Where is the US economy headed?

@Cycloptichorn,

Quote:

Yes, it sucks. But that doesn't matter now.

That doesn't matter to ci. He's only interested in words of wisdom after the event. He thinks it demonstrates his intelligence you see.

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@Cycloptichorn,

Cycloptichorn wrote:

Because we allowed them to grow...
Cycloptichorn

I am not sure I understand what you are suggesting, cyclops. I think I hear where you are coming from, but please explain.

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@okie,

If GM would go bankrupt, the ripples would probably crush all thye automakers in the US (including the foreign ones) There would be a period of NO CAR BUILDING because the supply chain would be dissembled and no car parts would be made.

1 Reply

@realjohnboy,

realjohnboy wrote:

Cycloptichorn wrote:

Because we allowed them to grow...
Cycloptichorn

I am not sure I understand what you are suggesting, cyclops. I think I hear where you are coming from, but please explain.

So, I've been reading a lot of history of the Great Depression lately - I find it to be incredibly instructive re: the causes of the problems we face today.

It turns out that one major reason they broke up the monopolies back then, was for the same reason we are seeing problems today - businesses were getting to be 'too big to fail.' It threatens our entire economy when major sectors are allowed to grow to the size where their failure begins to drag down so much around them, that we cannot allow it to proceed for fear of the effects growing out of control and putting us in a major depression.

GM was made of how many smaller companies? It should return to being smaller companies, who then could go in or out of business as they please, without threatening the entire system. Same thing for the banks, actually. Un-repeal the Glass-Steagal act!

Cheers
Cycloptichorn

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@realjohnboy,

He meant that it is pathetic that you don't want to take responsibility for your actions when they turn out not to be as useful as you had previously thought when you were happy to take responsibility.

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@Cycloptichorn,

Quote:

. Un-repeal the Glass-Steagal act!

Which the Dems repealed midst smirks and self-congratulatory, complacent orgies of self-satisfaction due to a total absence of an understanding of human nature caused by abstract theoretical thinking.

1 Reply

@spendius,

spendius wrote:

Quote:
. Un-repeal the Glass-Steagal act!

Which the Dems repealed midst smirks and self-congratulatory, complacent orgies of self-satisfaction due to a total absence of an understanding of human nature caused by abstract theoretical thinking.

Well, the Republicans - who controlled Congress at the time - had no small part in this. But the Dems certainly didn't stop them and Clinton did sign it.

Cycloptichorn

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@Cycloptichorn,

Cyclo, I don't thing it holds true for every industry, but I'm just guessing from gut feeling.

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@farmerman,

farmerman wrote:

If GM would go bankrupt, the ripples would probably crush all thye automakers in the US (including the foreign ones) There would be a period of NO CAR BUILDING because the supply chain would be dissembled and no car parts would be made.

I guess we would actually have to see it to prove who is right, but I doubt your prediction very very seriously. For one thing, it would force GM to reorganize and hopefully emerge as a smaller but stronger company that could hopefully make a profit, and not only that, it would probably increase sales for the competitors, including possibly Ford. I think you underestimate the ingenuity of people and companies that could fulfill the demand. Demand drives the economy. Necessity is the mother of invention, which has been proven over and over again. You cannot create demand out of a failed business model by simply giving it more money. Obama wants GM to reform, but the tools to do that in a way that would be sufficient, I think would happen under the bankruptcy court.

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@okie,

Quote:

Obama wants GM to reform, but the tools to do that in a way that would be sufficient, I think would happen under the bankruptcy court.

I don't see what the problem is with bankruptcy...it would void dealer contracts, force compensation cuts to management and workers, expunge debt. The only cut that would endanger production is the cut of the debt owed to the suppliers, as they cant afford to take an cut and stay in business. Obama would need to agree to pay the suppliers what ever GM and Chrysler did not, which would run into a few billion I suppose, but in the vast scheme of things that is chump change. Everyone else will take a huge haircut, which they will hate, but they will survive and they will agree to do it.Workers and management will hate the pay and pension cuts, but they will not have a better offer from some other industry so they will take it. Debt holders will take the cuts because smaller checks from GM and Chrysler are better than nothing.

We have paid $30 billion to kick the can down the road a few months, what a stupid plan that was as we got nothing for our money but full paychecks for a few extra months for the 100,000 or what ever the number is that are employed by GM and Chrysler.

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@realjohnboy,

realjohnboy wrote:

The "official" job loss numbers for Nov through Feb along with the "unofficial" number for March, as predicted by ADP:
November, 2008: 533,000
December, 2008: 681,000
January, 2009: 655,000
February, 2009: 706,000 (revised from 651,000)
March, 2009: 742,000

I had noticed in the scorecard that I look at every week or so that the number of layoffs at the 500 largest companies in the U.S. fell rather dramatically in March. I note in the Forbes article reporting the March estimate a new phrase for me: Planned Job Losses. Forbes says that number fell to its lowest level in 6 months. I suspect that " Planned Layoffs" is somehow related to announced/pending layoffs that appear on the scorecard above.
The 1st shot at the unemployment rate is due out Friday and the consensus is it will come in at about 8.5% up from 8.1% in February. Maybe, as we head into Spring, the increase will not be as severe, but I am sticking by my prediction of 10% sometime in the next 4 quarters.
Write if you get work and hang by your thumbs.

1 Reply

@realjohnboy,

rjb, Job losses will continue for several more quarters, because consumers have simply stopped spending. That will not turn around until we have some job recoveries, and that will not happen in the next several quarters - even from the stimulus plan, because we'll continue to have net job losses.

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Does anyone disagree with me?

I feel that the country is screwed, perhaps forever. We don't make anything to speak of, and the quality of what we do make is not well respected. I'm not sure, but I don't think we are securing patents as we did in the past. We are not measuring up to the rest of the developed world in education and healthcare, and we lead the world relative to the number of people imprisoned. Our wealth is leaving the nation to purchase oil. We don't come close to being energy independent. It is clear, to me at least, that the 21st century will be the Asian century. I believe that the Asians will trump us in virtually everything.

I hope I am wrong about our future, but haven't seen anything to contradict this.

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@Advocate,

Advocate, your points are real, but some of us have been saying for a very long time that the market is now a world market, moreso than ever. So Obama cannot promise his union buddies $75 to $80 bucks an hour in compensation, and we cannot continue to live like kings, borrowing money, paying worthless bureaucrats to sit around pushing worthless paper all day long. And we cannot sit here and coddle the kiddies, teaching them worthless rain forest crap and social engineering, at the expense of math and science. I know thats a hard pill for liberals to swallow, but its a fact. And we cannot saddle the populace with cap and trade and all the other worthless initiatives for a non-crisis that was manufactured out of thin air. And you cannot hamstring domestic industries, including the energy industry such as nuclear, oil and gas, and other energy industries with artificial pie in the sky feel good policies, that will drive businesses into bankruptcy. We live in reality, not Alice in Wonderland Land.

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@Advocate,

I'd say you have a pretty good grasp of where we are at economically. However, I would challenge your impressions about "we don't make anything to speak of" as an unfounded opinion. Look at the high tech industry, and see that our country was the impetus for it, and still manage to create commerce where none existed only a few decades ago. We are now in the information age, and it gets ever cheaper to increase our ability to communicate in many different modes including cell phones and our computers. Cars get more sophisticated with more computing systems with navigation tools.

Intel just came out with a new chip with unheard of memory capacity that can be used in many different kinds of communication systems.

What we humans have to do is to increase fuel efficiency and increase energy sources; there are many aspects to increasing our standard of living with new technology and tools.

To think that the last century of a 4.5 billion year old planet has brought so much advances in medicine, transportation and communication, I'm sure we're just on "the cutting edge" of things to come.

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@cicerone imposter,

Quote:

We are now in the information age, and it gets ever cheaper to increase our ability to communicate in many different modes including cell phones and our computers.

And what we communicate becomes ever more meaningless.

Quote:

Cars get more sophisticated with more computing systems with navigation tools.

And what we do with them gets ever more futile and dangerous.

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Good evening. An issue that concerns me a lot as the economy keeps sputtering along is protectionism. I hope that the various global meetings address this.
It is going to be so tempting for American politicians to shout out to voters: "American dollars for American produced goods." At the same time, politicians in France, Germany etc can shout something similar to their constituencies.
I don't disagree with most of yall that the drastic actions that have been taken in many of the developed countries, like lowering the interest rates to nearly zero, bailing out private companies, and printing lots of money (i.e. creating debt) to fund numerous initiatives, will come back to bite us in the ass in the form of inflation, perhaps severe inflation, a few years from now.
Artificially raising barriers in the form of tariffs on goods produced in countries that can produce them more cheaply will only make things worse.

1 Reply

@realjohnboy,

rjb :
i agree , artificial barriers would not only be useless but actually harmful to the developed countries .
let countries such as pakistan and brazil produce towels and other cotton goods .
and let's concentrate on value-added goods and services in north-america .
if we throw our resources into better (the best) education , the north-american economy - and it's people - will benefit more than from erecting trade barriers .

brazil -while not a rich country yet - has actually made great strides in becoming a more advanced nation .
as an example , their EMBRAER airplanes are now selling all over the world and are a very strong competition for canada's BOMBARDIER airplanes in the 60 to 150 seat category .

from :

http://internationaltrade.suite101.com/article.cfm/brazil_s_trade_buddies

Quote:

With a population of almost 200 million, Brazil is the world's leading exporter of sugar, coffee, beef and orange juice. Soybeans are Brazil's fastest-growing shipments, powered by the appetites of China's 1.3 billion consumers. Other major exports include aircraft, vehicles, iron ore, steel, textiles and footwear.

and who is brazil's the biggest trade partner ?
the U.S. by a wide margin !
hbg

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@hamburger,

brazil has oil.

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@Advocate,

Not to mention India -- most economists believe China and India will outstrip our GDP within the next five years.

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Where is the US economy headed?

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