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The Only Things That Matter… And No One Talks About
Today, most
pundits are growing increasingly concerned that we are headed for a “double
dip” recession. I think this view is idiotic as the US “recovery” was in fact
nothing more than a small bounce in economy activity within the context of a DEPRESSION.
Regardless,
the stooges are out again in full force proclaiming that the US economy is in
trouble again (duh), that the Stimulus high is wearing off (duh again) and that
the only solution is to issue more Stimulus and money printing to stop another
economic contraction (WHAT!?!).
Let’s be
honest here. The money printing and Stimulus DIDN’T work last time. All it did was buy time. Indeed, from an
economic perspective, the only thing the Feds can claim with any certainty is
that the Stimulus produced a bunch of economic data points that were
questionable in authenticity (GDP, inflation, employment, etc) many of which
have since been revised lower (GDP again).
If the best
evidence you can come up with for justifying Stimulus spending is a bunch of
accounting gimmicks, why even bother spending the money at all? I mean, if you
want to measure success by just fudging a bunch of numbers, why not SAVE the
money and just crank out a bunch of nonsensical data from thin air?
Indeed, why
not say that we’ve got 17% GDP growth and employment of 500%? Sure our economic researchers would lose
all credibility, but they’re already doing that anyway, and at least by simply
making stuff up we wouldn’t be ruining the US’s balance sheet and wasting money
in the process.
This real
issue with US economic policy today is that no one in a position of power
actually has a clue how to address the structural issues in the US economy.
Either that, or they willingly ignore the obvious for the sake of career risk,
choosing instead to take a “wack a mole” approach to handling economic issues:
applying the same solution (spend money) to every problem that raises its head.
The fact of
the matter is that the US economy, on a structural basis, is BROKEN. Starting
in the early ‘70s, we outsourced our manufacturing and began shifting to a
services economy (particularly financial services). We also outsourced our wealth to Asia, OPEC, and Wall Street.
Because of
this, the average American has seen his income dramatically in the last 30
years. This is obvious to anyone with a functioning brain. Forty years ago one
parent worked and people got by. Today both parents work (if they can find
jobs) and still can’t have a decent quality life.
THESE
are the items that matter for economic growth: jobs and income. If you
want people to have money for them to spend and consequently boost economic
growth, they need to have decent jobs
that pay them well.
However,
instead of focusing on these factors, the pundits and powers that be focus on
peripheral issues like stock market levels and housing prices. Don’t get me
wrong, these two markets matter in terms of retirement and savings (they’re the
two largest stores of wealth for most approaching retirement). But people don’t
pay for goods and services using stock gains or home equity (at least not since
the Housing bust).
No, people
pay for things using money they make
from their jobs.
Tax credits,
stock market manipulation, QE… all of these solutions address asset prices, but
NONE of them address income growth: the primary source of funding people need
to BUY assets. Put another way, all of the Feds’ efforts have been directed
towards financial speculation NOT economic fundamentals.
Until this
changes, the US economy is doomed. The consumer drives the US economy and the
consumer’s income is the fuel. And we’re fast running out of gas.
Good
Investing!
Graham
Summers
PS. Come join me for in-depth market analysis and exposes of the various frauds, cheats and corruption taking place in the financial markets at www.gainspainscapital.com
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OBAMANOMICS EXPLAINED
http://williambanzai7.blogspot.com/2010/08/obamanomics-explained.html
Shoot, I thought bad economic conditions are simply unconstitutional - isn't that why the Federal Reserve was created ?
best post ob zh in months - short, sweet, and flawless
"Because of this, the average American has seen his income dramatically in the last 30 years. This is obvious to anyone with a functioning brain."
Curious how you provide no evidence (other than anecdotal) to support your position (whatever it is).
According to data provided here http://www.gapminder.org/ the US has been trending positively in many metrics since 1940 (life expectancy, inflation adjusted GDP/capita, take your pick).
The stimulus is still on track;
http://www.recovery.gov/Pages/home.aspx
It is only perhaps half over. So maybe too late to say it did not work from a cash outlay standpoint. Also, Congress just passed another mini state aid packege, although not as flexible as the ARRA state infusion.
The question of stimulus has to be framed in terms of acting on a plan or strategy. Here in lies the question of failure. The failure is in execution. A lack of economic strategy, a failure of the Obama economic team (whats left of it).
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The money printing did work if you mean FED MBS purchase. Bad bank debt was successfully pumped though the GSEs to the FEDs balance sheet. The FED transferred over $1.3T in bad debt to its balance sheet without a vote from congress. Who has the real power?
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No the powers at be due have a clue to how to deal with the problems, it is just not in their best interest to do so.
Some would say the battle for jobs is not politically accurate. We have the protection of the unions and the outsourcing of large corporations. There are no lobbiests for jobs in the general sense.
Employment, during this recession has never been a priority, but even if it was there is perhaps no way to execute on keeping investment geographically contained unless some radical actions are taken. Like, trade control, and tarrifs. Also, without structual changes there really is no incentive for long term job creation.
Also, we look at wages as a basic premise to consumption, but what is not discussed are the costs (taxes and globilization). Whats important is what we keep, not what we make. It is the hidden costs, implied or through monetary inflation where the destruction has already taken place.
Growth to a large extent, has already been taxed away.
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To look at our problems a useful guide is to imagine outcomes based on growth. Some economists will use the word demand here, but growth is perhaps better in an overall understanding in relation to how GDP is computed. The task is how to increase growth over the long term. Is this possible?
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In terms of the economy being doomed. Structually it has been dead for some time now. We no longer have the framework for growth overall. We now have focused growth due to government subsidy. There is no reason or incentive to invest in anything in-between.
The government is the credit card (debt) consumer now. And soon will be barely able to make the minimum payment due.
Mark Beck
Hey, how about this, I've got a fico over 800, a mid 7 figure net worth and no debt. Of course, as things stand now, I am one of the "screwies", but I'd still like to help. So here is my suggestion, lend me a couple of million @ 0% interest and let me reinvest in gubbermint securities with the cash. I promise to spend the interest every 6 months. Sort of a QE2 for consumers. At least I wouldn't hoard the money like the banks. No? Gee, why not?
Send your proposal to Obamatron (with "Official"-looking letterhead), see what happens.
Idiot savant:
You are correct that peole lived more frugally - smaller homes, fans instead of air conditioning, one car, etc.
But remember, too, that families had more children 40 years ago, something like 4 per household versus 2 now.
Double the workers and halve the kids provides a lot of leeway, even if one is not that frugal.
Don Levit
"Indeed, why not say that we’ve got 17% GDP growth and employment of 500%?"
Great idea. I'm sure we will see this released on Monday morning.
A friend got me on an email newsletter mailing list of a guy named Rick Weissman. His stuff is pretty interesting.
One of his main theses of late is that what the Fed would LOVE to do is replicate the Fed's actions and their results of the late 40's.
In the 1940s private debts were a small fraction of public debts and at their lowest level with enormous growth potential. That's why the Fed's actions could have a meaningful impact on the economy.
Today we have exactly the opposite siutation, private debts are at their highest ever and can only decline, public debts are a small fraction of private debts. The Fed is completely powerless, the only thing it can try is to gradually transfer private debts to its balance sheet but it has not an epsilon chance of being able to suck in a sufficient amount (say $20 trillions) without causing an immediate currency crisis.
This Rick Weismann is a moron, he can't even see the difference between the situation today that followed a 3 decade long era of private debt enduced growth with the situation in the 1940s that followed 15 years of depression and private savings accumulation. ra
"Forty years ago one parent worked and people got by. Today both parents work (if they can find jobs) and still can’t have a decent quality life."
I get sick of reading/hearing this statement. Forty years ago people lived much more frugally. Most people purchased conservative homes and vehicles. Families usually owned one vehicle and drove it for ten to fifteen years. Forty years ago no one had cable, computers, internet, cell phones, multiple vehicles, iPods, mcmansions, etc.. If families would live more frugally, things wouldn't look as bleak as they seem. What happened to personal responsibility?
now now ...... do not blame the average American ! ..... I protest that. Most of what ails Americans can be related directly to fractional reserve banking & as my mom always said, "advertising is the worst thing that happened ... it makes people want what they do not need." .... so, let's blame the real culprits .......... The Federal Reserve Bank & advertising !
The average American is going through life like anyone else. Working harder than most, educating and caring for their children, taking care of their families, spending time with family and friends, trying to improve their lot in life.
There is nothing "wrong" with this, despite what you may have been led to believe.
What is "wrong" in all this is the spreading of propaganda and lies, in order to take advantage of others and create fear, mistrust, and doubt.
can anyone please respond to this question ? When AL GORE & ROSS PEROT were on LARRY KING (not sure of year -- 1996?) & ROSS PEROT was showing charts & talking about a big sucking noise of jobs leaving the country ............ Was AL GORE just trying to scam the citizenry ? Was AL GORE (Clinton's stooge) really trying to implement policy from the big investment banks & telling the citizenry that this was going to be a GOOD THING for all of us ? why aren't GORE & CLINTON reviled ? SOMEONE RESPOND, PLEASE !
IMHO in all things political, no one remembers and no one cares. Ross was being honest about the net effect of federal policies which were designed to enable industry exportation. I'm sure EDS (his corporation) has done its share of that.
The fact is that by and large Americans have accepted the "work for a paycheck" plantation mentality instead of returning to the roots of their prosperity, which was personal industry, invention, business development from the small scale of the homestead/land base.
We are no longer a nation of farmers and small business people. Instead we have become a nation of employees. Until that attitude reverts to the earlier example we basicly have given control of our lives and economy to "the owners", the managerial class.
In 1900 90% of the US population worked for themselves.
In the late 1990's 90% of the US population worked for someone else.
You work for someone else and they call the shots.
Which is precisely WHY Govt and big business write Law(s), rules and regulations -- to keep all their worker bees from leaving the hive!
+ Infinity.
Trying to make sense of a Mkt/ Economy built on a pile of rotten cds and other fraud? Its just a pile of s...t ! Treat it as such. This is what comes out after 40 years of cheap credit.
My brother has an MBA, he's selling food industry machinery now.
We didn't outsource our wealth - the finance bankster capitalists did.
It is ridiculous to say that the "stimulus" didn't work last time. There are several hundred totally incompetent Investment Banking whores, like Lord Blankfein, at Goddamn Sux, AIG's senior staff, China, Japan, Germany, and others who got exactly what Hank Paulson gave to them: A trillion dollars.
There aren't that many stars in the Milky Way. I'd say those who were targeted to benefit mightily in spite of their utter failure to manage risk made out precisely as the stimulus was intended to do.
Follow the money and you too will see how perfectly the stimulus worked, and still is. Get ready for QE2 and the commercial mortgage real estate market to be made whole and then some.
Don't over analyze just short the Market!
Good commentary/critique. And from this POV my concern is that "buying time" really was about letting the big fish reposition themselves before the real bottom drops out. In which case the popular sentiment regarding these financial "leaders" and their self serving frauds will turn very ugly, very fast.
I have little doubt that American will at least go Argentina, and possibly worse.
As I see it, since the 1970's, the political/corporate/managerial class has (knowingly or otherwise) systematicly sold the capital wealth of this nation in order to extend the period in which they could skim off greater and greater portions of money for their own uses. This 'war', where spoils were uncontested, has reached its final moments.
Now America stands very weak from the many bleedings from these vampires. At some point people will wake up to what has really happened in this nation. I hope that after long and deep reflection "the people" make a decision to refocus their values and actions on rebuilding and retaining ownership of their lives, rather than the always destructive path of rengence.
Que pasa, 'rengence' and how do I know I'm on it?
I think he meant regence.
Rule.
I ment to type revenge...as in the French Revolution.
"THESE are the items that matter for economic growth: jobs and income"
Sure, but how do you get companies to start hiring and paying their employees better ?
With a typical cyclical recession the recipie involves cutting corporate and income taxes. But that's not the beast we are dealing with right now, this is going to be a very long cycle of deleveraging.
On the way up of the debt bubble during the last 30 years, we have been pulling forward demand that would otherwise have come later. On the way down, it's the opposite effect, we are pushing away demand that would otherwise have come earlier. And that's true whether the deleveraging comes from paying down debt, restructuring debt, or defaulting. That deleveraging from households and businesses will take decades, and that's if the government doesn't mess around and tries to slow down the process. In that case it could take much much longer.
Aggregate demand = GDP + change in debt
On the way up at the top of the bubble in 2007 we were adding $5 trillion in increases in private and public debt to aggregate demand, so aggregate demand was $19 trillion
With deleveraging we are now dealing with a negative change in debt. Last year change in debt was negative 800 billion and that's despite the government rising its debt by almost $2 trillion. When the private deleveraging will be full swing and the government won't be able to raise its debt anymore, we'll be substracting $5 trillion to aggregate demand which will be less than $9trillion, compared with $19 trillion in bubbleicious times. Now we already have overcapacity today so just imagine what it's going to be like when aggregate demand is half of what it was like before.
So what miracle do you think is going to enduce companies to start hiring and paying their employees better ?
Monetarists like Bernanke don't even understand what is going on. They are looking at Money Supply M2 which is a tiny fraction of our total outstanding debt level ($7 trillion versus $52 trillion) and think they can reflate the economy with homeopathic doses of a trillion QE per year. They'd have to do TEN times more if they wanted to get back to the level of aggregate demand of bubble times. Needless to say, if they did that, the dollar would stop being accepted internationally and we'd get a full blown currency crisis engulfing the whole OECD.
There is NO SOLUTION other than a very very long depression. Forget the government whatever he does can only prolonge it even more.
"The nine most terrifying words in the English language are, "I'm from the government and I'm here to help."
Ronald Reagan
well said
back in the day, pecking away at our quotrons in the bullpen, we used to discuss outsourcing and lbo's when it was just getting going. i remember many of us taking the other side of the wall street journal's line that lbo's created jobs and efficiencies and that outsourcing our manufacturing to asia would allow the usa to focus on value added, brain power jobs. what a crock. i remember i got really suspicious when robert bartley 9editor) said he was in favor of a constitutional amendment stating"there shall be open borders."
and the (so-called) elite wonder why they are held in disdain by the "country" folks.
A big part of the reality check that is being ignored is that people need jobs today to pay for the money they borrowed over the past 40 years.
You know that whole deleveraging thing. Back in 2007 when food and fuel prices where going through the roof I took that as the markets having a fever. It was the collective unconsciousness informing the power elite that the sheeple were getting skeptical of the illusion they had been fed for generations.
It's'all very complicated if your are clinging to your political/financial bankster life but for everyone else seems to me that everything remaining equal there is one action that would have been an important first step in stimulating a real recovery:
Breaking up the TBTF banks,forcing them to mark their assets to reality and firing/jailing their CEOs as deemed appropriate.
The biggest failurein this whole mess is that average Americans along with average people from around the world no longer have any confidence in the rule of LAW in America. I laugh at evry mention of problems with corrupt regimes in Iraq and Afpak or Sout America for the US is well on its way to being a de facto fascist state. And it will only get worse under Tea Party influenced Republicans. The only thing worse than a badly run administration by elites who believe in government is a badly run administration by elites who don't for they are more that happy to let the corporation call the shots with laws being set by auction to the highest bidder.
Industry will always lobby for policies that are favorable to it but we must devise a new mechanism for politians to get the advise that they require to make intelligent policy choices. Banning earmarks completely would have been a good start.
America has become its own worse nightmare. Until it wakes up it will be all downhill from here.
wyndtunnel,
+100
"America has become its own worse nightmare. Until it wakes up it will be all downhill from here."
If we are to help America "wake up", we will have to consider what it was before it "went to sleep" and if it was awake then what were the differences that made that so. If we don’t know where we were, we will have little have little hope of restoring the positive elements of where we were.
Credentials: It is a waste to post here but lets just say that I am old enough to have been very aware of conditions, attitudes, strengths and weaknesses from around age 6 when I started school shortly before the start of WWII. I was privileged to interact with or know a few people that are now public names (positively thought of).
The era, of course was a period when over 20% of the population was directly engaged in farming. IMO, the practices of the time when America was “awake” would now be thought of as draconian. Spanking of children who “misbehaved” was approved. Child labor, not too severe, was acceptable. Radio, yes but there was no TV. Ditches were dug with shovels; medical care was not what it is today. Until the 50’s, polio, Roosevelt’s crippling disease, was a real threat. Dentists had only low RPM drills and dental procedures were often painful. People who didn’t take care of their own hygiene were punished by the real world around them.
The two front WWII, for which the US was not prepared, against countries with standing armies made the organization and regulation of human activity across the country necessary and acceptable. And then WWII was followed by the “Cold War”, the Berlin airlift and the Korean war.
http://www.rt66.com/~korteng/SmallArms/TimeLine.htm
My 1953 college dormitory entrance handbook which I happened to run across a few weeks ago was an interesting read. Coats and ties for dinner every day and Sunday noon meal. (No Sunday evening meal). No alcoholic beverages consumed or in the dorm. Visitors only on weekends with no female family except parents on Saturday. No non family females other than 12 noon to 3 PM on Sunday.
For everyone, the world we know begins when we come into it. For the first two or three years we are pretty much unaware of what is really going on as long as we are well fed and comfortable.
The first baby boomers came into a world that to their parents was an uneasy peace but peace with life improving, with astounding inventions. By about 1953, the comfort level American society was improving every year. Work was available with the war and rebuilding after WWII. Vaccine for dreaded Polio was becoming available. TV and radios without bulky tubes were being sold. Drive in movies and hamburgers to go; labor saving improvements in household appliances, even two car families were the happening thing. People were generally optimistic and feeling comfortable. The American dollar, backed by 90% silver, was mighty.
To the baby boomers, the draconian disciplines of the WWII generation must have seemed relics from a bygone era; particularly after birth control began to be available around 1960.
Of course, the 30’s which preceded that era was very painful for a lot of people. Shootings (to death) over stolen property were not totally unheard of.
Life has been relatively comfortable since with the advantages of relatively freedom for all citizens.
But IMO an “inconvenient truth” is that we cannot deal productively with the real physical world around us without some real personal discipline. Ethics has to be a part of that. Things like the Dodd-Frank act where control resides totally with the regulators would probably have not been allowed And the new generation of legislators must be given a chance.
Example: Ryan from Wisconsin. He is at least trying.
IMO, pain ahead. But it is perhaps necessary to disipline a populace.
Best of luck!
Self-esteem, the current paradym of the day, is completely false and hollow without the discipline required to earn it honestly. (read "Starship Troopers")
"We have met the enemy...and he is us!"
Couldn't agree more. Along with it's economic structural defects, America has some major shortfalls at the leadership level. Our government is bought and paid for by the very corporations that are outsourcing jobs of the citizens they claim to represent. I'd like to see politicians be contractually obligated to vote in accordance with their campaign promises and represent the best interests of their constituancy instead of the highest corporate bidder. The website www.goooh.com has an interesting template on how it could work, so it's not as far fetched as it sounds. Nothing will improve until our country has competant leadership to right the course. Unfortunately, the current corrupt regime isn't just going to hand over the keys peacefully.
THESE are the items that matter for economic growth: jobs and income.....However, instead of focusing on these factors, the pundits and powers that be focus on peripheral issues like stock market levels and housing prices.
100% correct about jobs and income growth as the catalysts for real, sustainable economic growth. I am continually perplexed why so many people, including the k-nuckleheads at the Fed, fail to understand that stock market levels and housing prices are OUTPUTS, not inputs (economic activity drives asset values, not the other way around). Then again, why should we be surprised.....
"if the stock market continues higher it will do more to stimulate the economy than any other measure we have discussed here."
Alan Greenspan
Who says the knuckleheads at the Fed don't understand? They do understand, they just like the direction we are heading 'cause it benefits them and their peers. So they spin, and claim a rising market benefits everyone (who matters)... they just never say the "who matters" part out loud.
Yes, the Fed and the system like rising asset markets because it is to their respective benefit. My point is stock market performance, housing prices, etc. (outputs) should reflect the current and near-term economic fundamentals (inputs). The dolts at the Fed think if you juice asset values by flooding the system with cheap money and more leverage, economic growth will follow. Such a philosophy is as flawed as Keynesianism itself.
Hmmm: Our entire fishbowl of a life, based on commerce swimming in "never pay, never on a solid monetary foundation" is something that I haven't seen touched on that much, if ever. Who "pays" all those Census and "American Reconstruction and Beautification" project workers? How does a Bank pay for sports stadia they subsequently "own?" Who pays for anything?
How does that form society? A society where everyone "sort of" knows something very weird is taking place at a fundamental level, but can't get at it.
Some unseen force has been given power to control reality and its not certain if we want that, but its a guilty pleasure "letting that slide."
Hmmmph.
Let's not talk about the alphanumeric programming command code, the food, the air, the body, what functions do these serve, how do they serve them, what functions beyond those we are taught can they serve?
"What doesn't kill you makes you stranger." - Heath Ledger as the Joker.
Ross Perot was right about the great big sucking sound. Time to follow Andy Grove's advice generally and in particular start imposing duties on products whose prices are subsidized by environmental devastation and substandard labor conditions.
So, protectionism is the solution to the jobs crisis? It will only make things worse -- much, much worse.
Leo:
For once I agree with you. But the U.S. also has to make it desirable for rich foreigners and Americans to invest ni the U.S.
First, the U.S. is the only country in the world that taxes income American citizens make overseas. Why should any foreigner with a business outside the U.S. want to give the IRS free hunting rights by becoming a U.S. citizen?
Second, the U.S. corporate tax rate at 35% is the second highest in the world. We should knock it down to no more than 20%, but that is politically unsellable (until at least 2013). What would sell is to lower the rate on, say, the first million of corporate income to 20%. This would help all profitable small businesses, and would certainly encourage the creation of new businesses and new, real jobs.
Third, two more reasons jobs left are high wage levels in the U.S., and expensive regulations. Since I want (relatively) high wages, cutting (what are, in my opinion) stupid regulations can only help.
Fourth, stop the whack-a-mole spending (cash for "clunkers"), home buyer credit, etc. that only benefit a few and distort prices.
Finally, (this should be number one) throw out fake accounting. If a bank is bankrupt, let the creditors own it. If that turns out to be the FDIC, let them auction off the assets, rather than picking the winners. Use GAAP on the federal, state, and local governments, and Federal Reserve. Of course, then we might find out what that "other" category in Treasuries is, and who actually owns this government.
Leo; this is not protectionism, it's retribution. The government made it easy for US enterprises to off shore production allowing profits to be hidden from the IRS. It's now time that these US companies pay for their "profits before people" way of doing business. So yes, if a company moved their production off shore, they should have to pay compensation for having done so, it only makes sense, and it is NOT protectionism, it's the price they pay for abandoning the people for the sake of higher profit. I may be dating myself, but I remember when companies valued the ethic of being good corporate citizens, I guess none of that applies anymore. Corporate ethics are a thing of the past, and can explain the major problem facing the country at this juncture.
Leo, then how do we create jobs in the US that have been exported due to lower wage costs? Either wages and working conditions have to be equalized by forcing Asian countries to raise theirs or we must lower ours. There is no political will to do either of those. The only other answer that accomplishes that goal is to impose tariffs. For wages to drop to the level of a Taiwanese or Chinese worker at Foxconn would destroy the infrastructure of the US. We do not have the capacity to house workers and pay their benefits. They would be living in tent cities like the 1930s.
Surely that is not what you advocate. The people in the US will not accept further contraction in their lifestyles. We do not have the infrastructure to keep people alive to work for $4-8.00 a day. As long as companies like Dell, Walmart and others do business with Chinese companies this will continue. As long as the minimum wage in China is $.55 per hour and the minimum wage in the US is $7.50 an hour it will continue.
We must punish companies that export jobs to Asian countries and then import goods made by 16 year old workers who work 6 days a week, 12 hours a day for $150-200 per month. We must reward companies who bring jobs back to the US and impose tariffs and fines on companies who refuse to and continue to import cheap goods made by essentially slave labor.
Yes, that will raise the cost of manufactured good, but it will also put more people to work, take them off government payrolls if in concert with a comprehensive plan we may be able to ultimately reduce taxes and let people keep more of what they make so they can afford to buy things. It will mean more businesses will start and ultimately add to our middle class.
As far as the price of things these companies make - yes, it may hurt their profits but we are talking mostly about electronic devices. If doing this would actually destroy the US economy and ultimately cause more lost jobs as companies would be unable to sell an iPad for $2,000 (instead of $499) then what do we do?
We cannot continue to have financial products as our only export. Everyone cannot work on a farm. The US car industry has managed to survive and compete with Toyota, Nissan and Audi. (Yeah, I know they needed government help, but I would argue only due to mismanagement - plus, Mercedes, Toyota and Nissan do make cars in the US profitably.) I think the US electronics industry would survive too.
If we continue what we are doing now things will get worse. More jobs will be exported and eventually the economy will collapse and consumer demand will evaporate. At least this way we have a fighting chance. We have NO chance now.
Leo's right, protectionism is not the answer and will only make things worse.
People will HAVE to get used to the idea of a lower life style - if wages are lower the cost of production will lower and people will be able to afford nationally produced items (e.g. US tyres as opposed to Chinese tyres - English spelling).
Yes, I know it's not as easy as that! Are the jobs even there? But the West CANNOT carry on living as it does now and The Powers That Be will be FORCED to acknowledge at some point that this is NOT a liquidity issue but a secular and structural change that is occurring. And protectionism for its own sake without addressing structural issues is not the answer.
By they way, I disagree with a lot of Leo's analyses (not all of them Leo!), but I'll defend his right to say them! I want a resource that makes me THINK, not just a whole load of zealots saying the same thing. I'm big time bearish but I have wondered if I'm wrong given my (lack of) trading success over the last year.
DavidC
"People will HAVE to get used to the idea of a lower life style"
Buncha crap. Why don't YOU get used to a lower lifestyle. Or, better yet, why don't WE try to raise the lifestyles of everyone on the planet? It can be done.
Who was it who said, there is always enough for everyone's needs, but there will never be enough for everyone's wants? If there are those wishing austerity on anyone, I invite them to be the first to practice it themselves, along with their own family and friends and colleagues. Or, is this another matter of "do as I say, not as I do"?
Buncha crap.
Idiot.
1) You don't know what my life style is, so don't make presumptions or assumptions.
2) If you're talking of raising the living standards of people across the planet (not something I even alluded to in my post) then I totally agree. If you're talking of of lifestyles (everyone aspiring to the latest TV or Apple maxiPad) then I totally disagree.
3)I don't wish austerity on anyone. But when my financial advisor tells me of visiting people who are in financial straits who have the latest plasma TV on their wall and take 2 or 3 holidays a year then their priorities need to change.
4) To reiterate, 'You don't know what my life style is, so don't make presumptions or assumptions'.
DavidC
1.) "Idiot". Thank you.
2.) I see you took my post personally. I was referring to those who would wish austerity on others. Like the IMF, for example.
3.) Should one have a plasma tv on their wall and take 2 to 3 holidays a year when the bottom unexpectedly falls out through no fault of their own, how do you recommend one "change their priorities"? Would you recommend they sell their TV and Apple maxiPad? To whom? Would you recommend that they invest in the stock market? Would you recommend that they create a 401(k)? Would you recommend that they save their money? Would you recommend that they keep their job? Would you recommend that they eat less? Would you recommend that they stop buying gas and groceries? Would you recommend that they find a way to pay increasing taxes and fees?
Exactly how does one preserve one's "living standard" when standards mean nothing?
I guess my real point to you in this, David, is that you are the one assuming too much. You are assuming that the "average American" understood all the many ways they were being set-up, when 90% of them didn't have a clue they were being played to begin with.
Beating one's equals can be a source of pride. Beating the innocent and naive at a game they didn't know they were playing without showing them the rules should be a source of shame.
Bitch Tits,
When you stated 'Why don't YOU get used to a lower lifestyle' then I think it was reasonable (although mistaken obviously) to think that the rest of the post was directed to me. My apologies.
I think you're right about the IMF.
Your last two paragraphs are spot on the mark especially your last sentence, with the exception that I personally have NEVER assumed that people knew all the ways in which they were being set up (if they were, why would they be? And if I can see something, there's no reason why everyone else can see it). I also include the average UK person as this is where I live.
If beating one's equals in a game where the rules are understood by both parties then I agree with your comment. 'Getting one over' on anyone, particularly the innocent and naive, I agree with you should be a source of shame.
I can answer all your questions (if you want me to!) but I don't want to make these posts too long. Suffice it to say, if there choices to be made, the 'lifestyle' should 'suffer' first and 'standard of living' secondly.
I also apologize for calling you an idiot - I don't think you'd be on ZeroHedge if you were!
DavidC
Can't wait to see your avatar should you decide to drop the bag.
I may have to keep the bag.
Don't want to make anyone here jealous.