Today the business section of the NY Times had two interesting
articles. One was entitled: "Wall Street Shaken by US Job
Losses in August" and the other was front page, "Drop in Jobs
is Continuing: 93,000 Lost Last Month."

Excerpt from the first:

.... yesterday the labor department reported that while the
unemployment rate slipped to 6.1% in August, companies cut
payrolls by 93,000. The report was weaker than expected and
delivered mixed signals about the nation's overall economic
health. Wall Street was expecting jobs to increase 20,000
to 25,000, Mr. Hogan [chief market analyst at Jeffries and
Company] said.

"We are concerned about the jobs-creation part of the
economy," Mr. Hogan said.

The second article is highly remiscent of the discussions
that went on here on rcm in the past few months, here I
quote from that article:

... What suprises many economists is that the job-shedding
has continued despite what they describe as an extraordinary
level of economic stimulus. Low interest rates, tax cuts and
rebates, a rise in military spending, mortgage refinancings,
growing corporate profits, even a long-awaited improvement
in business spending on new equipment and software have all
all contributed to the rise in the economic growth rate.

But jobs are disappearing, and employers continue to resist
adding hours for their existing workers. Economists warn that
without payroll expansion and rising income from wages,
sustaining the economic growth will be difficult once the
stimulus weakens.

"If we go into next year without job growth, then the consumer's
willingness to keep spending comes into question, and recovery
is in danger of unwinding," said James W Paulsen, chief
investment strategist for Wells Capital Management.

Seeking an explaination for the job drought, some economists
call attention to the shifting of production overseas,
particulary to China, and to the american economy's rapid
gains in productivity. The productivity gains allow companies
to maintain the same level of production with fewer workers.

Both trends have proceeded at a stepped-up pace in recent months
so the economy, in response, may now have to expand at an
annual rate of 5 percent or more, simply to keep employment
levels stable, said Albert M. Wojnilower, economic consultant
and wall street forecaster. ....

The article also mentioned that about half of the 93 thousand
jobs lost were in the manufacturing areas.

Frankly it sounds to me like the company's dreams of increased
profit by shifting production overseas where labor rates are
very low is already showing signs of failure. My bet is that
the management in firms like that is driven by the pure and
simple desire to temporarily boost profits, so that they
can line their own pockets before the rent comes due. Yep,
plain old greed.

The problem that nobody anticipated is, the feedback time
constant is way, way too far short for this to work. To
boost their profits, they need to lay off american workers.
Sure the workers have some savings, but once you lay off
the worker, they stop buying - instantly, and almost
completely.

Which leaves no market for the goods that the companies are
trying to peddle. A lot of this stuff is about perception,
all a person needs to hear is that their friend has just
been laid off, and he thinks, "that could be me. I better
start tightening the belt now before it's too late."

Somebody has to knock these idiots' heads together
and holler in their ears, that NOBODY BUYS ANYTHING
WHEN THEY HAVE NO JOB. This seems simple but they
just ain't 'getting it.'

How much do folks want to be that the next big export
overseas to china is going to be those executives
themselves, when they discover that their efforts have
destroyed their companies - and the US economy as
well. I suspect they will also be making 1/20 of
their present salary or thereabout - IF china is
interested in hiring them. Otherwise it's off to the
rice farm for them.

Jim

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