Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Holden McGroin on December 02, 2003, 12:26:32 PM
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Manufacturing at Highest Level in Two Decades
By EDMUND L. ANDREWS and FLOYD NORRIS
Published in NYTimes: December 2, 2003
WASHINGTON, Dec. 1 — American manufacturing activity rose to its highest level in nearly 20 years last month as factories raced to keep up with demand and indicated a readiness to expand their work forces for the first time in three years, according to a survey published on Monday.
In the latest good economic news, the Institute of Supply Management reported that its November survey of purchasing managers showed a surge in new orders and a big jump in production in almost every industry. The institute said its overall index of manufacturing activity climbed to the highest level since December 1983, an increase much greater than most economists expected.
But the bigger surprise was that manufacturers showed a wider readiness to hire workers after three years of reducing factory payrolls.
Major stock indexes rose yesterday to the highest levels in 18 months, with the Dow Jones industrial average rising 1.19 percent as investors became more convinced that the robust economic growth this summer was more than a one-time event.
Speaking at a fund-raising event in Dearborn, Mich., President Bush said his strategy of lower taxes had helped revive the economy.
"Our economy was strong and it is getting stronger," Mr. Bush said. "Productivity is high; business investment is strong; housing construction is strong. The tax relief we passed is working."
"The Bush economic plan is wrong... it must be... " -the thoughts and hopes of Howard Dean
Intresting that the economy is greatly on its own and the President's policy has little to do with it, whoever the President may be. But they still get the blame or the credit.
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Intresting that the economy is greatly on its own and the President's policy has little to do with it...
Usually it is not the president but the Federal Reserve that controls the business cycle through monetary policy.
In this specific case the huge fiscal injections of the 2nd quarter - tax cuts plus spending increases - could have been the trigger for the 3rd quarter growth in economic activity.
"The Bush economic plan is wrong... it must be... " -the thoughts and hopes of Howard Dean
With 3-4% growth the Fed must have expected to hold the recovery going for a few years - at least past the 2004 election. With rates above 7-8% it may be forced to raise interest rates and induce recession or face inflation before elections.
miko
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Yeah this whole money based economy thing will never work out. Back to Barter in '04!
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I'm thinking about buying gold. Anyone have any thoughts?;)
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I think our currency should be hotdogs, they'd be worth roughly a nickel.
(http://www.pitt.edu/~mrmst55/caray6.jpg)
-SW
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Originally posted by muckmaw
I'm thinking about buying gold. Anyone have any thoughts?;)
Gold is up to $404/oz today....over the weekend I heard some money guys say that the possibility of the US returning to the gold standard is close to becoming a reality...predictions say that would drive up the price of gold to above 1k/oz.
I've been investing in gold since GWB got 'elected'...just as a hedge against his 'economic policies'.
Y'all should look into it too :)
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lol the highest level of production in 20yrs?? Was that measured over a 2 day interval? I guess that goes right along with the highest unemployment in 20yrs.. Kinda funny how it can be both!
k
AoM
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It must suck to be a Bush hater these days...
First the Baghdad visit, now this.
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This is really BAD news.
There'll be some folks along to explain that in a short while.
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It may be good news or it may be bad news but the number itself does not say anything. A growth is only good if it's sustainable and production is only good if the output finds demand, rather than liquidated in bankrupcy proceedings.
Rejoicing at a number - be it 8.2% or 4% is the same as rejoicing at the car engine burning fuel at higher rate.
Yes, it means the car is going faster but that is only good if there is enough fuel to last the trip at such burn rate and if the car is going in the right direction. Otherwise at some point part of the cargo would have to be dumped overboard in order for the car to reach the refueling station.
If the projects being expanded are malinvestments, like many of those in the previous boom, then the resources would be vasted and real growth would be revised to lower number.
Net foreign investment fell to $4.2 Billion in September... In August, the figure stood at $49 billion... And in July, it stood at $73 billion.
The foreign investment in U.S. Treasuries fell to $5 billion in September from August's $25 billion. The average monthly figure for the last 12 months as been around $40 billion. Any way you cut this data, it all says the same thing - the U.S. is finding it difficult to finance their Current Account Deficit, which means only one thing - the dollar must fall further.
miko
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Originally posted by miko2d
, which means only one thing - The dollar must fall further.
miko
Which is a good thaing.....
in my business. :aok
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Originally posted by kappa
lol the highest level of production in 20yrs?? Was that measured over a 2 day interval? I guess that goes right along with the highest unemployment in 20yrs.. Kinda funny how it can be both!
k
AoM
Yeah...it sucks things are gettin better don't it!!!
Pathetic
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Originally posted by Rude
Yeah...it sucks things are gettin better don't it!!!
Pathetic
Pathetic rude?? Obviously your one to recognize pathetic....
What is pathetic, however, is the fact that the present economic agenda supporters have to grasp at anything they can find that might possibly draw a brighter picture on this record high defecit/debt our country has incurred under our leader's policies..
God, myself, and the entire country hope it gets better Rude... Dont be such a self rightous asss..............
k
AoM
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Originally posted by AKS\/\/ulfe
I think our currency should be hotdogs, they'd be worth roughly a nickel.
(http://www.pitt.edu/~mrmst55/caray6.jpg)
-SW
Will Ferrell doing Harry Carey, has to be one of the greatest comedy pieces EVAR!
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Originally posted by kappa
Pathetic rude?? Obviously your one to recognize pathetic....
What is pathetic, however, is the fact that the present economic agenda supporters have to grasp at anything they can find that might possibly draw a brighter picture on this record high defecit/debt our country has incurred under our leader's policies..
God, myself, and the entire country hope it gets better Rude... Dont be such a self rightous asss..............
k
AoM
Had to quote that one kappa. A gem of glaring stupidity such as this doesn't come around ever day. Calling rude self-righteous only adds icing to the cake.
MiniD
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Companies' Productivity Soars 9.4 Percent
(AP) - Productivity of U.S. companies rocketed at a 9.4 percent annual rate in the third quarter, the best showing in 20 years, offering an encouraging sign that the economic resurgence will be lasting. The increase in productivity — the amount an employee produces per hour of work — reported by the Labor Department on Wednesday was even stronger than the 8.1 percent pace initially estimated for the July-to-September quarter a month ago and was up from a 7 percent growth rate posted in the second quarter of this year.
Just more and more bad news...
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Kappa, you just have to contend that some people are idiots that have no desire to learn what things mean. They would trust their religious leader for an opinion whether some item of data means that "things are gettin better" or worse or does not mean anything at all.
Of course they would hotly insist that exactly the same statistics under different administration represented a bubble and unsustainable investment but you cannot really refute their matter of religious faith with logic.
One thing that the FED can control directly is the adjusted monetary base (http://research.stlouisfed.org/publications/usfd/page3.pdf) . That statistic indicates rising monetary expansion with temporary contraction in August. The increase, year to year, is about 6%.
(The adjusted monetary base is the sum of Federal Reserve deposits and vault cash held by domestic depository institutions,currency held by the public, and an adjustment for the effect of changes in reserve requirement).
The statistic known as money of zero maturity (http://research.stlouisfed.org/publications/usfd/page5.pdf) is up by 6.6% over the full year, but falling since August.
The more traditional M-2 (http://research.stlouisfed.org/publications/usfd/page6.pdf) . Same pattern: up by over 5% year to year, but falling since August.
Short-term interest rates have remained in the 1% range – very low. The FED is increasing the money supply but it does not seem to be growing of lately. The economy, we are being told, is growing. This would indicate that businesses should be borrowing in order to expand operations. But if the money supply is actually falling, and if increased demand places upward pressure on interest rates, then why hasn’t the federal funds rate increased?
There seems to be a problem with the assumption of increasing demand for loans. So let's look at the figures for bank loans. Bank credit rose to 12% above the previous year’s level in the first half of 2003, but then fell back to around 7%. Total loans and leases in bank credit at commercial banks rose in mid-year to 10% above the previous year, but then fell back to about 6%.
But when we look at commercial and industrial loans at commercial banks (http://research.stlouisfed.org/publications/mt/page14.pdf) and surprise! This statistic went negative in mid-2001, and it has yet to recover. It fell throughout the first half of 2002 to a negative 8%, then got better to negative 5%, briefly, in mid-2003. Since then, it has fallen back to negative 7%.
People are borrowing at an increased clip but those ain't no businesses!
The commercial and industrial business community has been unwilling to commit to major increases in debt in order to finance new projects. Businessmen have been cautious in further indebting their companies. There was some optimism through the first half of the year, but this optimism seems to be fading.
So the businesses are in no hurry to borrow and I do not remember a recent flood of IPOs either. Foreign direct investment? The numbers tell the different story.
How can business increase production without added investment? Right, by using up the capital. So the consumers are borrowing for current consumption while businesses are burning their capital. Why are they doing that? I don't know. Maybe they do not care to create/replace the physical capital anymore because once the factory is worn out, they will close it and move production abroad or just invest the money in China.
It seems to me - subject to further evidence, of course – that the economic recovery has been based a traditional response to classic Keynesian/supply-side deficit-financed stimuli: a large increase in military spending coupled with a mild tax cut.
When your unemployed son borrows money in the bank and buys a car, it is very different than when he earns the same money with his labor. To an ignorant like Rude all that is seen is another car in the street - an increase in GDP.
Which may be a good thing or a bad thing depending on where the wealth came from but he has no inclination to inquire which.
Productivity of U.S. companies rocketed at a 9.4 percent annual rate in the third quarter
Labor productivity increase is another factor that does not mean anything without explanation how it was obtained. When the workers are fired, the labor productivity increases greatly because the worst workers are fired first, the remaining ones work harder and amount fo capital per remaining worker is greater.
With raising employment going on but scarcely capital creation, the productivity should fall temporarily because inexperienced people are joining the process and need some time to adjust. Also, the capital per worker decreases.
Of course if there is not much employment raise, then the productity increase would be explained by existing under-utilised workers and capital being employed more hours. Which begs the question - how come the businesses had unutilised labor and capital as dead asset? And the answer may be that those were the excesses of the previous boom that misallocated and wasted resources that could have been better invested used elsewhere in sustainable projects.
miko
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Our orders are up..
So is our OT and I'm busier than chit!!
I blame Bush.
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unemployed over a year now.....when is the booming economy coming my way?
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Excellent post Miko. Would you relate todays economic outlook to that of the Reagan era with this route of supply side economics and military spending?
The foreign investment in U.S. Treasuries fell to $5 billion in September from August's $25 billion. The average monthly figure for the last 12 months as been around $40 billion. Any way you cut this data, it all says the same thing - the U.S. is finding it difficult to finance their Current Account Deficit, which means only one thing - the dollar must fall further.
Could you expand on this topic? I'm wondering what will be other tell tell signs the Fed is having trouble financing it's debt? And, as the dollar falls in value, lets say the Fed does not increase the Funds Rate, productivity stays about the same, and national debt is ignored, what will happen to the dollar?? What will happen to the avg joe on the street holding a $5 bill?
Short-term interest rates have remained in the 1% range – very low. The FED is increasing the money supply but it does not seem to be growing of lately. The economy, we are being told, is growing. This would indicate that businesses should be borrowing in order to expand operations. But if the money supply is actually falling, and if increased demand places upward pressure on interest rates, then why hasn’t the federal funds rate increased?
Forgive me for any stupidity. I have graduated college with a economic degree, but im afraid I might have trouble holding a intellectual conversation with you on the subject.
Where would you think this money is going? Certainly not investments in america... Could this money simply be given to public creditors and in return foreign investors? I would guess myself that the avg. joe is not saving it.
Inflation is the result of the fed injecting too much money supply in the economy?? How else will the Fed look to finance it's debt??
k
AoM
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Originally posted by Dnil
unemployed over a year now.....when is the booming economy coming my way?
What is your profession, DNIL?
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Originally posted by Mini D
Had to quote that one kappa. A gem of glaring stupidity such as this doesn't come around ever day. Calling rude self-righteous only adds icing to the cake.
MiniD
Thanks, I think.... I'm not sure how to take this... I can only hope MY stupidy is not glaring... I DO try to conceal it.. 8)
k
AoM
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Originally posted by muckmaw
I'm thinking about buying gold. Anyone have any thoughts?;)
SHould have bought it around April.
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Kappa, if you've graduated with a mainstream economics degree, you could certainly use a remedial course in real (Austrian school) economics. Just make sure you can compartmentalise and play along with your employers' usual Keynesian crap while professing the free markets in private - just like Alan Greenspan does. :)
Start at http://www.mises.org and go from there. A single book as introduction to Austrian economics is "Economics for real people" by Gene Callahan. The classic "Economics in one lesson" by Hazlitt is even simpler but you must already be versed in main concepts of economics, so you could skip it.
means only one thing - the dollar must fall further.
Could you expand on this topic?
Very basically, the growth if indstry happens when capital increases and that happnes when people abstain forom consumption and invested savved resources.
The abstaining from consumption does not mean abstaining from buying - it only means that people buy less stuff to be consumed and buy more production factors - capital. So the government's policy of encouraging consumption and discouraging savings are patently wrong.
The US consumets were not saving but instead borrowing money for current consumption - a big no-no! The economy was growing nevertheless. So who the heck was providing the resources for both consumption and capital creation? Right - the foreign savers.
They sent us $500 billion a year worth of goods and materials getting dollars in exchange - current account deficit.
Those dollars they stored in the form of cach, US treasuries or invested back into US directly. So the capital account surplus compensated the current account defdicit and the dollar did not fall.
It would have been great if US used all those subcidies (I was rebuked fro using the word "tribute") for investment into capital, but instead we used most of it for consumption. As a result we lost major chunks of our production where there was foreign competition (cannot compete with free goods). What remains is very inefficient (that includes illiterale school grads, few technical grads, affirmative action, litigation, environazism and regulation) but can exist due to being subcidised and lack of competition - and would fall as soon as subcidies are removed.
The problem is that as of late few years, the majority of dollar buying was done not by private investors expecting to earn profit from US but by foreitn central banks colluding with their export lobbies and their export sectors. Those inflows are much less assured than normal market-driven investments can stop any time they decide they have enough of foreign reserves or that inflation imported from US is hurting them - like it does in China or did to Asia in 97.
The foreign investment numbers indicate that may already be taking place. If we keep shoving dollars at them and they are less willing to buy them and thake them out of circulation as they did - the dollar will fall.
Where would you think this money is going?
There are two parts to the mechanism of fiat money creation in US. The Federal Reserve just prints money (by monetising government's debt). Then the fractional-reserve bank system multiplies that primary stock (within the fed-specified reserve requirements). So the fed and the banks both create money and that money would cause inflation if they were not taken away by foreigners in exchgane for real goods.
Now, if the fed prints more money and eases reserve requirements, that means the banks may create money (not backed by goods) and loan them out - thus driving another boom-bust cycle.
But if the businesses are not willing to borrow that money even at low interest - because they see no way to make profit in current anti-business envoronment - the money will just lay there in the bank. The banks will have deposits above minimum reserves but no takers - just like it happened in 1930s in US or like it is happening in Japan. Japanese are buying dollars - over $100 billion a year by printing yen but they still have deflation going because the money is not being loaned - and that is a good thing for them, whatever keynesians claim.
So with americans consuming more and forigners investing less, we may expect reduction in our stock of capital - and eventual drop in productivity and production and consumption. Also, not being able to export inflation we would have... inflation, unless the Fed clamps up and we get a mother of all recessions - which would be a good thing for an economy (as it would correct the past misallocations of capital) but not for administration in power.
Can Greenspan ensure inflation or receccion do not hapen untill after 2004 elections? Would the foreign central banks cooperate? Who knows.
Unlike Bush, Reagan did try to clamp down on spending and slowed it's growth considerably - especially non-military spending. Bush just increased spending - taking more resources out of the private economy, while reducing taxes. He basically printed money to buy stuff for the government and to give taxpayers to buy stuff too but there is no actuall srtuff to buy with that money - unless foreigners oblige and send us more imports.
Curiously, Bush is going out of his way (or at least pretends to, judjing by the latest Snow report) to dissuade foreigners "unfairily" giving us more cheap imports to back newly printed money - thus making sure that the tax refund money he is giving us can buy less stuff.
Bush has even less clue about the economics than even Rude here.
Which is not ment as a slander on Bush - none of the presidents over the past 100 years ever had a clue. Even Reagan was just reading aloud what Jack Kemp learned from Jude Wannisky who in turn got it from real economists - Arthur Laffer and Robert Mundell.
Kennedy was praised as the first implementer of "reaganomics" but he got his economic wits after visiting Ludwig Erhard in Germany and inquiring what made the "german miracle" work.
miko
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Saurdaukar: SHould have bought it around April.
Who was that posting about gold on this board in January and really cranking up the gold theme since March? Was it Maveric? :)
miko
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I was an engineering tech for exxonmobil, now I am a bum, lol.
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Originally posted by muckmaw
I'm thinking about buying gold. Anyone have any thoughts?;)
Guys, I was not serious.
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muckmaw: Guys, I was not serious.
For the long term, I'd say go for it. There is no way for US not to have a major inflation withing the next 20 years, even without wars and terrorism. When those baby boomers come in to cash their SSA, Medicare and drug benefits what do you think the Govt. would do - default on its obligations or print more money?
In the short term, the Fed can create and destroy dollars thus holding their value, the foreign central banks can buy more or less of them and also sell some of their gold, thus driving it's price down like they did in 1997. That would bee a buying opportunity.
Untill we see a real inflation, the cost of gold production is about $300 per ounce though the volume of production cannot be rapidly increased, unlike many other commodities.
I would not advise you to speculate with gold since the transaction cost is about 4.5% - two year worth of inflation damage. I would advise making a stash for a rainy day. Buy a few coins and put in your safe deposit box. If you buy for more than $1000, it becomes an investment and you do not pay a sales tax. If you buy for less than $10,000 and bring cash, there is no record or reporting requirements on the part of the sellers. US Gold Eagles, Krugerrands and canadian Maple Leaves are most common. Maple leaves are .9999 gold and have to be handled with care while the other two are 22 carat (92%) gold - a bit larger and heavier but less suceptible to wear.
For specualtion you can open a gold pool account at http://www.kitco.com/ or elsewhere. There are no coinage fees unless you decide to take delivery and very little spread (buying at $402.10 and selling at $405.60 now).
Or you can open an FDIC insured currency account at Everbank (http://www.everbank.com) and earn interest (4.2% Aussie and NZ) as well as capital gain on other currencies when dollar is going down. They only charge 0.75% for conversion and no other fees.
miko
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Originally posted by miko2d
.... One thing that the FED can control directly is the adjusted monetary base (http://research.stlouisfed.org/publications/usfd/page3.pdf) . That statistic indicates rising monetary expansion with temporary contraction in August. The increase, year to year, is about 6%.
(The adjusted monetary base is the sum of Federal Reserve deposits and vault cash held by domestic depository institutions,currency held by the public, and an adjustment for the effect of changes in reserve requirement).
The statistic known as money of zero maturity (http://research.stlouisfed.org/publications/usfd/page5.pdf) is up by 6.6% over the full year, but falling since August.
The more traditional M-2 (http://research.stlouisfed.org/publications/usfd/page6.pdf) . Same pattern: up by over 5% year to year, but falling since August.
Short-term interest rates have remained in the 1% range – very low. The FED is increasing the money supply but it does not seem to be growing of lately. The economy, we are being told, is growing. This would indicate that businesses should be borrowing in order to expand operations. But if the money supply is actually falling, and if increased demand places upward pressure on interest rates, then why hasn’t the federal funds rate increased?
There seems to be a problem with the assumption of increasing demand for loans. So let's look at the figures for bank loans. Bank credit rose to 12% above the previous year’s level in the first half of 2003, but then fell back to around 7%. Total loans and leases in bank credit at commercial banks rose in mid-year to 10% above the previous year, but then fell back to about 6%.
But when we look at commercial and industrial loans at commercial banks (http://research.stlouisfed.org/publications/mt/page14.pdf) and surprise! This statistic went negative in mid-2001, and it has yet to recover. It fell throughout the first half of 2002 to a negative 8%, then got better to negative 5%, briefly, in mid-2003. Since then, it has fallen back to negative 7%.
People are borrowing at an increased clip but those ain't no businesses!
The commercial and industrial business community has been unwilling to commit to major increases in debt in order to finance new projects. Businessmen have been cautious in further indebting their companies. There was some optimism through the first half of the year, but this optimism seems to be fading.
So the businesses are in no hurry to borrow and I do not remember a recent flood of IPOs either. Foreign direct investment? The numbers tell the different story.
How can business increase production without added investment? Right, by using up the capital. So the consumers are borrowing for current consumption while businesses are burning their capital. Why are they doing that? I don't know. Maybe they do not care to create/replace the physical capital anymore because once the factory is worn out, they will close it and move production abroad or just invest the money in China.
It seems to me - subject to further evidence, of course – that the economic recovery has been based a traditional response to classic Keynesian/supply-side deficit-financed stimuli: a large increase in military spending coupled with a mild tax cut.
When your unemployed son borrows money in the bank and buys a car, it is very different than when he earns the same money with his labor. To an ignorant like Rude all that is seen is another car in the street - an increase in GDP.
Which may be a good thing or a bad thing depending on where the wealth came from but he has no inclination to inquire which.
Productivity of U.S. companies rocketed at a 9.4 percent annual rate in the third quarter
Labor productivity increase is another factor that does not mean anything without explanation how it was obtained. When the workers are fired, the labor productivity increases greatly because the worst workers are fired first, the remaining ones work harder and amount fo capital per remaining worker is greater.
With raising employment going on but scarcely capital creation, the productivity should fall temporarily because inexperienced people are joining the process and need some time to adjust. Also, the capital per worker decreases.
Of course if there is not much employment raise, then the productity increase would be explained by existing under-utilised workers and capital being employed more hours. Which begs the question - how come the businesses had unutilised labor and capital as dead asset? And the answer may be that those were the excesses of the previous boom that misallocated and wasted resources that could have been better invested used elsewhere in sustainable projects.
miko
Miko, that's as erudite a discourse on macroeconomics as I've ever heard in any college lecture. Thanks. But, sometimes, one cannot see the forest for the frikkin' trees. You (generically speaking) can analyze the economy and politics out the wazoo (so-to-speak), and the one thing that can bring to naught all economists and politicians' prognostications in consumer confidence/ consumer reaction. That's because it's the one thing that is most unpredictable. At least, that's how I see it. What ya think? I'm listening.
slim03
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Originally posted by kappa
Pathetic rude?? Obviously your one to recognize pathetic....
What is pathetic, however, is the fact that the present economic agenda supporters have to grasp at anything they can find that might possibly draw a brighter picture on this record high defecit/debt our country has incurred under our leader's policies..
God, myself, and the entire country hope it gets better Rude... Dont be such a self rightous asss..............
k
AoM
and I would be a self rightous asss because.....?
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Originally posted by slimm50
Miko, that's as erudite a discourse on macroeconomics as I've ever heard in any college lecture. Thanks. But, sometimes, one cannot see the forest for the frikkin' trees. You (generically speaking) can analyze the economy and politics out the wazoo (so-to-speak), and the one thing that can bring to naught all economists and politicians' prognostications in consumer confidence/ consumer reaction. That's because it's the one thing that is most unpredictable. At least, that's how I see it. What ya think? I'm listening.
slim03
Bingo....btw....the sky is falling. Factories are currently pumping out goods at a record rate, so that product can sit on the shelves of retailers nationwide while consumers buy gold in preparation for the upcoming economic maelstrom. :rolleyes:
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Originally posted by Dnil
I was an engineering tech for exxonmobil, now I am a bum, lol.
Dnil,
I was unemployed after being released fromt he military for the secont time (long story) and moved to north texas. Last I heard dallas had a booming job market.
Well, it didnt and I ended up getting a job as a temp at a sweatshop type repair facility for lucent. It was funny cause that company was a collection point for everyone that had been layed off by Motorola IBM alcatel micron....u name it somone worked there.
basically we all had to take the job or lose unemployment.
my solution.....I re-enlisted....cant say if I'm happier or not but I get a paycheck so oh well
hang in there bud ~S~
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can't re-enlist, already tried. See they are funny about taking back a disabled veteran, go figure.....I can fight just give me a weapon!!
2003 has hands down been the worst year of my life...the last 2 months almost unbearable.
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Originally posted by Rude
and I would be a self rightous asss..... because.
couldn't resist.
Does this mean I don't get BBQ next April?
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Dnil, have you looked into applying for a National Guard Technician position? There are tons of these positions posted, but I don't think many are aware of it. As long as you did not retire from the military or separated with 100% disability you'd probably qualify. They look at military experience very favorably. It's an odd position. Basically you are a federal civilian and get paid as such, but you wear a National Guard uniform M-F, and do the drills with a unit on the weekends. You acrue retirement credit towards both- federal and national guard. If you're interested, shoot me a message and I'll pass along what info I have to you.
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slimm50: You (generically speaking) can analyze the economy and politics out the wazoo (so-to-speak), and the one thing that can bring to naught all economists and politicians' prognostications in consumer confidence/ consumer reaction.
Not really. Consumers cannot spend the money they do not have and the money cannot buy goods that are not produced. So all the talk about "consumer confidence" is so much claptrap used by politicians to explain things they do not understand.
If someone's confidence metters to economy it's not consumers but entrepreneurs - the people who risk their money on profitability of increased production.
And from what I see - they are not confident. The foreign investors are not as eager to invest in US and the domestic capitalists are reducing their borrowing, not increasing it.
"Our economy was strong and it is getting stronger," Mr. Bush said. "Productivity is high; business investment is strong; housing construction is strong. The tax relief we passed is working."
How can Bush say that busieness investment is strong if business borrowing is clearly down?
Rude: Factories are currently pumping out goods at a record rate...
Factories were pumping out goods in Soviet Union and in US in 1929, so what? It's not a big deal to increase consumption by burning through your savings/capital account.
You confuse activity with progress and even the most primitive argunemts do not get through to you. Do you wnat to bet that people hired today will not lose their jobs withing two years and that many of projects started would not go bancrupt and result in waste of resources?
People are buying plenty of gold as you can see. They are also buying plenty of cheap foreign imports, not the US manufactured stuff.
miko
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yes that sounds good...shoot me an email at jeffh999@hotmail.com
really appreciate it.
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Email sent.
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I hate it when it's horrible that good things are happening.
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Thx Miko, it's always interesting to read your economic lessons.
:)
(Even if I dont agree with your "economic utopia")
@Dnil:
sorry for your situation, :( but i guess when Iraq will be "stabilized", there will be a new opening of working positions in oil companies. ;)
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Originally posted by midnight Target
couldn't resist.
Does this mean I don't get BBQ next April?
Absolutely not....my skin is as thick as boot leather, so BBQ is in your future:)
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Again Miko....what exactly is your forecast for the US economy?
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Tumor: I hate it when it's horrible that good things are happening.
Increase in hours worked, in capital and labor spending - it's all expense. Expense is only a good thing if it results in profit - increase in usefull production, etc.
From the point of view of one guy, a paid job is good whether he is employed to create value or to destroy it. But for the whole country it's only the jobs/investments that create value that are good.
All other jobs just destroy wealth and redistribute some wealth from people creating it to those wasting it.
It seems that you guys cannot understand that I am not arguing that we do not have an increase in economic activity. We certainly do. But it's a fallacy to consider such an increase good or bad without knowing or at least having an idea what the result will be.
All the dark cable buried underground was counted as billions $$ increase in GDP. Their value now is nill. The massive works to dry the Everglades caused jobs and GDP increase. Now the massive work and many jobs restoring the damage are counted as GDP increase again.
Extra capacity of the plants being closed before they are worn off is of zero value but when they were built, the whole expense was counted as GDP gain instead of loss.
Rude: Again Miko....what exactly is your forecast for the US economy?
Midterm - two-four years - it is just another wastefull boom/bust cycle induced by the Fed's monetary policy. We will experience some "growth". Then we will have a recession and experience some loss. Also, many boom projects counted as value created will prove a loss and value destroyed.
So the 8% reported growth now minus depression losses minus wasted value may prove to be really 1-2% of real sustained growth if any with resources invested that could have easily resulted in 4-5% growth.
Meanwhile longer term we are movng even deeper into general insolvency as a country and more unbalanced economy due to artificially high imports.
miko
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Midterm - two-four years - it is just another wastefull boom/bust cycle induced by the Fed's monetary policy. We will experience some "growth". Then we will have a recession and experience some loss. Also, many boom projects counted as value created will prove a loss and value destroyed.
Did you just describe a new phenomenon in American economics, or is this a continuation of practices going back over 50 years?
Thanks for answering btw.
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I know little of what Miko talks about, but I will say this. We are a big ticket manufacturer, and we DO NOT build stuff just to keep busy. In fact if it aint sold it ain't built. Yet our orders from the last trade show were up over 30% from last year. And orders from the current show in Louisville have exceeded 600 so far. Thats a lot of RV's folks.
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MT, sounds as though the RV's are being built to help everyone drive off into the waste land with foil hats to escape the black helicopters.
:D
kidding aside, glad you folks are doing better.
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Rude: Did you just describe a new phenomenon in American economics, or is this a continuation of practices going back over 50 years?
I am talking about the boom-bust cycle - so called "business cycle" - of a growth followed by a recession that wipes out lot of the gains.
Business cycle is a feature of our economic reality since the second half of the 18th century - late 1700th.
Mainstream economics has no explanation for the business cycle whatsoever and it is generally considered an integral and unfortunate feature of capitalism that requires the state intervention.
Not untill the Austrian school of economics developed the theory of money and capital structure was the nature of the business cycle understood. The Business Cycle (http://www.mises.org/StudyGuideDisplay.asp?SubjID=12)
The business cycle is not a feature of a free market capitalism but a result of the state intervention into monetary policy - specifically the ability of the banks/state to create money.
midnight Target: but I will say this...
we DO NOT build stuff just to keep busy. In fact if it aint sold it ain't built. Yet our orders from the last trade show were up over 30% from last year.
Your "but" implies that you are arguing something I said while in reality you are just repeating a part of my statement.
I am not saying that there is no increase in econimic activity.
I am saying that an increase in economic activity caused by distorted interest rate may be unsustainable and can be followed by a recession that would wipe out most of the gains.
It's like I am sayng - "You are going too fast and using too much fuel per mile because your fuel gauge is broken. And you are going a few degrees of course because the compass is broken too. Once the mistakes become obvious, there will not be enough to reach the destination without dumping some cargo to lighten the load."
And you are saying "You are wrong, we are going very fast!"
But that's exactly what I said - we are going very fast and that is the problem. It's not the fall that kills - it's hitting the ground.
miko