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It Might Be A "Services Economy" But Manufacturing Drives Recessions

Tyler Durden's picture




 

Submitted by Lance Roberts via STA Wealth Management,

 

 

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Mon, 11/23/2015 - 21:51 | 6829760 dimwitted economist
dimwitted economist's picture

Manufacturing.. LOL!

Back in 2006' i was in Manufacturing..

it was in Decline back then..

China does the Bulk of the Manufacturing now.

Here in the u.s. everyone wants to work in Health care

or 

Government.. weird how closely related they are now Huh?

Mon, 11/23/2015 - 21:52 | 6829777 junction
junction's picture

in the United States is on its last legs, helped in large part by the over valued dollar.  The high price of electricity thanks to Obama shutting down clean coal-fired power plants shares part of the blame. 

Mon, 11/23/2015 - 21:53 | 6829779 NoWayJose
NoWayJose's picture

Waiters don't go out to eat at the other guy's restaurant - the manufacturing guys do.

Mon, 11/23/2015 - 22:04 | 6829811 thesonandheir
thesonandheir's picture

Do my nails bitch.

Mon, 11/23/2015 - 22:15 | 6829851 Spungo
Spungo's picture

Service economy = how about you service this dick for $10.

Mon, 11/23/2015 - 22:25 | 6829888 Yen Cross
Yen Cross's picture

    Lack of fiscal policy, drives recessions. [excess capacity]

Mon, 11/23/2015 - 23:05 | 6829958 Arthur Schopenhauer
Arthur Schopenhauer's picture

I'm thinking about starting up a new service business. I'm going to hire out little short people that don't weigh very much who will place saddles on customer's backs, with a bridle and a bit in customers mouths in order to guide the customers around so they can piddle with their I-Phones without having to concern themselves with where they are going.

Tue, 11/24/2015 - 02:17 | 6830426 Miffed Microbio...
Miffed Microbiologist's picture

I am assuming you meant " fiddle". If not, the labor cost may be steeper if you require them to perform such a function. Then again, we import labor from other countries to " do what Americans won't do" so it just may work out for you.

Of course after such a business is created, Apple will come up with an app that prevents a normal Darwinian outcome due to the stupidity of their customers.

Miffed;-)

Mon, 11/23/2015 - 23:13 | 6830034 kelley805
kelley805's picture

Speaking of recession... Here are some signs of a coming recession.

1. Business loans for M&A not CAPEX.

http://www.zerohedge.com/news/2015-10-15/there-goes-final-pillar-us-recovery-loan-growth-paradox-explained

2. Factory orders continue to drop

http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row

3. Default risk spikes

http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high

4.  M&A set record

http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/  

5. Fed sees 2 bubbles

http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/

            o  Commercial Property higher than pre-2007 level.

http://nreionline.com/finance-investment/cre-prices-are-now-officially-above-pre-recession-peak

            o  Global Corporate Debt Market hits $5 trillion.

http://fn.dealogic.com/fn/DCMRank.htm

 

Here is how to prepare.

http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/

 

Here is how to get your mind off this stuff.

http://michaelekelley.com/category/humor/

 

Good luck!

Tue, 11/24/2015 - 02:56 | 6830466 Grandad Grumps
Grandad Grumps's picture

It seems to me that financialization of an economy causes recessions. Prices are driven up by free money created out of thin air for the elitists and trade stops.

Free money goes to the wrong hands. Those who it is given to do not consume. They simply drive up price preventing others from consuming, dropping money velocity to approach zero.

If you want an economy to flourish, put meaningful earned money in the hands of the people. To create meaningful money, value adding work must be created and it must be compensated at a higher level than financialization and non-value adding work.

But I am certain the Fed and government know this.

Tue, 11/24/2015 - 01:05 | 6830309 DragonWings
DragonWings's picture

it is not "just" manufacturing...

A society is rich as long as it creates/build something it needs and/or has the means to import what it needs.

 

Services are part of the constructive economy only as long as they add something (build value) into something tangible (it could be a logistic added value, like gasoline being available where is needed via transportation services).

 

Yet service (just like finance) is mostly just a moltiplicator acting on money supply, unless you can sell those services in exchange for goods to other countries.

Unfortunately for Americans this concept is very difficult to grasp, because we sell debt in exchange for goods... but I can assure you this is not "normal", nor sustainable...

:-D

Tue, 11/24/2015 - 01:32 | 6830346 Yen Cross
Yen Cross's picture

  Are you really" THAT" comfortable with your description of global deflation?

 You sound like a nice unellected intern.

Fill in the gap with some trade asshole!

 You Socialist farcical wanabe, fake theoretical marrons, make me laugh.

 BTW, The Chinese eat anything with flippers or wings.

 How's that for demand driven bullshit?

Tue, 11/24/2015 - 01:57 | 6830405 hedgiex
hedgiex's picture

Are you going to hand over your wealth to be managed by this Wealth Management guy ? Try his experiment that manufacturing is all that matters to increase and preserve wealth. Tangible goods have to be priced and their prices have to be paid out of debts where debts have peaked. Drug makers are reaping their bounties not from dependence on the consumption of their impoverished preys but from the largesse of "affordable health care" that they engineered into existence. You just need smart trading services to preserve your wealth by directing it to the fund flows out of Central Banks's spigots. Of course, there are plenty of charlatans in Service Sector and the same goes for Manufacturing. Contamination flows through the whole economy be it manufacturing or services now exacerbated by the debt deadweights in the real economies.

 

Tue, 11/24/2015 - 02:42 | 6830458 coast
coast's picture

the government employees and health care employees paid thru our taxes and/or printed money, need us to make them dinner, do their nails, give their kids tattoos, check them into a motel etc... Its all fine until the money runs out.

Tue, 11/24/2015 - 09:43 | 6831498 strangewalk
strangewalk's picture

Every economic miracle of the last two centuries was based on manufacturing--no exceptions, and the British Empire fell into decline almost in exact proportion to the loss of its manufacturing base. Manufacturing built the middle class owing to the fact that it is one of the few main generators of genuine wealth creation, along with agriculture, mining and intellectual property. The common people of Russia, Europe (except Germany), the Middle East and much of Latin America, along with North America, have been economically savaged and hurt very, very badly by the outsourcing of their manufacturing industries to the slave labor zones of Asia, It is a phenomenon that represents an unprecedented in human history disaster, which has beneffited no one except a very thin layer of insatiably avaricious, evil elites. 

Tue, 11/24/2015 - 12:55 | 6832792 rex-lacrymarum
rex-lacrymarum's picture

Manufacturing is the largest sector of the US economy by far in terms of gross output. GDP leaves out the bulk of the economy's production structure by only counting durable investment and final goods. Moreover, manufacturing is the foundation on which everything else rests. To argue that it doesn't matter is like saying "the foundation of the house has rotted away, but the house will keep standing anyway".  No, it won't. 

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