America's Race to the Bottom

[Billy T]

Fed buys ONLY with printing press money now that the selling of shorter term Treasury paper (Opertation twist) is over (as it had to be since Fed sold all that short term paper it had). FED just announced (See quote below.) that the buying of longer term treasuries will not only continue but increase to 45 billion per month and the buying of mortgages (toxic trash) at 40 billion per month will continue.

Thus 12 months of (40+45) billion more printed money is 1.02Trillion, not counting the > Trillion dollar deficits of government. Call the average increase of the fiscal debt 1.28 trillion. Thus, annual total of printed + borrowed money is 2.3 trillion.

China will not finance any of this - became a net seller of treasury paper two years ago. Who will, at net negative real interest rates? - Answer, no-one & that´s why Fed dropped the prior promisse to hold interests rates to essentially zero thru mid 2015 (last line of quote below)

The buying announced today will be in addition to $40 billion a month of mortgage-debt purchases. The FOMC said asset buying will continue “if the outlook for the labor market does not improve substantially.” {Billy T notes Fed defines that as below 6.5%}
The latest move will follow the expiration at the end of this year of Operation Twist, in which the central bank each month has swapped about $45 billion in short-term Treasuries for an equal amount of long-term debt. That program kept the total size of the balance sheet unchanged, while the new purchases will expand the Fed’s holdings.
The Fed said that a highly accommodative monetary policy will be appropriate “for a considerable time after the asset purchase program ends and the economic recovery strengthens.” The Fed dropped its earlier pledge to hold interest rates near zero “at least through mid-2015.”

 

[Billy T]

People who are in the KNOW, know that and hence trying to find other ways to generate more high tech products for sell to the world. If that does not work, we can do WARS as before in human history...

I don´t think US plans to / realistically hopes to / sell more than about 12 the expensive toys (not counting some the US taxpayers pay for and give to Israel) shown at end of this post. The main US enemies buy tickets then take over commercial air liners or strap bombs to their bodies, or soon refuse to sell oil, etc. for green paper promises as dollar is losing value (last week hit a 10 year low, but slowly declines YoY), so I don´t think it is wise to spend so much for F-35 stealth fighters:

Estimated price per unit: F-35A is $150 million dollars now but dropping to $135 million dollars in 2017 on large volume, if all goes as planned;
The 2017 planned cost for other two, not yet flying (still have defects):
F-35B costs $135 million dollars and the F-35C costs $125.9 million dollars ($ data from: http://www.defenseindustrydaily.com/F-35-Lightning-The-Joint-Strike-Fighter-Program-2012-07501/)

The United States plans to buy a total of 2,443 aircraft to provide the bulk of its tactical airpower for the U.S. Air Force, Marine Corps and Navy over the coming decades. The United Kingdom, Italy, Netherlands, Australia, Canada, Norway, Denmark, Turkey, Israel and Japan are part of the development program and may equip their air services with the F-35

Just which of the listed above bankrupt countries (Norway & Canada, excluded) are going to buy? Norway may buy a dozen or so, Canada less and the rest none, as they need funds for their economies. Who would they be used against?

This is more of the welfare for the industrial-military complex (rich people) that Ike warned was US´s greatest danger. Taking 140 million as average unit cost (much higher as there are always large cost over runs) 140x2443 = 342020 million.
Or a total cost of more than 342 BILLION DOLLARS.[/b]

Again: Who is US going to attack that stealth fighters are needed? (Certainly not a nuclear ICBM country like China.) Radar avoiding*, low flying drones are the future of air war fare. Our brilliant generals are thinking in WWII terms still.
*Because the radar echo takes TWO inverse R^2 reductions and the drone only one, the drone can know where the radar is long before the radar detects it.

 

[billvon]

Estimated price per unit: F-35A is $150 million dollars now but dropping to $135 million dollars . . . Taking 140 billion as average unit cost . . . .

I think you dropped a decimal point (or three) along the way there.

 

[Billy T]

I think you dropped a decimal point (or three) along the way there.

Thanks, you´re right. I mixed million and billion. I have edited post to correct. I remembered that the Navy´s super foolish "stealth destroyers" which any of more than 12,000 Chinese fishing boats can see and report the locations of to a few meters with the Chinese GPS, cost Billions (more than 3 to be more exact) and that confused me.

At more than $3 billion a pop, critics say the new DDG-1000 destroyer sucks away funds that could be better used to bolster a thinly stretched conventional fleet. One outspoken admiral in China has scoffed that all it would take to sink the high-tech American ship is an armada of explosive-laden fishing boats.

Despite my decimal confusion, it still true that US military is destroying the US econonical, as Ike forecast in his farewell address.

 

[Billy T]

Sadly some of sciforums readers know the following all to well from personal experience.

Generation Y professionals entering the workforce are finding careers that once were gateways to high pay and upwardly mobile lives turning into detours and dead ends. Average incomes for individuals ages 25 to 34 have fallen 8 percent, double the adult population’s total drop, since the recession began in December 2007. Their unemployment rate remains stuck one-half to 1 percentage point above the national figure.

Three and a half years after the worst recession since the Great Depression, the earnings and employment gap between those in the under-35 population and their parents and grandparents threatens to unravel the American dream of each generation doing better than the last. The nation’s younger workers have benefited least from an economic recovery that has been the most uneven in recent history.

“This generation will be permanently depressed and will be on a lower path of income for probably all of their life -- and at least the next 10 years,” says Rutgers professor Cliff Zukin, a senior research fellow at the university’s John J. Heldrich Center for Workforce Development. Professionals who start out in jobs other than their first choice tend to stay on the alternative path, earning less than they would have otherwise while becoming less likely to start over again later in preferred fields, Zukin says.*

Michael Greenstone, who was chief economist at the White House Council of Economic Advisers in 2009 and 2010, says the shift to a downwardly mobile society may be lasting. “Children are not earning as much as their parents, and I think we’re laying the seeds for that to continue into the future,” he says.

Only one-fifth of those who graduated college since 2006 expect greater success than their parents, a Rutgers survey found earlier this year. Little more than half were working full time. Just one in five said their job put them on a career path.

Not mentioned here but very important is that student loans total more than ALL credit card debt and are typically at least $20,000 with some many times that. The new graduates not only can rarely generate the purchasing power income their parents did in the US´s sick economy, but, even if they could they are weaker consumers as they are paying down their student debts (or try to - many never will be able to.). That is really "bad news" for an economy that was 2/3 consumer spending. No wonder the corporate profits are mainly coming from healthy foreign economies in Asia or the super rich in Africa buying BMWs etc.
Many in "Generation Y" will just be able to keep head above water as they go down the tube.

* To borrow a nautical phase: "any job in a storm."

 

[Michael]

1 in every 10 houses sold in California was sold to a Chinese citizen this year (2012). Good thing we bailed out the banks and are propping up the housing market... Well, it's good if you're a rich Chinese or a landlord or Banker.

If you own a business in California and pay for 100 employees, well, actually you're supporting an ADDITIONAL 134 Citizens. THAT Manu people are now being paid out of the public purse (public employees like the TSA to welfare queens). I wonder how much higher it can go? apparently 11 States are now either at 1 to 1 or higher like Ca at 1 to 1.34

Thanks Ben, fcuking jackass.

 

[kmguru]

all it would take to sink the high-tech American ship is an armada of explosive-laden fishing boats.

Chinese already have missiles that can take out coming from space...(up and then down)

As to Chinese buying houses...they can send at least 100 million in 5 years...and still have people back there...just wait 3 to 5 years, by then USA will be in big trouble...

 

[Michael]

Sometimes a picture is worth a thousand words

 

[Billy T]

Philly FED says things are getting worse:

Earlier this morning, the Philadelphia Fed released its traditional revisions to the historical data for the Business Outlook Survey. The report noted that overall; the data revisions adjust the current year-end indexes moderately downward. It added that there were more pronounced downward adjustments of the six-month expectations indexes over the last two months of 2012.

Below, are the primary revisions to the December data compared to the original data (reported on 20-Dec)
General activity: 4.6 vs prior 8.1
New orders: 4.9 vs 10.7
Shipments: 14.7 vs 18.3
Prices paid: 23.5 vs 27.8
Employees: (0.2) vs 3.6
Future activity: 23.7 vs 30.9

The release of the report triggered selling in the stock market as traders feared that the economy may not be as strong as the original reports may have indicated.