Michael Burry's Reminder That After Every Over-Consumption, A Brutal Hangover Is Inevitable

Tyler Durden's picture




 

On America's day most famous for over-consumption, we thought a few minutes of reflection on the state of our world would be useful. Infamous for his correct predictions of the great recession, Europe's demise, and the collapse of the US financial system (as well as profiting handsomely from being right), so well captured in Michael Lewis' book "The Big Short", UCLA's Dr. Michael Burry undertakes UCLA's Economics Department's commencement speech with much aplomb. In this "age of infinite distraction", the painful 'truthiness' of this 15 minute speech is stunning from single-sentence summation of Europe's convulsions that "when the entitled elect themselves, the party accelerates, and the brutal hangover is inevitable" he reminds us that Californians, and indeed all Americans, should take note. A quarter-of-an-hour well spent from a self-described 'chicken-little' who was "just trying to figure it all out".

 

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Thu, 11/22/2012 - 14:25 | 3004927 unrulian
unrulian's picture

worst shot you've ever tried....

For me 1/2 scotch 1/2 porridge...its called cement

Thu, 11/22/2012 - 14:31 | 3004940 MillionDollarBonus_
MillionDollarBonus_'s picture

I’m sorry to say it, but UCLA is neither an Ivy League college nor a top tier school among the ranks of MIT or Stanford. Dr Paul Krugman earned his undergraduate degree from Yale, his PHD from MIT and ultimately went on to become a Princeton professor and one of the most respected economists in the world. Virtually nobody has even heard of ‘Michael Burry’, and from what I can see the only people who listen to him are doomer libertarians, raving conspiracy theorists and tiresome, moronic silverbug preppers. Maybe when Mr Burry gets some serious credentials, I’ll pay a bit more attention to his ludicrous predictions about the economy. Until then, I’ll listen to the experts.

Thu, 11/22/2012 - 14:39 | 3004954 ultraticum
ultraticum's picture

" . . . . Until then, I'll listen to the experts."

 

MDB:  Please keep listening, and you too will get the same disastrous results as your annointed "experts", who only wish they had either the brains or the fortitude to go against the herd just once in their little establishment-indoctrinated lives.

Thu, 11/22/2012 - 14:56 | 3004987 Looney
Looney's picture

MDB = Moronic Douche Bag  ;-)

Thu, 11/22/2012 - 15:35 | 3005042 Enslavethechild...
EnslavethechildrenforBen's picture

MDB type prostitutes have been around for a while. Tenessee Eny Ford wrote a song about them http://www.youtube.com/watch?v=Joo90ZWrUkU&feature=related

 

Thu, 11/22/2012 - 16:30 | 3005133 Michaelwiseguy
Michaelwiseguy's picture

Rather then commit suicide, the suicide candidate should print up a new currency, with some gold backing, even if it's only one ounce of gold you can scrape up, and issue $2,000 to start the new solid currency, and see what happens. The outcome can't be much worse. The gold deposit can be monitored with 24/7 internet video cam.

Give the suicide candidates something to do.

Thu, 11/22/2012 - 17:57 | 3005201 CrockettAlmanac.com
CrockettAlmanac.com's picture

That's not the original MDB up there (not that it matters), note the underscore character at the end of the name.

 

In any case:

"I Can't Believe I Ate The Whole Thing"

http://www.youtube.com/watch?v=VFKifpMtlNs

Thu, 11/22/2012 - 18:14 | 3005217 Michaelwiseguy
Michaelwiseguy's picture

And how can anyone say any brainwashing college is worth a dam theses days.

Thu, 11/22/2012 - 19:29 | 3005252 TruthInSunshine
TruthInSunshine's picture

Happy Thanksgiving, my fellow ZH diverse, motley crew of unconventional thinkers (a very good thing) & skeptics of most everything stated or pronounced by Big Brother (a very, very, very good thing).

I give thanks today for honest & bright people like Michael Burry, who still find the time & energy to go against the establishment, and lay bare truths before people just like this college graduate class he spoke to in the above-titled video.

As many here are undoubtedly aware, we are in a contracting global economy, as measured in real economic output, productivity and consumption, despite what heavily massaged statistics generated by various governmental beaurocratic agencies (such as the BLS) claim. Some could and do credibly argue we've entered a deep economic recession or even depression, and they have compelling statistics of their own to back those claims up (e.g. how understated official inflation allows GDP to print flat or positive, only due to officially "not counted" higher prices, which hides dramatically decreased consumption; e.g. how deficit-derived government spending has essentially made as many as 25% of the U.S.'s population dependant, partially or entirely, upon direct government transfer payments to meet their basic needs, such as SNAP/EBT, SSI, Social Security, Medicare/Medicaid, UI & extended UI, etc., which allows the "soup lines" of the 1930s to now be hidden from view).

Here's a really interesting article that pretty much rips apart the notion that there's a "skilled worker" shortage in the United States, and lays bare the truth that many of those companies claiming this (and politicians repeating it) are essentially only willing to hire extremely highly skilled workers for what are barely above fast food worker wages, which won't even allow such workers to pay off their educational loans (another truth laid bare):

Skills Don’t Pay the Bills


By Published: November 20, 2012

Earlier this month, hoping to understand the future of the moribund manufacturing job market, I visited the engineering technology program at Queensborough Community College in New York City. I knew that advanced manufacturing had become reliant on computers, yet the classroom I visited had nothing but computers. As the instructor Joseph Goldenberg explained, today’s skilled factory worker is really a hybrid of an old-school machinist and a computer programmer. Goldenberg’s intro class starts with the basics of how to use cutting tools to shape a raw piece of metal. Then the real work begins: students learn to write the computer code that tells a machine how to do it much faster.

Nearly six million factory jobs, almost a third of the entire manufacturing industry, have disappeared since 2000. And while many of these jobs were lost to competition with low-wage countries, even more vanished because of computer-driven machinery that can do the work of 10, or in some cases, 100 workers. Those jobs are not coming back, but many believe that the industry’s future (and, to some extent, the future of the American economy) lies in training a new generation for highly skilled manufacturing jobs — the ones that require people who know how to run the computer that runs the machine.

This is partly because advanced manufacturing is really complicated. Running these machines requires a basic understanding of metallurgy, physics, chemistry, pneumatics, electrical wiring and computer code. It also requires a worker with the ability to figure out what’s going on when the machine isn’t working properly. And aspiring workers often need to spend a considerable amount of time and money taking classes like Goldenberg’s to even be considered. Every one of Goldenberg’s students, he says, will probably have a job for as long as he or she wants one.

And yet, even as classes like Goldenberg’s are filled to capacity all over America, hundreds of thousands of U.S. factories are starving for skilled workers. Throughout the campaign, President Obama lamented the so-called skills gap and referenced a study claiming that nearly 80 percent of manufacturers have jobs they can’t fill. Mitt Romney made similar claims. The National Association of Manufacturers estimates that there are roughly 600,000 jobs available for whoever has the right set of advanced skills.

Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.” Isbister, after all, doesn’t abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonald’s can earn around $14 an hour.

The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.” After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages.

In a recent study, the Boston Consulting Group noted that, outside a few small cities that rely on the oil industry, there weren’t many places where manufacturing wages were going up and employers still couldn’t find enough workers. “Trying to hire high-skilled workers at rock-bottom rates,” the Boston Group study asserted, “is not a skills gap.” The study’s conclusion, however, was scarier. Many skilled workers have simply chosen to apply their skills elsewhere rather than work for less, and few young people choose to invest in training for jobs that pay fast-food wages. As a result, the United States may soon have a hard time competing in the global economy. The average age of a highly skilled factory worker in the U.S. is now 56. “That’s average,” says Hal Sirkin, the lead author of the study. “That means there’s a lot who are in their 60s. They’re going to retire soon.” And there are not enough trainees in the pipeline, he said, to replace them.

One result, Sirkin suggests, is that the fake skills gap is threatening to create a real skills gap. Goldenberg, who has taught for more than 20 years, is already seeing it up close. Few of his top students want to work in factories for current wages.[continue reading via link above]

Thu, 11/22/2012 - 19:50 | 3005312 Future Jim
Future Jim's picture

True. There has been no recovery.

However, the article does not explain WHY employers are unwilling to pay more to get the people they need. It doesn't add up.

Thu, 11/22/2012 - 19:56 | 3005325 TruthInSunshine
TruthInSunshine's picture

Click on the link b/c the author and those he spoke with, including employers, discuss some of those potential reasons.

I only posted approximately 1/2 the article.

Thu, 11/22/2012 - 20:19 | 3005363 Future Jim
Future Jim's picture

Ah yes. It implies that employers are so greedy that they would rather lose sales than pay more for employees, so it says the solution is unions, and then it says that government schools have failed, so we need to give more money to government schools.

Sounds like NPR. Oh wait. It IS NPR.

Thu, 11/22/2012 - 20:53 | 3005405 TruthInSunshine
TruthInSunshine's picture

See my response further down (I'm not endorsing/agreeing with any of the "whys" cited in the article, and attribute dysfunctional supply/demand in this area with radical, unprecedented central fractional reserve bank monetary policy, more than anything).

As an aside, regardless of what these companies can or can not obtain similar skill level labor for overseas, no rational person will put the time and resources into obtaining specialized training as specifically described in the article, when alternate employment can be found paying 70% of that wage or even 100% of that wage with little to no such requirement of the investment of that time and those resources, so something is clearly broken in this equation.

Thu, 11/22/2012 - 23:04 | 3005487 Michaelwiseguy
Michaelwiseguy's picture

I'm that $10/hr, last job as precision manual and CNC diamond tool maker running 4 machines, got myself fired 5 months ago because I told my boss to shut the fuck up about my production or he could fire me, highly skilled CNC machinist with 30 years experience and can do anything. I also know an entry level machinist is worth less unless they have 5 years experience or more. That is a fact computers can't fix ever.

I chose the most opportune time when a company will be most damaged by my untimely exit, like I did the last time. I take long sabbaticals between quitting and firings. I've had 7 Yeas off with sabbaticals and no pay between jobs in the previous 30 years and 7 machine shop jobs. Fuck them small business small minded fuckers, that's what I say.

 

And they want to make 12 million illegal aliens legal citizens, and the globalist banksters and multinational corporations want to flood the country with millions more uneducated low wage illegal alien morons to drive down the pay of the legal Americans thru competition with them. OK, I get it. I Get IT! 

I'm not heartless. If I grant the illegals already in the country amnesty, who won't self deport, as a compromise, What do me and my fellow legal Americans GET?

How about a moratorium on immigration for 5 years so the illegals granted amnesty can be assimilated?

Fri, 11/23/2012 - 14:31 | 3006974 cheapy
cheapy's picture

I think you'd have been better off just looking for and landing another, better paying job, than to intentionally get yourself fired.  It sounds like you have the skills and experience that someone would be willing to pay more than $10 an hr for, but to take the risk to hire you, companies want good odds of getting an employee that can and will help them make a profit.

 

Just my 2 cents worth...

Thu, 11/22/2012 - 20:01 | 3005334 Binko
Binko's picture

Because the idea is now deeply embedded in the consciousness of american business owners that you only pay rock bottom wages. Many will cut their own throats before they pay decent wages to workers.

Relatives of mine owned an oil change business. They constantly complained about the workers suddenly quiting, the cost of training new workers and the poor quality of the work that caused many customer complaints and claims.

"How much do you pay the oil change guys?" I ask.

"10 bucks an hour."

"10 bucks an hour for working in a pit and doing service on expensive cars??"

"Speedy Lube trained us to check out local wages and only pay this much. We absolutely can't pay more!"

"It must be very expensive to constantly train new workers and to have to repair customer's cars and deal with customer ill will. Maybe if you paid 12 bucks or even 15 bucks an hour the workers would have more loyalty and stay longer and do better work."

At this point they look at me as if I'm some kind of communist labor agitator and basically just refuse to talk about it any longer. Higher wages, in their minds, is essentially off the table even if it would improve their bottom line. 

Thu, 11/22/2012 - 20:32 | 3005386 cheapy
cheapy's picture

They probably aren't making enough profit to pay themselves for running the business.  In addition, once you increase wages, you have a tough time taking those increases away if it didn't cause profits to increase.  

 

If they own a large chain of the shops, they might be able to try the idea as a pilot at one where they are planning to close it down anyway, and therefore don't have much to lose by trying it.  

 

I would suggest if they think the employees could work harder/better and get the jobs done that they reduce the number of employees by 15% (perhaps by attrition or firing the ones causing claims) and giving the wage savings to the more productive employees that don't cause claims as a weekly bonus based on revenuse and claims (post a weekly chart of each by employee showing productivity and claims) .  They can then keep the overhead savings as increased profit.

Fri, 11/23/2012 - 00:10 | 3005441 TruthInSunshine
TruthInSunshine's picture

You highlight some very interesting points.

If I am a business owner, and want to hire skilled workers at the present time, I need to have a relatively high degree of certainty and confidence about long term (or at the very least, intermediate term) trends, in terms of my order book, prices paid, likely revenue and profitability, before committing a large amount of working capital to expand output by HIRING additional employees, which is one of the largest constituents input costs of any business (and the highest, for most).

Maybe that's the underlying and critical problem that the article doesn't delve into or even mention:  The markets are broken by incredibly radical central fractional reserve bank monetary policy, which has distorted everything possible to such a massive degree, & completely destroyed the ability to plan ahead, since nothing can reasonably be forecasted over the intermediate, let alone long term, and therefore even those businesses that see their present order books seeming to justify such large capital outlays are not willing to make such a committment.

Bernank'd, broken, FUBARed markets.

Fri, 11/23/2012 - 00:35 | 3005674 cheapy
cheapy's picture

No small business owner would even be THINKING about hiring additional people in this day and age unless they have obvious demand for their product or service that exceeds the ability of the existing emplyees to supply.  Taking risk to expand without demand and HOPING more customers will appear is a recipe for disaster.  

 

You don't even have a way to estimate the probability of another complete collapse or recession starting in the next 30 days, let alone try to plan a year out, 

 

I owned a few businesses over a 30 year span, and I wouldn't even consider trying again in today's environment.  I never got a "paycheck" in all thoise years, btw.  I only was able to take money out if the business was producing lots of cash in excess of costs.  When you have 20 employees to pay every week, and suppliers, and utilities and rent to pay, and you are underwater, and getting absolutely NOTHING for your 16 hr days, you don't even CONSIDER paying employess EVEN MORE, regardless of how low their wages might be from a quality of life standpoint.  That was why he was getting that look from the business owner, is my guess.  The business is barely surviving on his free labor and not returning anything on the capital he invested, and not meeting the estimates he was given when he bought the franchise, and he probably doesn't see a way to improve it, but hates even more to give up on his dream or see it ruined even further by union organizing or whatever.

 

Its just the way of the world these days.  So he complains about the claimms and productivity and lack of people that will stay and work their butts off for his $10/hr.  He can't raise prices and can't find costs to cut.  He hopes someday business will pick up...

 

Yes, just print us up some more debt money, and watch how fast it disappears off to the Far East or Middle East via WalMart and Target, or Exxon, etc.  Until we go back to making things here, and produce more thann we consume, its not going to improve, just deteriorate further into the abyss, IMO.   

Fri, 11/23/2012 - 00:49 | 3005692 TruthInSunshine
TruthInSunshine's picture

It's incredibly coincidental you wrote what you did. I met with a client 3 weeks ago or so, and he literally has not paid himself any compensation in at least 7 months, in order to help improve the odds of making it through this environment with his business still intact, and because he refuses to cut anymore employees.

Now, before anyone cries for him, he's wealthy and has a lot of cash, so it's not as if he's starving. Still, he built the business from scratch starting a dozen years ago, and has put an enormous amount of sweat, toil and devotion into his business.

It's not a massive company, but it's not exactly tiny either, with around 80 employees, and it makes parts for the aviation industry.

There's no end in sight to the deleveraging and belt tightening. Bernanke and his counterparts the world over have sacrificed good, honest, ethical business owners on the altar of the myth of the too big to fail (which is unmitigated B.S.) banks, and the financial/banking sector, in general, with Wall Street as the crown princess of Bernanke's attention and adoration.

Bernanke, Geithner and Obama are running policy right now that is the textbook definition of plutocracy by the banking/financial class.

 

Fri, 11/23/2012 - 14:49 | 3007029 cheapy
cheapy's picture

I think we'd all be surprised just how typical your client's dilema is.  Yes, some, maybe many are rich, but it gets old working for nothing for months on end while everyone else at least gets a check.

 

I did a little observing this morning when I went out for groceries.  There is a Jiffy lube next door, and I counted 4 people inside, but all bays empty when I went in the grocery store.  I noticed the sign outside offering $8 off the price in the morning.  No customers anywhere in sight, and everyone just standing or sitting.  The had opened 1 hr before.  When I came out of the store I watched again for a little bit.  They had 1 car and 3 bays empty.  I assume the 5th person owned the car.  So, guessing, 3 others were employees and 1 was the owner.  So, in 30 min, they were doing 1 oil change for under $20, costing about $8 worth of oil and maybe $2 for a filter.  But if employees got $10 an hr, that would be $15 of direct labor, plus at least $5 in benefits and taxes, and guessing utilities at $500 a month and rent at $2000 and say $500 of other costs, that's $100 a day, or about $4 for that 30 min assuming they stay open at least 12 hrs.  

 

So the net is they got $20 in revenue and shelled out $34 in costs.  The owner didn't get a penny and has to pay the $14 difference out to keep the doors open.  Do that 23 more times for the day and he goes broke pretty quick losing $336 per day.  Welcome to small business USA in 2012.  The last thing the guy wants to hear is that his employees want paid more or that a customer is complaining something got screwed up and wants reimbursed to fix it.

Fri, 11/23/2012 - 00:42 | 3005684 Raymond K Hessel
Raymond K Hessel's picture

Your last sentence doesn't make sense.  It's part of the social justice movement to think that a small business owner is not a rational human being who can make a decision that doesn't include sticking it to the proletariat.

If it improves their bottom line, they'd do it.  They'd do it over and over again and pull out all that wonderful extra cash.  People who go into business are in it for the money.  Not for social justice.

Fri, 11/23/2012 - 03:04 | 3005804 cranky-old-geezer
cranky-old-geezer's picture

 

 

I don't know how anyone makes an oil change business profitable.  Brings in $200 an hour tops, $1500 a day if you're lucky, COGS and expenses get most of it, taxes get the rest, and pray you don't get a fine from one of 50 different govt agencies looking over your shoulder or get sued by a customer, if either happens, that's it, you're bankrupt.

Just not enough money in it.

Thu, 11/22/2012 - 20:03 | 3005337 CrockettAlmanac.com
CrockettAlmanac.com's picture

It would help if entrepreneurship, especially on a small scale, was not made so onerous by regulation and taxation. If high-skilled workers could enter the market without impediment and hire other high-skilled workers in support then the problem could work itself out without relying on existing business owners who owe their status to lobbying and regulatory capture. When the little guy can enter the market and provide the goods and service which the big boys can't or won't and put skilled labor to work then those who are Too Big to Fail will find no support.

Thu, 11/22/2012 - 22:25 | 3005523 nmewn
nmewn's picture

That's a big part of it I believe. Big Business loves regulation, licensing and fees. They can afford it, the little guy can't = less competition.

And before some statist bonehead jumps in here on "licensing professionals" how long do you think that someone would be in business doing shoddy work? And, while we're at it...if a state issues a license to someone to practice their craft, why can't the state itself be sued along with that someone for damages...they gave him a state sanctioned seal of approval didn't they?

Its a racket.

Thu, 11/22/2012 - 22:59 | 3005550 CrockettAlmanac.com
CrockettAlmanac.com's picture

 

they gave him a state sanctioned seal of approval didn't they?

Its a racket.

 

A deadly racket. I've posted this before, forgive me if you've seen it.

 

The Pennsylvania Department of Environmental Protection produces incomplete lab reports and uses them to dismiss complaints that Marcellus Shale gas development operations have contaminated residential water supplies and made people sick, according to court documents.

 

 

http://www.post-gazette.com/stories/local/state/lawmaker-challenges-pa-d...

Thu, 11/22/2012 - 23:27 | 3005586 Harlequin001
Harlequin001's picture

A license is not an asset, simply an impediment to or a tax on new players entering any market at lower costs.

Buying a license does not in itself make anyone any money, apart from the licensing authority that is...

Fri, 11/23/2012 - 02:13 | 3005759 CrockettAlmanac.com
CrockettAlmanac.com's picture

 

 

 

The Pennsylvania Liquor License Exchange
"Where qualified buyers meet serious sellers"

 


http://www.pallx.com/

 

 

In most states, a liquor license is considered a business asset and may be sold or transferred from one retailer to another. Often, this practice involves a business broker or a liquor license broker to facilitate a sale and the buyer must be qualified by the respective state. For instance, in the state of Florida, a buyer must apply with the Division of Alcoholic Beverages and Tobacco in Tallahassee prior to buying a liquor license from a seller.

 

 http://www.ehow.com/how_7184224_sell-liquor-license.html#ixzz2D1gl93hA

Thu, 11/22/2012 - 22:41 | 3005529 Michaelwiseguy
Michaelwiseguy's picture

You can't have job creation in the USA because factories that produce consumer products were removed from the country.

The Money Math for Job Creation doesn't work due to Globalization and the Federal Reserve Corporation.

Globalization = American Wage Arbitrage = Lower Worker Pay

Federal Reserve Corporation = Private Company that Manufactures Paper Money and Sets its Value, and continually reduces the value of the money by printing more and more of it out of thin air.

Thu, 11/22/2012 - 23:12 | 3005563 CrockettAlmanac.com
CrockettAlmanac.com's picture

...and sends that cheaply produced money (it's free!) overseas for tangible goods. In a sound monetary system wealth tends to remain at home due to its value rather than go abroad due to its cheapness. This tendency of wealth to remain at home is what Adam Smith meant when he spoke of the "invisible hand."

 

But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce maybe of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

 

 

http://www.gutenberg.org/files/3300/3300-h/3300-h.htm

 

 

Thu, 11/22/2012 - 20:17 | 3005357 cheapy
cheapy's picture

Its really pretty simple.  Manufacturers here can't afford to pay a reasonable wage for the skilled people or else their costs rise to where they would be better off moving offshore to reduce costs and maintain their ability to compete and hopefuly make a profit.  So, in the one sense they can honestly say they can't find skilled people, but the reality is they aren't willing to pay enough for the real skilled people to want their jobs.  

 

Is it their fault?  They can't compete with Chinese wages at 1/5th or 1/10th of US wages and taxes and overhead costs also at fractions of our costs here.  Their only advantages of being here are reduced shipping costs and ease of communication, and those help, but cannot offset the huge wage and overhead differentials.

 

I saw many manufacturing clients go under for these reasons in the past 12 years.  I don't see an end to it until the Renimbi is revalued by at least triple, and I don't expect to see that happen as long as we as a nation keep borrowing from them, enabling them to keep their currency dramatically undervalued.

Thu, 11/22/2012 - 20:29 | 3005384 BigJim
BigJim's picture

TIS, much as I respect and enjoy your contributions here, you seem a bit off track on this subject if you believe the various premises of this article.

These 'skilled' manufacturing jobs in the US are competing with Chinese and VietNamese workers. It's no mystery why

I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.”

When a US employer is paying '$10 an hour', he's not paying $10 an hour; he's paying all the other costs and taxes (imposed by our government) that go along with having another employee; and if this amount is more than the worker will make in terms of the monetary value of what they will produce, then the worker won't get hired.

We can't compete with overseas labour because foreign manufacturers don't face the ridiculous overheads that they do here, and because foreigners are happy to learn the skills required for these 'skilled' jobs in sufficient numbers to push wage prices downwards.

Clearly, being a skilled machinist is no longer much of a 'skill', irrespective of its complexity or difficulty; if one wishes to earn a decent amount, then find a different trade/profession.

Thu, 11/22/2012 - 20:54 | 3005392 TruthInSunshine
TruthInSunshine's picture

I'm not advocating any position, cited within the article or not, as the correct one as to the "why" or "whys".

As an aside, regardless of what these companies can or can not obtain similar skill level labor for overseas, no rational person will put the time and resources into obtaining specialized training as specifically described in the article, when alternate employment can be found paying 70% of that wage or even 100% of that wage with little to no such requirement of the investment of that time and those resources, so something is clearly broken in this equation.

In fact, I'd argue that massive tampering with markets by central fractional reserve banks via unprecedented, radical, bat-shit crazy monetary policy, chief among them the Fed & ECB, have been as big as- if not the biggest- factor in breaking the rationality of all markets, including the supply/demand curve for skilled labor.

The Bernank'd, broken market chronicles are going to be one for the ages.

Thu, 11/22/2012 - 20:56 | 3005432 BigJim
BigJim's picture

Yup, Triffin and the road to ZIRP are coming home to roost

Thu, 11/22/2012 - 21:08 | 3005444 TruthInSunshine
TruthInSunshine's picture

3005441 You succinctly stated it-

 

Thu, 11/22/2012 - 22:51 | 3005542 Michaelwiseguy
Michaelwiseguy's picture

When the whole shithouse collapses and you need a new part from me, The Machinist, to make your car run, I'm going to make you pay me thru the nose for it.

I really got to see this movie;

The Machinist trailer

http://www.youtube.com/watch?v=H0fuHY4U1UA

Fri, 11/23/2012 - 00:35 | 3005676 Raymond K Hessel
Raymond K Hessel's picture

It's all lube to reintroduce the fallacy of a social contract.  The social contract has nothing to do with labor unless you are a socialist, then yes, It's all about the relationship between employer and employee.

I find the second half of the NY Times article completely offensive.  There's no gap because of automation and outsourcing.  It has nothing to do with any social contracts.  It's dollars and cents.  If you are competing with someone from India or China, you can't hope to compete on price.  

Learn it. Know it. Live it.

Fri, 11/23/2012 - 00:42 | 3005685 RallyRoundTheFamily
RallyRoundTheFamily's picture

+100  This is what I see happening, also who would take one of these jobs when they can stay on unemployment and net more FRN's.

 

 

Thu, 11/22/2012 - 19:12 | 3005245 TwoShortPlanks
TwoShortPlanks's picture

When economists wake-up and admit to the following two facts;

1. that the Earth is a ball isolated by a vast vacuum
2. in light of #1, the structuring of global economies, finance and population toward long term positive growth becomes absurd

then I'll sit up and take them seriously. Until then, a child who receives pocket money once a week has a stronger grasp of sustainable living.

It is precisely this inability to come to terms with the most basic and obvious facts to human existence is why I am of two minds about Agenda 21. Agenda 21 circumvents the absurdity of academia and reinstates common sense....no matter how ugly it is, the current path of modern society is uglier.

No matter what the motive or origin of that program, you must admire its' purity of assesment and boldness of action.

<You can vote me down all you like, it doesn't change the fact that I'm right>

Thu, 11/22/2012 - 19:15 | 3005266 CrockettAlmanac.com
CrockettAlmanac.com's picture

I'm I understanding this? Central planners have screwed things up and so we need more central planning in the form of agenda 21 in order to fix things? If I misunderstood blame the tryptophan.

Thu, 11/22/2012 - 19:28 | 3005277 TwoShortPlanks
TwoShortPlanks's picture

What if "Central Planners" are not the cause, what if a run-away society is the cause. You have assigned blame to a particular entity rather than investigate the true cause....which may or may not be Central Planning.

Where we stand right now and the future we are facing is 100% unsustainable and guarenteed to fail (painfully I might add).

So. What. Do. You. Do?

Thu, 11/22/2012 - 19:39 | 3005299 CrockettAlmanac.com
CrockettAlmanac.com's picture

 

 

You said:

 

, the structuring of global economies, finance and population toward long term positive growth becomes absurd

 

That is a direct result of the fiat monetary system and legal tender laws. Such a monetary system demands that interest be paid on money created through debt which requires an ever greater number of debtors to underlie the growing pyramid. Without such laws there would be no means to promote a system based on an exponential growth in credit. This system was created by and for the central planners -- politicians and bankers -- as it allows them to take a cut of all monetary transactions.

Thu, 11/22/2012 - 20:43 | 3005408 centerline
centerline's picture

Take this one step further and imagine a society that does not have a  "growth" mentality.  A world where birth rates are managed... consumption is rationed... etc.  How would such a world work?  I do not know - but it sure feels like something other than freedom from where I sit now.

I too find myself conflicted with the notions of where human nature leads us and how we are best to deal with it (or not).  The real scary part is that we have arrived at our technological adolesence.  Will we survive it?

The financial side of things is geared to run on the growth premise (ponzi) of course.  Is the grease under the skids.  It keeps the hamsters on the wheel.  It fits better with human nature.  Corporations take the ball and run with it.  Parasites who understand the nature people and of the system can too often find ways to exploit them (bankers are the best modern example).  Politicians get bought and sold - playing the game with competitive advantages and stacking the deck to keep the party going.  Till growth runs out (nominally) and the system begins to implode...

 

Thu, 11/22/2012 - 21:20 | 3005464 CrockettAlmanac.com
CrockettAlmanac.com's picture

 

 

Take this one step further and imagine a society that does not have a  "growth" mentality.  A world where birth rates are managed... consumption is rationed... etc.

 

That's not the idea. This is purely anecdotal but it seems to me that those who reproduce the most are on the fringe of society or even life itself. Stressed individuals act on a need to reproduce as quickly as possible before they die. Those who are well off reproduce at about the rate of replacement plus a fraction. Those who were well off but have hit a rough patch delay reproduction in hope of making a recovery and regaining well off status.

Take away the ability of central planners to created exponential debt and you will reduce the consumption of pointless consumer goods and services in the developed world where most consumption takes place. A reduction in demand for the raw materials to make useless gadgets and doodads would make those raw materials more affordable to populations under stress, food and shelter being foremost considerations. When the stressed populations become accustomed to being better off they will reduce their birth rate as others have.

No managing or rationing are necessary and neither are the central planners who would mange such a scheme. Central planners are the cause of the problem not the solution.

 

The real scary part is that we have arrived at our technological adolesence.  Will we survive it?

 

Man has felt that way forever. We see the story repeated from the Tower of Babel to  Frankenstein to modern science fiction. We'll be all right as long as central planners don't force a majority of individuals onto unsustainable paths for too long. Free individuals who are not compelled to run with a herd can recover their senses and back away from dangerous paths. Humanity can only survive if we are not collectively herded over a buffalo jump.

 

As far as worst case scenarios go I haven't forgot about the global nuclear arsenal or Fukashima. But remember this:

 

The Toba catastrophe theory suggests that a bottleneck of the human population occurred c. 70,000 years ago, proposing that the human population was reduced to perhaps 15,000 individuals[3] when the Tobasupervolcano in Indonesia erupted and triggered a major environmental change. The theory is based on geological evidences of sudden climate change and on coalescence evidences of some genes (including mitochondrial DNA, Y-chromosome and some nuclear genes)[4] and the relatively low level of genetic variation with humans.[3]

 

http://en.wikipedia.org/wiki/Population_bottleneck

 

 

If mankind survived such a scenario before we can do it again. No reason to believe it would be different this time.

Thu, 11/22/2012 - 21:30 | 3005478 centerline
centerline's picture

Thanks for the response.  I always appreciate good conversation.  Would hang around to write more - but have to run for the moment.  Any more ZH for now and wife will kill me.

Thu, 11/22/2012 - 21:38 | 3005484 CrockettAlmanac.com
CrockettAlmanac.com's picture

Feel free. Enjoyed the chat.

Fri, 11/23/2012 - 00:05 | 3005626 Michaelwiseguy
Michaelwiseguy's picture

Our ancestors, who are dead now, produced almost all the "Growth" we need, if we don't destroy what they produced for us by war. Why not just focus on 'Maintenance" of the things already produced? Any further "Growth" can happen organically, not necessarily monetarily. We can focus on leisure time and a minimal but necessary amount of work with greater benefit to each individual from our labor. Don't fret about overpopulation. A balanced intelligence in all areas on our part and a planet of somewhat unknown destructive capabilities such as ours, will take care of any overpopulation problem. Stop focusing on foreign problems and using it as an excuse to not take care of your own backyard first.

Fri, 11/23/2012 - 01:15 | 3005720 CrockettAlmanac.com
CrockettAlmanac.com's picture

 

Why not just focus on 'Maintenance" of the things already produced?

 

That's fine for you. I have other plans.

 

 

NORMAN: What are you doing here?
KIRK: I want you to surrender.
NORMAN: That is illogical. We can move more quickly than you. We are invulnerable to attack. We are much stronger.
KIRK: No, we are stronger. I'll prove it to you. Can you harm a man that you're programmed to serve?
NORMAN: No.
MUDD: But you already have, Norman, laddy. Human beings do not survive on bread alone, you poor soulless creature, but on the nourishments of liberty, for what indeed is a man without freedom? Naught but a mechanism trapped in the cogwheels of eternity.
MCCOY: (in a monotone) You offer us only well-being.
SCOTT: (in a monotone) Food and drink and happiness mean nothing to us. We must be about our job.
MCCOY: Suffering, in torment and pain. Labouring without end.
SCOTT: Dying and crying and lamenting over our burdens.
BOTH: Only this way can we be happy.

 

Kirk, Spock, Scotty, and McCoy outwit the Androids

http://www.youtube.com/watch?v=YbHtzqCge_8


Thu, 11/29/2012 - 00:53 | 3019419 TruthInSunshine
TruthInSunshine's picture

I really appreciated this string of what I consider extremely insightful dialogue and the interchange of ideas and back-and-forth debate.

This is ZH at it's best, IMO, and I've observed this in many instances where I did not participate, but merely learned in an observant, quiet manner, as I didn't feel I had enough relevant and/or credible information or experience to add value to the dialogue.

Thu, 11/22/2012 - 20:58 | 3005435 Whiner
Whiner's picture

Fools! Have you no sense of humor. MDB is a ZH treasure. He is a farcical humorist skirting so close to the edge of true American liberal gibberish that he sounds-well-almost self convinced. But keep on junkin him lest you take all the fun out of his art.

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