Thanks for the summary. I concur!
America's Race to the Bottom
- Thread starter kmguru
- Start date
Thanks for the summary. I concur!
This is the year that 50% of commercial real estate mortgages will go underwater. 
When will we learn that we must bring the economy home if we want it here. :shrug:
When will we learn that we must bring the economy home if we want it here. :shrug:
Note the four bold questions below for you to reply to.
For example: The WTO has recently granted Brazil the right to cross retaliate against the US for its illegal cotton subsidies. Also the US protects inefficient corn to alcohol production, which is WORSE for the environment than gasoline when the NOx damage is included. (NOx is produced in the soil by bacteria from the nitrogen fertilizer, which is used in large amounts in Iowa to compensate for short growing season) The cost of driving in US could be 50% lower (including in the accounting the corn to alcohol related subsidies along with the cheaper price at the pump) IF tropical sugar cane based alcohol were given a level playing field shot at the market and it does make about an 80% reduction in green house gas release but US voters are too dumb (believe TV ads etc.) to overcome the financial interest of large agricultural corporations and the fact that Iowa is the first state to hold primaries. (Iowa gave then unknown Obama his start towards the white house.)
(2) Who is "not letting it work"? I think the Congress (part of the system) gets most of the blame as representatives are mainly interest in their re-elections and vote accordingly. - Have no longer term interest in benefiting the US with better infrastructure, that takes longer to build than the next election. - For example US has no high speed trains and China will soon have more that the rest of the world's total!
(3) Here we agree. GWB mainly did this with his tax reductions for the rich. Also under GWB, purchasing power of Joe American's salary DECLINED - first time since the great depression of 1929. That combo is a disaster in an economy that depends upon Joe's buying for 62% of GDP; however giving more funds to the rich to invest did more damage - destroyed US factories and jobs. For example Warren Buffet used some of his available funds to become owner of 10% of BYD motors. Mainly US's rich paid for the more modern factories built in China when GWB was POTUS. US factories closed as they have both higher labor costs and now are older, less productive than the more modern Chinese ones. The capital that should have made US factories more modern "trickled down" into China!
(4) And you are assuming the US is not run by bureaucrats? In many cases such as farm planting quotas, granting of license to operate taxis, cut wood in national forests etc. it is obvious who is making the economic decisions; but the main governmental control over US economic decision is more subtitle - done via the IRS's complex rules. There is essentially no significant economic decision made in the US which is not strongly influenced by its tax consequences. For example, the decision to buy or rent at the personally level or which is the best investment at the corporate level (E.g. in mining with its depletion allowance vs. farming with its subsidies.) Few realize it but the US economy is "centrally planned" via the tax rules. Currently popular are various "green" systems cash benefits, $8000 for new home buyers, etc.
(5) First in education that is important for societies progress (science and math) it is the US kid that is the "idiot." Secondly, I agree that the Chinese kid (one to a family) may be more spoiled with family attention, but rarely on an absolute materialistic scale. I.e. Which gets the most plastic junk toys and things like trips to an amusement park? True,the Chinese CCP leadership is not elected by votes of the people, but the selection process is both political and merit based (on their prior records of achievement at lower levels). The US electorate is very easily mislead via TV, etc. (huge expenditures in campaigns) and very often persuaded to vote for the interest of the wealthy, not themselves. Read a few post in my thread: "How Dumb can US Voters be?"
(1) Not sure what you are referring to here. What international system did the USA build? Foreign trade? I don't think so. In fact with all our farm subsidies and tariffs, the US is a great blocker of expanded trade. - The main reason the Doha round of expansion is dead.
For example: The WTO has recently granted Brazil the right to cross retaliate against the US for its illegal cotton subsidies. Also the US protects inefficient corn to alcohol production, which is WORSE for the environment than gasoline when the NOx damage is included. (NOx is produced in the soil by bacteria from the nitrogen fertilizer, which is used in large amounts in Iowa to compensate for short growing season) The cost of driving in US could be 50% lower (including in the accounting the corn to alcohol related subsidies along with the cheaper price at the pump) IF tropical sugar cane based alcohol were given a level playing field shot at the market and it does make about an 80% reduction in green house gas release but US voters are too dumb (believe TV ads etc.) to overcome the financial interest of large agricultural corporations and the fact that Iowa is the first state to hold primaries. (Iowa gave then unknown Obama his start towards the white house.)
(2) Who is "not letting it work"? I think the Congress (part of the system) gets most of the blame as representatives are mainly interest in their re-elections and vote accordingly. - Have no longer term interest in benefiting the US with better infrastructure, that takes longer to build than the next election. - For example US has no high speed trains and China will soon have more that the rest of the world's total!
(3) Here we agree. GWB mainly did this with his tax reductions for the rich. Also under GWB, purchasing power of Joe American's salary DECLINED - first time since the great depression of 1929. That combo is a disaster in an economy that depends upon Joe's buying for 62% of GDP; however giving more funds to the rich to invest did more damage - destroyed US factories and jobs. For example Warren Buffet used some of his available funds to become owner of 10% of BYD motors. Mainly US's rich paid for the more modern factories built in China when GWB was POTUS. US factories closed as they have both higher labor costs and now are older, less productive than the more modern Chinese ones. The capital that should have made US factories more modern "trickled down" into China!
(4) And you are assuming the US is not run by bureaucrats? In many cases such as farm planting quotas, granting of license to operate taxis, cut wood in national forests etc. it is obvious who is making the economic decisions; but the main governmental control over US economic decision is more subtitle - done via the IRS's complex rules. There is essentially no significant economic decision made in the US which is not strongly influenced by its tax consequences. For example, the decision to buy or rent at the personally level or which is the best investment at the corporate level (E.g. in mining with its depletion allowance vs. farming with its subsidies.) Few realize it but the US economy is "centrally planned" via the tax rules. Currently popular are various "green" systems cash benefits, $8000 for new home buyers, etc.
(5) First in education that is important for societies progress (science and math) it is the US kid that is the "idiot." Secondly, I agree that the Chinese kid (one to a family) may be more spoiled with family attention, but rarely on an absolute materialistic scale. I.e. Which gets the most plastic junk toys and things like trips to an amusement park? True,the Chinese CCP leadership is not elected by votes of the people, but the selection process is both political and merit based (on their prior records of achievement at lower levels). The US electorate is very easily mislead via TV, etc. (huge expenditures in campaigns) and very often persuaded to vote for the interest of the wealthy, not themselves. Read a few post in my thread: "How Dumb can US Voters be?"
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Sorry, I didn't see your reply until a second ago. I have to run but I'll respond when I get back.
Below is a short muse I had.... (off topic and can be ignored)......
When do you suppose the USA will decide its time for all out war? IF things get seriously shit in the USA, I think that more and far worse war will follow. That's my only real worry.
Below is a short muse I had.... (off topic and can be ignored)......
When do you suppose the USA will decide its time for all out war? IF things get seriously shit in the USA, I think that more and far worse war will follow. That's my only real worry.
I suppose we could say the Europeans built these vast trading routes and following their collapse the USA stepped in. But, it's really a lot of the same families. No?
I see your point, and even if they were rigged, the USA did maintain a lot of the world trading order - somehow the Asians have seemingly beat us at our own game??? Are the Japanese to blame? Surely they'd have to be given credit over the Chinese? China, IMM, is a great big shinning factory paid for and build by wealthy Americans looking for cheap labor.
Somehow reminds me of England importing all those Pakistani people to work cheaply in the textile industry. That didn't seem to work out all that well either? A lesson in greed?
I still think WE are the government. It's our own fault. Cheap gasoline and no foresight. BUT when we want to, we can build great infrastructure projects. I'd say much much better than the Chinese. Not to slap the Chinese over the head, but, they're just copying the Germans aren't they? Or is it the German's building their trains for them?
Either way I do agree with your point, but, I still think our system CAN be and IS a great system when it works.
I almost think we are a victim of our own success - does that make sense? Which is why I really wish we hadn't bailed out the rich in 2008
Here I absolutely and totally agree. Great point. How to we fix? The way we're growing the government - well, it's a worry. BUT, if I'm right, you're saying centralized power is actually crap right?
We should let the market set the price?
Yeah, again, it seems like a case of being a victim of our own success? Or maybe the Greatest Generation were really just too Great and the last two (going on three) have ridden on their coat tales?
Kind of like a Nation Wide version of that old (incidentally) Chinese Proverb.
The First Generations Makes It (This would be WWII vets)
The Next Generation Spends It (Flower Power/ Me Generation)
The Last Generation Breaks It (Gen X)
Not sure if that's correct but you get my drift?
Well, the other thing is, I know a lot of Japanese. They're as good as any Chinese. This latest generation is a shadow of their grandparents - just like us. The Chinese ARE our grandparents generation. They do work hard. They will succeed. Their grand kids will be total little selfish shits (just like us) and they will NOT have a government they can change. THAT will be a problem. That's the point I was trying to make. I believe in our system. I just don't think we let it work, but, it IS working. It's telling us that it's time for a depression. So, that's what we should do. It's really the only way to peacefully remove the rich.
We seem to agree on most points now, but I will comment on your question to me.
For example the French control rooms are all the same. In the US, each utility specifies them differently. In the three mile island accident, the team of experts from the AEC misunderstood what the gauges were telling and what various controls did for two days! They made the problem worse, may have created a hydrogen bubble and forced some of the radioactive release. - I.e. the US nuclear industry is entirely decentralized and basically dead now. China is following the French model and building a new nuclear plant about every 40 days. US has built none in 35 years! Central planning would have been much better. We would not now be using imported oil to make electric power.
On the other hand central planning can really mess up the non-infrastructure part of the economy. I have posted before my talk, years ago, with pretty Russian economics student during a train ride in Hungry. She worked summers in a tomato processing plant.** All three were economic disasters, but now I only tell one: The central planners had forgotten that the cans need lids so none were available. The factory manager bribed the truck drivers arriving daily from the state farms to take the tomatoes directly to the town dump. Adam Smith's invisible hand should be allowed to guide /control the consumer economy, as it does in China, not central planning.
*The public service commissions in the US allows a rate of return on the capital invested, but only on the capital that is used on line (not capital spent in construction stage). Thus, three mile island plant was put on line on the last day of the year so the capital it cost could be included in the next year's rate base. They did this even thought 4 or 5 pumps of the back-up safety system were not yet installed! As it turned out, the accident was not effected by their absence (or by that time the had been installed - I forget.) but the point is the US nuclear industry puts profit first, and safety second because, unlike the French or Chinese, profit making concerns order and run it.
**BTW she sat at her work station all summer long and read 8 classic books in English so for her that "lid-less" summer was great. I let casually drop that I worked summers at LASL, where US atomic bombs are designed. (That was safe to let slip as I did not know anything secrete.) I was hoping she was really a Russian spy and would get off the train with me when I did, but she did not. :bawl:
Yes & No. I.e. you need to look at the use of the power, not make a blanket statement about central power /planning. For example central power planning /controlling of the drugs sold in the US (i.e. the FDA) is great. Likewise when it is used to build safe* nuclear power plants, as in France, it is great. There the government is focused on safety.*
For example the French control rooms are all the same. In the US, each utility specifies them differently. In the three mile island accident, the team of experts from the AEC misunderstood what the gauges were telling and what various controls did for two days! They made the problem worse, may have created a hydrogen bubble and forced some of the radioactive release. - I.e. the US nuclear industry is entirely decentralized and basically dead now. China is following the French model and building a new nuclear plant about every 40 days. US has built none in 35 years! Central planning would have been much better. We would not now be using imported oil to make electric power.
On the other hand central planning can really mess up the non-infrastructure part of the economy. I have posted before my talk, years ago, with pretty Russian economics student during a train ride in Hungry. She worked summers in a tomato processing plant.** All three were economic disasters, but now I only tell one: The central planners had forgotten that the cans need lids so none were available. The factory manager bribed the truck drivers arriving daily from the state farms to take the tomatoes directly to the town dump. Adam Smith's invisible hand should be allowed to guide /control the consumer economy, as it does in China, not central planning.
*The public service commissions in the US allows a rate of return on the capital invested, but only on the capital that is used on line (not capital spent in construction stage). Thus, three mile island plant was put on line on the last day of the year so the capital it cost could be included in the next year's rate base. They did this even thought 4 or 5 pumps of the back-up safety system were not yet installed! As it turned out, the accident was not effected by their absence (or by that time the had been installed - I forget.) but the point is the US nuclear industry puts profit first, and safety second because, unlike the French or Chinese, profit making concerns order and run it.
**BTW she sat at her work station all summer long and read 8 classic books in English so for her that "lid-less" summer was great. I let casually drop that I worked summers at LASL, where US atomic bombs are designed. (That was safe to let slip as I did not know anything secrete.) I was hoping she was really a Russian spy and would get off the train with me when I did, but she did not.
:bawl:
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This post is up dating:
How am I doing on my 156 to fail prediction? Well Friday, 9April10, was day 99 of 2010. If failure rate holds steady 42 x (365/99) = 155, so I am currently one bank off, but as I noted in prior post and is now confirmed, the failure rate is accelerating, so I am confident - expecting to this year again have under estimated the total, even with the 10 banks over linear extrapolation added in the prior post to predict 156.
" BNC Bancorp, the North Carolina- based lender with $1.6 billion in assets, purchased a Myrtle Beach, South Carolina bank as the number of U.S. bank failures this year climbed to 42." From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aLxMWNV_IB6s&pos=7
How am I doing on my 156 to fail prediction? Well Friday, 9April10, was day 99 of 2010. If failure rate holds steady 42 x (365/99) = 155, so I am currently one bank off, but as I noted in prior post and is now confirmed, the failure rate is accelerating, so I am confident - expecting to this year again have under estimated the total, even with the 10 banks over linear extrapolation added in the prior post to predict 156.
“…Nearly half {24 to be exact} of all U.S. states reported rising unemployment rates in March, the government said Friday. … On an annual basis, jobless rates increased in 44 states and D.C. in March. That's down from a total of 46 states in February.
{As Sandy would say: “more good news” - Two less states with rising unemployment! :bravo: :bravo:}
{A just signed law} restores federal unemployment benefits to more than 200,000 jobless Americans who started losing them on April 5 {but only until 2 June}.
The National Employment Law Project, an advocacy group, said last week that 33 states and the Virgin Islands have depleted their funds and borrowed more than $38.7 billion to provide a safety net. Four others are at the brink of insolvency. …”
From; http://money.cnn.com/2010/04/16/news/economy/state_unemployment/index.htm
{As Sandy would say: “more good news” - Two less states with rising unemployment! :bravo: :bravo:}
{A just signed law} restores federal unemployment benefits to more than 200,000 jobless Americans who started losing them on April 5 {but only until 2 June}.
The National Employment Law Project, an advocacy group, said last week that 33 states and the Virgin Islands have depleted their funds and borrowed more than $38.7 billion to provide a safety net. Four others are at the brink of insolvency. …”
From; http://money.cnn.com/2010/04/16/news/economy/state_unemployment/index.htm
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"... The U.S. will sell $44 billion in two-year notes, $42 billion in five-year securities, $32 billion in debt maturing in seven years and $10 billion in five-year Treasury Inflation Protected Securities, according to the average estimate of nine primary dealers in a Bloomberg News survey. The $118 billion in nominal debt matches a record. The U.S. will announce the amounts tomorrow for the auctions conducted over four days beginning April 26.
Matthew Rutherford, the Treasury’s deputy assistant secretary for federal finance, said in February that the auctions have been expanded enough to fund the budget deficit and that any changes would depend on tax receipts and how fast the economy recovers. Dealers estimated in an earlier survey that the Treasury will sell a record $2.4 trillion in debt in 2010, compared with $2.11 trillion in notes and bonds last year. ..."
From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aeRHlg6eqCxQ&pos=3
Billy T comment:
Interesting to note that Treasury is not even trying to sell 10 year or longer bonds in this record setting offering. Could it be they don't want to offer more than there are buyers for? - Only insurance companies buy 30 year bonds now as they match their payout requirements 30 years hence. They don't care if the dollar then is only worth 3 cents in purchasing power as their payout obligations are in fixed dollar amounts.
Deeper in debt we go with rising interest rates growing it faster. I.e. Like Greece,* the US is past the point of no return. Only question now is when do we crash.
----------------
* But Greece is tiny - the EU or IMF can easily bail them out. Who can bail out the US government? Not even China, nor would they want to. It is best for China if US crashes and burns as then the demand for oil** etc. will be greatly reduced, saving China a lot of expense as it continues to grow.
China will not NOW give US a push over the cliff as it need to grow its domestic market more and reduce its economic dependency on exports further first. Also China would like a few years more to use dollars in its reserves to buy oil, minerals, and food stocks (or farm land) in long term (20 to 30 year) contracts. It is doing that at an ever accelerating rate now and for last four months has been a net seller of US treasury paper.
All is going as I forecast back when GWB made the collapse of dollar and economies of US and EU inevitable.
** Chinese demand for oil is already growing at astounding rate (China sold four times more cars in 2009 than in 2008):
"... China's demand for oil rose 12.8 percent in March as the Chinese economy returned to rapid growth and refining capacity expanded, according to a report Tuesday. ... It was the seventh month in a row of double-digit increase in demand for China. But it was short of the all-time high in February of 8.5 million barrels per day. ..." {February is cold in China and oil is used for heating. US oil demand has been dropping since 2006 but still is twice that of China's at less than 19 million BPD.}
From: http://www.chinadaily.com.cn/bizchina/2010-04/21/content_9756278.htm
Matthew Rutherford, the Treasury’s deputy assistant secretary for federal finance, said in February that the auctions have been expanded enough to fund the budget deficit and that any changes would depend on tax receipts and how fast the economy recovers. Dealers estimated in an earlier survey that the Treasury will sell a record $2.4 trillion in debt in 2010, compared with $2.11 trillion in notes and bonds last year. ..."
From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aeRHlg6eqCxQ&pos=3
Billy T comment:
Interesting to note that Treasury is not even trying to sell 10 year or longer bonds in this record setting offering. Could it be they don't want to offer more than there are buyers for? - Only insurance companies buy 30 year bonds now as they match their payout requirements 30 years hence. They don't care if the dollar then is only worth 3 cents in purchasing power as their payout obligations are in fixed dollar amounts.
Deeper in debt we go with rising interest rates growing it faster. I.e. Like Greece,* the US is past the point of no return. Only question now is when do we crash.
----------------
* But Greece is tiny - the EU or IMF can easily bail them out. Who can bail out the US government? Not even China, nor would they want to. It is best for China if US crashes and burns as then the demand for oil** etc. will be greatly reduced, saving China a lot of expense as it continues to grow.
China will not NOW give US a push over the cliff as it need to grow its domestic market more and reduce its economic dependency on exports further first. Also China would like a few years more to use dollars in its reserves to buy oil, minerals, and food stocks (or farm land) in long term (20 to 30 year) contracts. It is doing that at an ever accelerating rate now and for last four months has been a net seller of US treasury paper.
All is going as I forecast back when GWB made the collapse of dollar and economies of US and EU inevitable.
** Chinese demand for oil is already growing at astounding rate (China sold four times more cars in 2009 than in 2008):
"... China's demand for oil rose 12.8 percent in March as the Chinese economy returned to rapid growth and refining capacity expanded, according to a report Tuesday. ... It was the seventh month in a row of double-digit increase in demand for China. But it was short of the all-time high in February of 8.5 million barrels per day. ..." {February is cold in China and oil is used for heating. US oil demand has been dropping since 2006 but still is twice that of China's at less than 19 million BPD.}
From: http://www.chinadaily.com.cn/bizchina/2010-04/21/content_9756278.htm
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Some people are getting hurt already on the way to the bottom:
".. Food prices for the month {March BLS data} rose by 2.4%, its sixth consecutive monthly increase and the largest jump in over 26 years.
There are now 39.4 million Americans on food stamps, up 22.4% from one year ago. The U.S. government is now paying out more to Americans in benefits than it collects in taxes.* As food inflation continues to surge, our country will soon have no choice but to cut back on food stamps and other entitlement programs. ..."
The food stamp program is growing in numbers and the cost of each package of food is growing too. Lets call (guessing) average monthly increase in food cost only 1.5% or 1.5x12 = 18% annually. Then 22.4 +18 > 40% annual increase in the food stamp program (assuming that the un & underemployed do not increase their rate of growth) This is even faster than the cost of Social Security and medicare programs are increasing, I think.
I.e. the deficit is accelerating (increasing at faster rate) as US races to the bottom. Fact that interest rates will rise on the ever growing debt is more gas to the race car going down hill already.
---------------
* The ominous but obvious conclusion is that now the government must borrow to pay the interest on the debt!
(Probably have been for many years as I don't think NASA, Aid to Israel, etc. or certainly not the Iraq war can be considered to be "benefits to Americans" like Social Security and food stamps are.)
".. Food prices for the month {March BLS data} rose by 2.4%, its sixth consecutive monthly increase and the largest jump in over 26 years.
There are now 39.4 million Americans on food stamps, up 22.4% from one year ago. The U.S. government is now paying out more to Americans in benefits than it collects in taxes.* As food inflation continues to surge, our country will soon have no choice but to cut back on food stamps and other entitlement programs. ..."
The food stamp program is growing in numbers and the cost of each package of food is growing too. Lets call (guessing) average monthly increase in food cost only 1.5% or 1.5x12 = 18% annually. Then 22.4 +18 > 40% annual increase in the food stamp program (assuming that the un & underemployed do not increase their rate of growth) This is even faster than the cost of Social Security and medicare programs are increasing, I think.
I.e. the deficit is accelerating (increasing at faster rate) as US races to the bottom. Fact that interest rates will rise on the ever growing debt is more gas to the race car going down hill already.
---------------
* The ominous but obvious conclusion is that now the government must borrow to pay the interest on the debt!
(Probably have been for many years as I don't think NASA, Aid to Israel, etc. or certainly not the Iraq war can be considered to be "benefits to Americans" like Social Security and food stamps are.)
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Lenders in Arizona, California, Minnesota and Florida were closed by regulators and the Federal Deposit Insurance Corp. was named receiver, according to statements on the agency’s website. The failures cost the FDIC’s deposit insurance fund $213.7 million, a fraction of last week’s $7.3 billion total cost. City National Corp., the Los Angeles-based lender with $20.1 billion in assets, purchased one of the banks. ...”
From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aRVsqkRolq1c&pos=4
68 banks have failed as of yesterday, Friday, which was day 127 (=31+28+31+30+7) of 2010. Thus failure rate is now 0.535433 banks/day or in 365 days that is 195.4 banks expected to be failing. Well above my post 94 prediction that 156 would fail and nearly equal to the 2009 total!
I.e. bank failure rate is still accelerating; however, it must be noted that the failing banks are tending to be the smaller ones that serve local communities. This is good for the FDIC as it has less to pay out on average, but harder on their communities than when a big Wall Street bank fails as small businesses cannot get loans, while the doors are closed.* Wall Street is doing well now, but unemployed Joe American can still not find a job in his local community –that is getting worse.
----------------------
*Also even if the doors reopen quickly because some big distant bank takes them over, the local knowledge as to who is a good loan risk is lost. Many will not reopen. That is a real pain for their communities.
From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aRVsqkRolq1c&pos=4
68 banks have failed as of yesterday, Friday, which was day 127 (=31+28+31+30+7) of 2010. Thus failure rate is now 0.535433 banks/day or in 365 days that is 195.4 banks expected to be failing. Well above my post 94 prediction that 156 would fail and nearly equal to the 2009 total!
I.e. bank failure rate is still accelerating; however, it must be noted that the failing banks are tending to be the smaller ones that serve local communities. This is good for the FDIC as it has less to pay out on average, but harder on their communities than when a big Wall Street bank fails as small businesses cannot get loans, while the doors are closed.* Wall Street is doing well now, but unemployed Joe American can still not find a job in his local community –that is getting worse.
----------------------
*Also even if the doors reopen quickly because some big distant bank takes them over, the local knowledge as to who is a good loan risk is lost. Many will not reopen. That is a real pain for their communities.
I forgot to bestow my own economic prediction:
Anything can happen.
As for the worst (or best) extremes of the boom or bust chart, the higher probabilities remain in the middle. People in every economic sector do share a healthy fear for the worst, and present volatility, vulnerability and downturns are the result of healthy collective emotions that go along with unsettling collective awareness.
If the US/global economy were still sailing along unperturbed under present conditions, then it seems to me that the probabilities would move to the outer limits. But we're increasingly in the same boat, and with 2 ways to start bailing. Very broadly and psychologically I contend that in our present situation most people are likely to contribute to staying afloat together, in whatever ways we can, than we are prone to jumping overboard.
I'm no economist and no psychologist. But in what I can glimpse of the macro level and momentum of humanity, I suspect the two are ultimately one science, with double the experts, but the same existential question about our intelligence and adaptiveness as a species. And the answer is (here's my prediction) we choose to Be.
Anything can happen.
As for the worst (or best) extremes of the boom or bust chart, the higher probabilities remain in the middle. People in every economic sector do share a healthy fear for the worst, and present volatility, vulnerability and downturns are the result of healthy collective emotions that go along with unsettling collective awareness.
If the US/global economy were still sailing along unperturbed under present conditions, then it seems to me that the probabilities would move to the outer limits. But we're increasingly in the same boat, and with 2 ways to start bailing. Very broadly and psychologically I contend that in our present situation most people are likely to contribute to staying afloat together, in whatever ways we can, than we are prone to jumping overboard.
I'm no economist and no psychologist. But in what I can glimpse of the macro level and momentum of humanity, I suspect the two are ultimately one science, with double the experts, but the same existential question about our intelligence and adaptiveness as a species. And the answer is (here's my prediction) we choose to Be.
Because of GWB’s tax relief for the wealthy, they invested (trickle down) where return on investment was several times that of USA due to almost four times higher GDP growth rate. I.e. “Trickle Down” built the more modern (than in US) factories in China. This with lower wages made US factories close or outsource heavily to stay open. These Chinese factories will be better than those in the US for decades. They will make high unemployment chronic in the US. See below how this new norm is forming. (Let's hope the curve stops rising soon, but it shows no sign of that yet.):
Those with jobs still are under employed. See below:
When the depression comes, remember to thank GWB.
His disastrous economic and war starting policies allowed me to predict it was inevitable when he still had two years more as POTUS.
Those with jobs still are under employed. See below:
When the depression comes, remember to thank GWB.
His disastrous economic and war starting policies allowed me to predict it was inevitable when he still had two years more as POTUS.
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“… Unemployment among people under 25 years old was 19.6 percent in April, the highest level since the Labor Department began tracking the data in 1948.
{Probably the highest level EVER}
Ten months after graduating from Ohio State University with a civil-engineering degree and three internships, Matt Grant finally has a job -- as a banquet waiter at a Clarion Inn near Akron, Ohio. "It’s discouraging right now,” said the 24-year-old, who sent out more than 100 applications for engineering positions. “It’s getting closer to the Class of 2010, their graduation date. I’m starting to worry more.”
Schools from Grant’s alma mater to Harvard University will soon begin sending a wave of more than 1.6 million men and women with bachelor’s degrees into a labor market with a 9.9 percent jobless rate, …” From: http://www.bloomberg.com/apps/news?pid=20601109&sid=a8f9A4GYLECE&pos=10
Billy T comment:
Many new graduates will not really be “Unemployed” but a new group: the “Nevemployed” (never employed). Thank GWB. See why in my last post, 114.
{Probably the highest level EVER}
Ten months after graduating from Ohio State University with a civil-engineering degree and three internships, Matt Grant finally has a job -- as a banquet waiter at a Clarion Inn near Akron, Ohio. "It’s discouraging right now,” said the 24-year-old, who sent out more than 100 applications for engineering positions. “It’s getting closer to the Class of 2010, their graduation date. I’m starting to worry more.”
Schools from Grant’s alma mater to Harvard University will soon begin sending a wave of more than 1.6 million men and women with bachelor’s degrees into a labor market with a 9.9 percent jobless rate, …” From: http://www.bloomberg.com/apps/news?pid=20601109&sid=a8f9A4GYLECE&pos=10
Billy T comment:
Many new graduates will not really be “Unemployed” but a new group: the “Nevemployed” (never employed). Thank GWB. See why in my last post, 114.
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Thanks. (I made chart plural here, but not in the original.) The problem continues to grow worse, more rapidly than expected by experts:
Today's report: "... Initial jobless claims rose by 25,000 to 471,000 in the week ended May 15, exceeding the median forecast of economists surveyed by Bloomberg ... The number of people receiving unemployment insurance and those getting extended payments fell. {Because many are now passed their eligibility time limit. See first chart of post 114. Out of work for a year is not rare!}
Some companies are trimming payrolls to boost or maintain profits, even as overall employment has grown each month this year. {But not as fast as the labor force, which soon will get 1.6 million new college graduates added. Employment has grown in last month mainly because of all the temporary census jobs. }
Unemployment may take time to recede as more jobseekers enter the workforce and fail to find work. “It’s very discouraging,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York. “The other troubling thing is the total number of people receiving benefits, including extended and emergency benefits, has remained very high.” ..."
From a few minutes ago at: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajS7JMYelGRc
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Here is another example of postive feedback leading to an non- linear increase, (but it will saturate as all non-linear growth curves do):
"A growing number of homeowners who owe more on their mortgages than their property is worth are opting for "strategic default," which means walking away from their homes, even though they can afford to make their monthly payment.
If the trend accelerates, it could put more empty houses on a market that's already overburdened with vacancies and snuff out any recovery in the moribund housing market.
Right now, more than 10% of borrowers are 25% or more underwater on 4.9 million mortgages. The total valuation could saddle banks with as much as $656 billion of bad loans, according to the latest report from Corelogic. ..."
Quote from part of Email from From:
Money Morning <customerservice@moneymorning.com>
Billy T comment:
About a year ago 2/3 or more of under water home owners told interviewers that it was immoral to walk away if they could still pay their mortgage, even when recognizing that they were, in most cases, just throwing good money after bad. Now that two of their neighbors on their street have done so they are thinking they too should. Rationalizing that the greedy bankers made this mess and they should be made to eat the bad debts. I.e. now They will tell you it is nearly a moral obligation to punish the bank for the evil it did to the economy as they take the keys to their house to the bank.
"A growing number of homeowners who owe more on their mortgages than their property is worth are opting for "strategic default," which means walking away from their homes, even though they can afford to make their monthly payment.
If the trend accelerates, it could put more empty houses on a market that's already overburdened with vacancies and snuff out any recovery in the moribund housing market.
Right now, more than 10% of borrowers are 25% or more underwater on 4.9 million mortgages. The total valuation could saddle banks with as much as $656 billion of bad loans, according to the latest report from Corelogic. ..."
Quote from part of Email from From:
Money Morning <customerservice@moneymorning.com>
Billy T comment:
About a year ago 2/3 or more of under water home owners told interviewers that it was immoral to walk away if they could still pay their mortgage, even when recognizing that they were, in most cases, just throwing good money after bad. Now that two of their neighbors on their street have done so they are thinking they too should. Rationalizing that the greedy bankers made this mess and they should be made to eat the bad debts. I.e. now They will tell you it is nearly a moral obligation to punish the bank for the evil it did to the economy as they take the keys to their house to the bank.
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kmguru
Staff member
The greater problem is how the big corporations treat their employees. My next door neighbor's daughter got fired because she got sick and ended up in the hospital two days before her 90 day probationary period. The supervisor did not have the spine to keep her as if the policies are the law of the country. This is from the biggest Bank of our country. This is pervasive in the country.
As more and more large corporations abuse their employees, there will be no loyalty by people towards any corporation. That has long term consequences in the society.
As more and more large corporations abuse their employees, there will be no loyalty by people towards any corporation. That has long term consequences in the society.