"Too_Many_Tools" wrote in message
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On Apr 3, 10:49 pm, "Ed Huntress" wrote:
"Too_Many_Tools" wrote in message

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On Apr 3, 5:13 am, "Ed Huntress" wrote:





"Too_Many_Tools" wrote in message

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On Apr 2, 9:53 pm, "Ed Huntress" wrote:

posting stripped to RCM only

"Too_Many_Tools" wrote in message

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On Mar 27, 9:27 am, reinhardt wrote:

On Mar 24, 5:15 pm, Too_Many_Tools wrote:

The jury is out on this one....

What do you think?

TMT

Recession is a given. Can we avoid depression?

Why avoid one when that was desired goal to begin with?

Do you know how financially reasonable depression labor is?
Actually your comment does make sense.

No it doesn't.

If one wants to level the world labor market in respect to costs, one
must lower the United States labor costs to Third World levels.

No one wants to level the world market. They want the low-wage
countries
to
make the goods, and the high-wage countries to buy them. That's how
one
makes the most profit.

--
Ed Huntress
There are other countries that will buy goods...have you noticed how
companies are falling over each other to sell to China?

There are a lot of people in China, a tiny percentage of which can buy
expensive goods. But even a tiny percentage of 1.2 billion people is a
lot
of customers. This is what businesses have been anticipating for a long
time. Meanwhile, the West is China's export market, and its entire
economy
still hinges on exports.

The United States is quickly running out of money...and credit.

Really? I think you're engaging in wishful thinking and some confused
conclusions from the current financial troubles here, TMT. You're
sounding
like the flip side of the right-wing nutbags. The US will continue to be
a
large market for low-wage countries.

No money or credit...no buying of goods.
The United States is becoming the cheapest place to produce.

Having covered this topic for some decades as a magazine reporter, I can
tell you that the US was the cheapest place to produce advanced machine
tools, for example, as far back as the early '90s. It's also been the
cheapest place to produce top-tier cars (ones that meet Western quality
standards) for about the same length of time. (Korea probably holds that
title now.) That's because we have the most productive manufacturing
economy
in the world. As of five years ago (I haven't checked current figures),
we
were roughly ten times as productive as China, for example.

Before you drink the Kool-Aid with the Chicken Little brigade, you
should
spend more time with the numbers, and less time with the doomsday
stories
written by fairly ignorant reporters in the general press.

--
Ed Huntress- Hide quoted text -

- Show quoted text -
I disagree Ed.
If we are so productive, then why are the jobs leaving the country?

Because we may be the most productive, but we aren't the cheapest. They
are
two different things. Productivity is a measure of the dollar (or other
currency) value of output per labor hour. Cheapness is a measure of how
much
one has to pay to get something made. If you're Reebock and you can get
running shoes assembled in the interior of China for $0.17/hour, you don't
care if they only get 1/10th the productivity of US workers, or even
1/20th.

If we are so productive, then why has so much of our manufacturing
infrastructure been moved offshore?

See above.

I would suggest looking at the national debt, the rate of lending that
the Feds doing and the loss of housing equity and then get back to me
as to how much money/credit this country still has.

You can't draw a conclusion about how much money or credit we have from
that
information, TMT. As for our national debt, as a percentage of our GDP it
is
less than that of Japan, Canada, Norway, Sweden, Switzerland, France,
Germany, and about 60 other countries. You'll have to define what
constitutes "lending," in your view, by the Fed before we can address that
question. Regarding housing equity, the bubble of exuberance is getting a
haircut and probably will decline to something closer to housing's true
replacement value.

--
Ed Huntress- Hide quoted text -

- Show quoted text -


You can't draw a conclusion about how much money or credit we have from
that
information, TMT.

Yes you can...we have less...much less.

This is a "narrow money/broad money" question that can't be answered unless
and until you define what kind of money you're talking about. Any of the
usual indicators, including the standard M1+M2+M3, right at this moment,
probably would show that the "amount" of money the US has now is the highest
in history. In fact, at a more sophisticated level of discussion, one of us
might take up the side that the problem is that we have *too much* money.

Regarding credit, what do you mean by "how much credit this country has"?
Are you talking about how many Treasury bonds we can sell? We could sell a
lot more if we raised interest rates. But not at the low interest rates
we've been selling bonds for the last decade or so. That's probably
surpassed its peak. We shouldn't be tapping into that vein anymore, anyway.
We've already dug pretty deep and we'd be better off if we stopped. But, in
any case, we sell most of those bonds to US citizens, not to foreign
citizens or governments.

Please note where the American dollar compares to the other world
currencies...that is the measure of trust the rest of the world (who
makes most of what we use and holds the markers to our debt).

The value of the dollar, most importantly and to a dominant degree, is based
on what currency traders think about the relationship between the number of
dollars in circulation and the productive output they represent -- in other
words, what you *should* be able to buy with a dollar. The markets have
judged that we've been getting too much for a dollar, and they're right. The
dollar has been overvalued and it's now going through an adjustment, a part
of which is the result of being in a recessionary period, if not an outright
recession.

After that there are many other factors, ranging from the interest rates we
pay on government bonds (want to see the US dollar's value climb in a hurry?
Raise the interest rate by two or three percent and watch it soar.) to the
state of our economy. This is too deep a question for anything we could
possibly discuss here. But if you want to correct some of your
misapprehensions, plenty of good analysis is out there.

Here's something, for example, from an article in last week's _The
Economist_:

"Indeed, the main cause of the dollar's recent slide has been the ECB's
refusal to cut interest rates (because of its inflation concerns) while the
Fed is slashing rates to support growth. Or to put it another way, the weak
dollar is consistent with the economic fundamentals, namely that America is
in recession whereas the euro zone is still growing. The ECB will want to
see inflation easing and more evidence that growth is slowing before it cuts
rates. There is also little chance right now that the American government
would join in any action to push up the dollar, because the cheap currency
is giving a helpful boost to exports.
"On the other hand, the euro is now looking extremely over-valued-and thus
ripe for intervention (see chart).

http://www.economist.com/finance/dis...ry_id=10924165

It doesn't matter what the rest of the world is doing in regards to
debt...we don't owe that debt.

Yeah, it matters. What it tells you is that our deficit, as a static number,
is not the answer to why the US economy is not doing well relative to those
European countries that have much higher debt/GDP ratios. It tells you
you're looking in the wrong place for an answer.

As for symatics, it matters little.

Sematics means "the meaning of words." If it doesn't matter to you what
words mean, then this is going to be a very short discussion. d8-)

What matters is that the United States is a debtor nation, with a
significant amount of its manufacturing base offshore, significantly
dependent on foreign energy and its assets devaluing substantially.

No, no, no, and that's a mixed bag. The fact that we're a debtor nation does
not explain the recession, as you should recognize from the information
about debt/GDP relationships posted above. As for how much of our
manufacturing "base" is offshore, you'll find it illuminating to actually
look up the numbers (not to mention that it's an excellent discipline for
holding intelligent discussions.). Our foreign energy dependence is far less
than that of other countries that are doing well. As for our assets -- which
ones are you talking about that weren't ridiculously inflated to begin with?

This has happened under this Administration. and from every poll I
have seen the American people will be going to the polls in November
with change on their mind.

That appears to be likely, but it will be based more on erasing the memory
of George Bush, his attitudes, and his policies, than on accurate
evaluations of where we stand economically.

--
Ed Huntress