and regulatory policies, not any trade agreement, that encouraged the manufacturing and other jobs exodus.
And, trade tariffs are not the answer either. Remember it was the Smoot-Hawley Tariff Act of 1930 that deepened and extended the Depression.
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