114
   

Where is the US economy headed?

 
 
okie
 
  1  
Reply Sun 29 Mar, 2009 09:33 pm
@hawkeye10,
I don't know if this has been mentioned, but I do not like the idea of the government meddling with car companies, as it affects people's investments. For example, if I am invested in Ford for various reasons, one being if I think they have the best chance of surviving of the Big 3, and in the event Chrysler or GM went belly up, surviving companies such as Ford might benefit from that. Just as Circuit City went broke, other companies that survive will receive their business.

For anyone even slightly educated on economics, this is merely a way of capitalism adjusting efficiencies of the market. Instead of the government artificially propping up failed businesses, they should instead see the situation as one of the reasons why capitalism works, it is simply a streamlining process of the market, by the market and its inherent forces. It is a winnowing process of the market, weeding out the weak and the inefficient, and keeping the companies that remain competitive as strong and efficient.

Perhaps there are just too many car companies right now for the demand out there, or too many big companies, perhaps they just need to downsize, or simply go out of business, leaving the more efficient companies to serve the people. But instead, government wants to preserve inefficiencies and failed business models, and then they ironically blame capitalism as failing. Nonsense, it is part of why capitalism works, and they are simply too ignorant or dumb to figure it out, either that or they know this but instead are using the opportunity to push their particular alternate economic model. After all, "never waste a crisis to get things done."

Another example of what I am touching on here is the Postal Service. I think technology is simply taking over alot of the business of using the postal service, there are simpler and more efficient ways of moving messages, mail, advertisements, doing business, etc. So will the government continue to prop up this bureaucracy indefinitely? I think the service is still very useful, but perhaps it should pay more of its own way, and perhaps the shear size of the organization needs a drastic downsizing, perhaps the volume of junk mail if it had to pay its way would virtually come to a screeching halt? I don't know the answers to alot of these questions, but it looks to me like increasing postage will only cut into the business volume more, thus continuing operating losses, but lowering postage would only increase operating losses, so something more sweeping and innovative needs to be done. I think perhaps a total revamping of size of the bureaucracy and days of delivery need to be reformed big time. In other words, the market should impact how this bureaucracy is run.
okie
 
  1  
Reply Sun 29 Mar, 2009 09:44 pm
"GM CEO Wagoner to Step Down; Auto-Plan Details Emerge"

http://www.foxbusiness.com/story/markets/industries/industrials/gm-ceo-wagoner-step-obama-unveil-auto-plan/

Does anyone else find this repulsive? If I was GM, I would tell Obama where to stick his plan, and then promptly file bankruptcy.

I am sure Obama will never ask the union buddies to hit the road, as he has now done to Wagoner?
hawkeye10
 
  1  
Reply Sun 29 Mar, 2009 09:57 pm
@okie,
Quote:
Does anyone else find this repulsive? If I was GM, I would tell Obama where to stick his plan, and then promptly file bankruptcy.

I am sure Obama will never ask the union buddies to hit the road, as he has now done to Wagoner?


because Obama for some reason that I can't fathom is unwilling to wipe out the shareholders. The company is bankrupt, the shares SHOULD be worthless. So long as management feels their job to deliver value to the shareholders they must go along with the government alternative bankruptcy plan. Near as I can figure it anyways.
0 Replies
 
hawkeye10
 
  1  
Reply Sun 29 Mar, 2009 11:27 pm
Quote:
Indeed, these days America is looking like the Bernie Madoff of economies: for many years it was held in respect, even awe, but it turns out to have been a fraud all along.

It’s painful now to read a lecture that Mr. Summers gave in early 2000, as the economic crisis of the 1990s was winding down. Discussing the causes of that crisis, Mr. Summers pointed to things that the crisis countries lacked " and that, by implication, the United States had. These things included “well-capitalized and supervised banks” and reliable, transparent corporate accounting. Oh well.

One of the analysts Mr. Summers cited in that lecture, by the way, was the economist Simon Johnson. In an article in the current issue of The Atlantic, Mr. Johnson, who served as the chief economist at the I.M.F. and is now a professor at M.I.T., declares that America’s current difficulties are “shockingly reminiscent” of crises in places like Russia and Argentina " including the key role played by crony capitalists.

In America as in the third world, he writes, “elite business interests " financiers, in the case of the U.S. " played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive.
.
.
.
The financial crisis has had many costs. And one of those costs is the damage to America’s reputation, an asset we’ve lost just when we, and the world, need it most.



http://www.nytimes.com/2009/03/30/opinion/30krugman.html

When Krugman gets more more pessimistic than me you know we're fucked.
spendius
 
  1  
Reply Mon 30 Mar, 2009 08:32 am
@hawkeye10,
What do you think the offspring will look like hawk?

Being fucked usually results in an offspring when done properly.
0 Replies
 
Foxfyre
 
  1  
Reply Mon 30 Mar, 2009 08:44 am
@hawkeye10,
Please, can you recall a time when Paul Krugman was NOT pessimistic? (Even as pessimistic as you? Smile)

The guru of Keneysian economics had nothing to commend any economic initiatives of the previous administration despite a Congress, abetted by President Bush, who utilized just such methods in addressing various initiatives by throwing a whole lot of money at them. And then he reversed course and had nothing but praise for the current President and a Congress and their plans to apply Keneysian economics on an unprecedented scale and with numbers too big for any of us to wrap our minds around. Now that those plans are backfiring and our new President is faring no better with much larger applications of such hairbrained economics, Krugman is pessimistic. Again.

His standing with the liberal left could be used as a force for good if he would join with those beating the drum for those measures that would make a difference. For instance, he could propose reining in the 'spend ourselves rich' nonsense and offer incentives, structured tax cuts and relaxation of unnecessary regulation to allow the private sector to fix it. Had the President done that, assuming he could get Congress to go along, any temporarily reduced revenues would have been far less costly to the taxpayer and I think we would have hit the bottom and would be beginning to pull out now. Instead we are seeing the market tank again today in reaction to what appears to be another really unpopular government initiative with no more substance than hope that it might work.
0 Replies
 
Advocate
 
  1  
Reply Mon 30 Mar, 2009 08:46 am
@okie,
I just read that O is demanding major changes in the business model of the auto makers. He is also demanding further concessions by labor.
spendius
 
  1  
Reply Mon 30 Mar, 2009 09:06 am
@Advocate,
There is no-one else to demand changes and concessions from. Children and the leisure class are a waste of time in that regard.
0 Replies
 
cicerone imposter
 
  1  
Reply Mon 30 Mar, 2009 09:47 am
@Advocate,
That's the reason why taxpayer money shouldn't be bailing out the auto companies. Their debt load and cost of production makes it impossible for them to survive from too many bad decisions of the past.
hamburger
 
  1  
Reply Mon 30 Mar, 2009 10:04 am
@cicerone imposter,
i would still hope that a major re-organization of the "north-american" (U.S. , canada and mexico) automobile industry attuned to the market , might result in an industry that can bring a satisfactory product to the market .
imo the american auto-industry should still be able to produce a product that will satisfy the consumer .
if countries such as germany (benz , audi , VW , BMW) and japan (toyoata , hoda , mazda) can produce cars for the world market (they started essentially with nothing some 60 years ago) , i don't see any reason why north-america cannot do the same - as long as they do not follow the british example of "automobile" (austin , morris hillman) production .
i am hopeful - perhaps a bit of an optimist .
hbg
hamburger
 
  1  
Reply Mon 30 Mar, 2009 10:38 am
@hamburger,
the biggest gainer by the TSX (toronto stock exchange) by 12 noon today was ritchie brothers - with a morning gain of 6.25 % .

Quote:
Ritchie Bros. welcomes thousands of bidders to record-breaking US$66 million Houston Grand Opening auction

07:00 EDT Monday, March 30, 2009

<<
Company also attracts record number of bidders to US$28 million auction
in Atlanta
>>

VANCOUVER, March 30 /CNW/ - Ritchie Bros. Auctioneers (NYSE and TSX: RBA), the world's largest industrial auctioneer, attracted more than 4,400 bidders to the record-breaking US$66 million Grand Opening auction at its new permanent auction site in Houston, Texas last week (March 25 - 27, 2009). The unreserved public auction broke every Houston auction record for Ritchie Bros., including total sales, online sales, number of lots sold, number of bidders and number of online bidders, as well as being the largest three-day auction in Company history. Ritchie Bros. conducted seven other auctions around the world last week, including a US$28 million auction in Atlanta, Georgia that set site records for on-site and online bidder registrations (March 26 & 27).


who says there is no life left in the north-american industry ?
obviously there are buyers if "the pricce is right" !
okie
 
  1  
Reply Mon 30 Mar, 2009 03:10 pm
@Advocate,
Advocate wrote:

I just read that O is demanding major changes in the business model of the auto makers. He is also demanding further concessions by labor.

So will Obama now force us to buy his cars? Is this guy have an ego or what?

Some of us warned all of you.
Cycloptichorn
 
  1  
Reply Mon 30 Mar, 2009 03:17 pm
@okie,
okie wrote:

Advocate wrote:

I just read that O is demanding major changes in the business model of the auto makers. He is also demanding further concessions by labor.

So will Obama now force us to buy his cars? Is this guy have an ego or what?

Some of us warned all of you.


What, exactly, are you blathering about here, Okie? You warned us about what?

Cycloptichorn
cicerone imposter
 
  0  
Reply Mon 30 Mar, 2009 03:49 pm
@Cycloptichorn,
okie has great imagination; he has to ask "So will Obama now force us to buy his cars?" What a dunce!
0 Replies
 
okie
 
  1  
Reply Mon 30 Mar, 2009 04:13 pm
To both ci and cyclops, perhaps you can't see what is going on, but Obama thinks he can run a car company, when he can't even run the government. Things have gotten so embarrassing that I have almost disengaged from politics. But please keep the politicians to politics, not business, after all, please do not screw up everything.

What the dunces have not figured out is that the reason capitalism works is not all about profits, it is also about losses and going broke, thus weeding out the people that can't cut the mustard. The government cannot balance their own books, so what makes them think they can balance the books of a car company, let alone know how to build a car. Obama is joke. I can't believe one single citizen voted for the guy.
Cycloptichorn
 
  1  
Reply Mon 30 Mar, 2009 04:21 pm
@okie,
okie wrote:

To both ci and cyclops, perhaps you can't see what is going on, but Obama thinks he can run a car company, when he can't even run the government. Things have gotten so embarrassing that I have almost disengaged from politics. But please keep the politicians to politics, not business, after all, please do not screw up everything.

What the dunces have not figured out is that the reason capitalism works is not all about profits, it is also about losses and going broke, thus weeding out the people that can't cut the mustard. The government cannot balance their own books, so what makes them think they can balance the books of a car company, let alone know how to build a car. Obama is joke. I can't believe one single citizen voted for the guy.


He beat the best your side could field. Handily. Keep that in mind when you criticize, Okie; you've nobody better to put forward.

Obama is not forcing anyone to buy a car, or running the company at all. He's just preventing them from failing, b/c of the consequences of their failure being worse than the prevention.

I think a large part of your problem is a lack of basic understanding of finance and economics, and the effects that allowing a company like GM to simply collapse would have on the economy and the US as a whole. You want GM to 'go broke,' but it would mean millions more jobs lost while in the middle of a bad recession already; that's hardy a recipe for success, now is it?

Cycloptichorn
okie
 
  1  
Reply Mon 30 Mar, 2009 04:27 pm
@Cycloptichorn,
Nonsense, all of it. Let them file bankruptcy and reorganize, it doesn't have to be the end of the company. That is if they bust the unions and bust unsustainable contracts, and reorganize under the force of a court. Thats what those laws are for, and they have worked fine until Obama showed up, claiming he is the saviour and hero. The man knows nothing about economics or building cars, and neither does Geithner. He can't even pay his own taxes.

Take his car company heroics and stick it, that is what Wagoner should have told him.
0 Replies
 
realjohnboy
 
  1  
Reply Mon 30 Mar, 2009 04:40 pm
@hamburger,
Interesting article, Hamburger, about Ritchie Bros. Something is going on in the real estate business, and my buddies and I in that racket can't agree on what it is.
As yall probably know, I and a partner are working on a $27M mixed use project on W Main St here in Cville. 6 stories of retail, office and residential. It has taken longer than I had hoped, partially because of the economy but more because we got caught in the middle of the city revamping the code with regards to building height, set backs from the street on the upper stories and housing density.
In the past 2 weeks, we are finding that we are getting a lot more calls, not only from prospective buyers, but also from banks. I am hearing the same thing from other folks I know in the business.
Did I ever show you a picture of the building?
I own another parcel across the street on which we can put up a 9-story building, consisting of retail, hotel, office and residential. And there is interest there already.
So there seem to be folks who believe that the real estate market, in certain areas, may have bottomed out.
I am not convinced.
0 Replies
 
cicerone imposter
 
  1  
Reply Mon 30 Mar, 2009 04:42 pm
@Cycloptichorn,
Cyclo, I understand that over one million jobs are at stake at the US auto companies, but they should not be bailed out with taxpayer money. Our government should not intervene in all companies who are faced with bankruptcy.

GM and Chrysler has too much debt and future benefit costs for taxpayers to be bailing them out. They should have planned better for the long term. Many who lose their jobs today do not have the same benefits as the auto workers. Why should they (the taxpayers) be responsible for supporting something many themselves do not have? Totally unfair.
Cycloptichorn
 
  1  
Reply Mon 30 Mar, 2009 04:47 pm
@cicerone imposter,
cicerone imposter wrote:

Cyclo, I understand that over one million jobs are at stake at the US auto companies, but they should not be bailed out with taxpayer money. Our government should not intervene in all companies who are faced with bankruptcy.

GM and Chrysler has too much debt and future benefit costs for taxpayers to be bailing them out. They should have planned better for the long term. Many who lose their jobs today do not have the same benefits as the auto workers. Why should they (the taxpayers) be responsible for supporting something many themselves do not have? Totally unfair.


Because we allowed them to grow to the point where their failure will have major ripple effects at a time we can't afford that to happen. Yes, it sucks. But that doesn't matter now.

Cycloptichorn
 

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