User login
Who's online
There are currently 38 members and 80 guests online.
Currently online
- soft1
- MurseFokker
- Juvenal Delinquent
- mock turtle
- Anonymous Bosch
- Citizen AllenM
- ldmeier
- ResistanceIsFeudal
- CitizenPither
- skk
- bearly
- longtimelurker
- MLM
- GDD9000
- NorkaWest
- sportsfan
- Comrade Dazed and Amused
- Antipodes
- Tim waiting for 2012
- 1 currency now -yogi
- JD2B
- alkaloids
- Kauai_Kahuna
- staunch
- RockyR
- Jedi Mind Trick
- alambka
- Leftys Liquors Lubricants and Tarp and Bank
- feralpig
- aleister perdurabo
- pannkake
- Oil Can
- furiouschads
- OldSouth
- localandbitter
- Comrade Alexei Mikhailovich
- steinly
- azurite
Err.. Yay?
second?
d'oh
Good mooorrrrrning Maryland!
There has never been a better time to buy NY CRE!
C
Can't the 130,000 construction-union members force those big, greedy mean developers to build buildings even if they don't want to, in order to provide jobs and benefits and health care and vacation time for all those poor, exploited union construction workers?
This time last year, contractors and journeymen were king.
Now ... not so much.
Nearly $5 billion in development projects in New York City have been delayed or canceled because of the economic crisis,...
No, no, no. My how the worm turns. It was only recently the construction was driving economic woes but now flip and spin construction woes are the victim of an economic crisis.
My favorite quote: "Construction generated more than $30 billion in economic activity in New York last year, said Louis J. Coletti, the chief executive of the Building Trades Employers Association. The $5 billion in canceled or delayed projects tracked by Mr. Colettis association include all types of construction: luxury high-rise buildings, office renovations for major banks and new hospital wings. Mr. Colettis association, which represents 27 contractor groups, is talking to the trade unions about accepting wage cuts or freezes."
Union givebacks? Wow.
LEH falling over derailed a bunch of projects in the supposedly redeveloping DC south and southeast:
Lehman Brothers backed several D.C.-area projects - Washington Business Journal:
D.C. Deals Relied On Lehman Funding - washingtonpost.com
Not many recent stories, but one would have to assume the situation has not improved.
C
So much for Christmas Cheer! After all the Christmas shopping is done, look for more store closings in 09 which will free up even more CRE.
Anecdote: my wife is acquainted with Japanese sushi chef or two here in SoCal and she tells me that sushi customers are way down: some are working part time now due to low customer traffic. (She's not as pessimistic as I am but she has her eyes open to the weakening economy.) She also mentioned recently that Japanese news have been reporting that Japanese economy suddenly started to slow down in September, from large to small businesses. "Great Slowdown" is world-wide....(I'm still expecting the name to be relabelled as GD2.)
Meanwhile, the Olive Garden nearby seems packed (people are waiting outside, as far as I can tell) almost every night I drive by it...
This time will be different--more employees will work from home--less need for office space.
2009 will be the year of walk-away Joe.
High unemployment and underwater real estate? Walk-away.
CRE is even more likely to experience a walk-away bankruptcy.
Local municipalities faces with empty homes, businesses, warehouses and office buildings will see their budgets crash, will they be able to service their muni-bonds?
Will there be any banks anywhere that will be solvent enough to lend?
In the face of all the above I find the 40% spike in ProLogis (PLD) stock last week amusing. Once again emotion and hope trump reality and reason!
We may see good restaurants becoming victims of bad debt. My guess is that Olive Garden/Red Lobster will be unable to unload numerous ground leases at attractive cap rates thus being forced into their own cash flow squeeze and unable to roll debt or access new lines. Lines out front won't matter if there are no lines of credit out the back.
Sushi Chefs, Yoga Instructors, Interior Decorators, er ... lets see ... Personal Trainers, Pet Manicurists, and my personal favourite, Life Coaches will soon be the occupations of lore.
i cant speak for nyc
but here on the left coast the unemployment numbers are much different because in part, a significant number of laborers are not unionized
i monitored a 1000 lot residential development for our local school district (classroom and levy considerations)
when touring the site it appeared that much more than half the workers did not speak english any better than i speak spanish
sure would be interesting to get the real employment impact on the construction industry as undocumented workers, who im told frequently were paid cash, "dis-appear"from the work force
"Nearly $5 billion in development projects in New York City have been delayed or canceled because of the economic crisis, an extraordinary body blow to an industry that last year provided 130,000 unionized jobs, according to numbers tracked by a local trade group.
..."
Huzzah, New York City has discovered the real estate crunch. It is now officially real -- since nothing's really important unless it happens in New York.
Personally, I'm waiting for the Vogue Magazine "Foreclosure Fashions" special issue.
Dawg you almost had a great one liner... Red Lobster and credit lines out THE back.
the downward spiral: is it about to be the death spiral?
but the 'market' is immune to this, right?
We could see a very interesting reversal in CRE (mostly industrial,), in a few years. When China blows up (and it will) a lot af manufacturing jobs will come back (at least temporary) to the States. Meanwhile, as I have been saying for 4 years now, CRE in the near future is going to make RRE disaster look like a walk in the park.
The Donald wil be BK soon.
i monitored a 1000 lot residential development for our local school district (classroom and levy considerations)
...undocumented workers, who im told frequently were paid cash, "dis-appear"from the work force
mock turtle
You'd be interested in the Rio Elementary School District's latest disaster in Oxnard, CA. They built a shiny new bauble as part of the now failing Riverpark project. Because Riverpark sales are not yet servicing the debt they've tried to issue bridge bonds. Currently double tax free and yielding 11%. Yes, eleven. Selling for $63 and callable at 102 in 4 months of some such.
I find the juxtaposition telling. Undocumented workers slapping up stick houses and school districts spending megabucks to serve them using only prevailing wage labor.
"Meanwhile, as I have been saying for 4 years now, CRE in the near future is going to make RRE disaster look like a walk in the park.
Broker"
What park do you walk in?
mock turtle,
I'm reluctant to spark a round of immigrant bashing, but I had a conversation with a documented neighbor of mine a couple months ago.
Quote. "The people without papers are hungry". That was in October.
NOT Irving Fisher says... writes:
Dawg you almost had a great one liner... Red Lobster and credit lines out THE back.
Thanks but I meant to write; "OUT the BACK". Who are no doubt not long for this world either.
One more anecdote I forgot to add: about a week ago, my wife talked to the owner of a sushi restaurant (I don't know where exactly but in Orange County) and she was complaining how the lease keeps going up (still). In spite of see-through buildings here in the OC, I guess strip malls owners are still drinking the kool aid....(even though almost all the strip malls I drive by have for-lease signs out in the front.)
When China blows up (and it will) a lot af manufacturing jobs will come back (at least temporary) to the States.
China is going down because nobody is buying their cheap plastic crap anymore.
I don't see how this will evolve into a cheap plastic crap manufacturing boom in the states.
The Donald wil be BK soon.
You mean for a 3rd time? The man already runs his own Bankruptcy Anonymous meetings.
Can't the 130,000 construction-union members force those big, greedy mean developers to build buildings even if they don't want to, in order to provide jobs and benefits and health care and vacation time for all those poor, exploited union construction workers?
El Cliffo
No. We'll just sit on our asses as the illegals do the available work at half wages and as taxes are raised on people like yourself to extend our unemployment benefits, provide free healthcare and food stamps. Thanks man.
"When China blows up (and it will) a lot af manufacturing jobs will come back (at least temporary) to the States. "
Actually no, you just do not switch like that from paying 400-500 dollar salaries per month per worker in Asia back to 3000-4000 per month in the US. The manufacturing companies are already starving for cash and they do not have even necessary money to relocate.
Most of the US workforce are also service sector workers and know nothing about manufacturing. It takes years to become an engineer or even technician.
"No, no, no. My how the worm turns. It was only recently that construction was driving economic woes but now flip and spin: construction woes are the victim of an economic crisis." (edited)
That is the new world-wide mantraotherwise known as whocoodanode?
In Russia, GosPlan has published a list of 295 "strategic sectors" it deems worthy of financial support. This is a preliminary first cut, it says. No word on Oblasts.
In Japan, the debt/GDP ratio is 180% and the japanese Govt. has just announced a further (non)stimulus package.
Here at home, Obama's team of crack advisers have been busy re-reading "The General Theory of Employment, Interest and Money" in which the distinguished author posits that unemployment is due to too much saving. Take that, supply siders! (Is it a coincidence that both Keynes and his distinguished successor, J. K. Galbreath, were tall and gangly? Then there's Paul Volcker! A triumvirate of big men.)
Anyhow, we are all awaiting the list of "strategic sectors" that will emerge out of the Obama economic team's discussions. It looks like New York City and the State of California are slam dunks, while the nearby Washington Suburban Sanitary Commission and the local transit authority are elbowing to get to the front of the line. I would guess at the end of the day the number of President Obama's "strategic sectors" will vastly exceed GosPlan's.
(I know, it's not called GosPlan now. But it's the same dealcentralized planning.)
"DannyHSDad writes:
One more anecdote I forgot to add: about a week ago, my wife talked to the owner of a sushi restaurant (I don't know where exactly but in Orange County) and she was complaining how the lease keeps going up (still)."
Flip side of that; a friend owns a used bookstore in Concord (Contra Costa County) -- the space is cheap, it has to be, and not too desirable. There are several vacancies in the complex, and the owner's in no hurry to fill them; he owns outright. But the foot traffic gets less and less.
My friend's out of there in two years when his lease is up. He thinks there'll be some real deals for him downtown by then.
I guess, for shopping center owners, there's more than one way to be stupid.
"The Donald wil be BK soon."
He would have more money if he had just taken Daddy's money and put it in an index fund...but then he would probably just have to keep his mouth shut instead of impersonating an entreprenuer.
Elvis, I mostly swim for relaxation.
General Chiang.. , while you are 100% right about Chinese crap, we will still need some things, which like I said I think they will be manufactured (temporary?) in the U.S.A.
Bringing jobs back to the US would destabilize Mexico. Their problems will get far worse with high unemployment and a restless population staring across a border at a land of plenty. They had their chance with $100 oil but like every other opportunity they squandered it.
joe the carpenter writes:
No. We'll just sit on our asses as the illegals do the available work at half wages
But what about the alleged power of unions to create prosperity for American workers? Surely unions can force the developers to build new projects and pay union scale and keep those furriners off the construction sites. Which side are you on?
one_timmy, that's going to happen (IMO) because of the future political and social climate in China.
Is there a "jobs bank," equivalent for CRE construction workers. You know, warm room, plasma teevee, card tables and unlimited decaf coffee?
And a paycheck.
IRVINE, Calif. The box of crackers Debra Rogoff bought from the grocery store had some crackerjack in it an envelope stuffed with $10,000.
Yet the Irvine woman was more curious than ecstatic about her daughter's find. After all, who would leave money in such a place?
"We just thought, 'This is someone's money,'" she said. "We would never feel good about spending it."
Rather than go on a shopping spree, the family called police and was initially told the money could be part of a drug drop.
Police later heard from store managers at Whole Foods in Tustin that an elderly woman had come in a few days earlier, hysterical because she had mistakenly returned a box of crackers with her life savings inside. In a mix-up the store restocked the box rather than composting it.
The Lake Forest woman, whose identity was not released, had lost faith in her bank and decided the box would be a safer place for the money.
Luckily for her, the box of Annie's Sour Cream and Onion Cheddar Bunny crackers were bought by the Rogoffs, who discovered the crisp $100 bills in an unmarked white envelope on Oct. 10.
The Rogoffs never heard from the woman and didn't receive a reward, but Rogoff did return to Whole Foods a couple weeks later.
"I asked them if I could have another box of crackers," she said with a laugh. The store obliged.
Surely unions can force the developers to build new projects and pay union scale and keep those furriners off the construction sites. Which side are you on?
El Cliffo
I hesitantly respond to your foolish question. On second thought, I won't.
"I find the juxtaposition telling. Undocumented workers slapping up stick houses and school districts spending megabucks to serve them using only prevailing wage labor.
Rob Dawg"
Yep...the word justice comes to mind...er uh maybe real consequences
btw...because of people here at CR like you, DC1000, Tanta, FFDIC, alan greedspend and many other steady CR ers..i recommended that the school board wait on land acquisition and construction because trying to lead the wave was so risky
told them i thought (guessed) that the downturn was ahead and better for them to be tentative
Dawg...this one is for you:
Light rail to celebrate kickoff across Valley
Most of the US workforce are also service sector workers and know nothing about manufacturing. It takes years to become an engineer or even technician.
one_timmy | 12.27.08 - 11:11 am | #
Another interesting but OT thought about this: There are a lot of American trained engineers in the workforce who know nothing about engineering. I have a degree in engineering that I've never used because the money in management/BS was much, much better. one_timmy is right that will take YEARS and a lot of training/re-training to bring a vibrant manufacturing economy back to the US. That, or a lot of immigration from Asia.
Let me add a link to the NY CRE smack down:
Curbed NY: CurbedWire: More Lien Times at Sheffield 57, Trader John's?
when i wrote "becasue of CR ers i recommended"
i was trying to say thanks to the "crew" here for the education...i arrived here a dummy and now am only half as stupid...
now thats progress!
General Chiang.. , while you are 100% right about Chinese crap, we will still need some things, which like I said I think they will be manufactured (temporary?) in the U.S.A.
Broker | 12.27.08 - 11:16 am | #
The manufacturing will evolve from local sources where the need is expressed as demand. One at a time, and we shall see if our government allows any capital formation from it.
Obviously, this is all just greedy savers saving too much. It just appears that we have too much consumption end square footage. Those evil animal spirits causing consumers to be cautious with taking out 24%/yr interest rate loans to fatten bank balance sheets...erm...to buy necessary necessities like 850" Plasma TV/TV dinner cookers, and SUV's to support oil prices is the problem.
The gov't and Central Blank..erm...Bank...need to get off there duffs and start shoveling credit directly down peoples throats. I mean, this has been an exact science since Keynes discovered it in the 30's for chryssakes.
Nostrovia,
Sushi Chefs, Yoga Instructors, Interior Decorators, er ... lets see ... Personal Trainers, Pet Manicurists, and my personal favourite, Life Coaches will soon be the occupations of lore.
Au contraire. We make plenty of stuff with relatively few people. Employment of the future will be increasingly services of the kind you mention although some of those are comparatively frivolous. Sure wish my mom had spent less on her house and more on yoga instructors, though. Maybe she wouldn't have chronic back pain. Likewise American health stats would be better if our restaurants spent less on the quantity of food and more on interesting presentation.
When REITS have neagative earnings(FFO), do they suspend the dividend or use borrowed money for dividend payments? I would suspect neither is too good for business.
Comrade Volker, that's why I used "temporary".
RockyR, when did you buy last time something "Designed in China"? It has never happend to me. Maybe it is just bad luck on my part.
Misean - SUVs and flat screens are a human right. You shall be reported to the UN Human Rights Council if you persist in such comments...
C
For you people in the USA. Any evidence of people maxing out their credit cards? Or are we not there yet?
Sushi Chefs, Yoga Instructors, Interior Decorators, er ... lets see ... Personal Trainers, Pet Manicurists, and my personal favourite, Life Coaches will soon be the occupations of lore.
I would add Wealth Psychologists and Stock Brokers
Stigma attached to China products today as was to Japan Products after the war.
What percentage of CRE and RRE's were built to include energy renewable resource grids? This last building boom was a chance to change how the USA consumes energy. Greed and cheap toxic materials were and are the norm. This last decade I was appalled seeing subdivision crapola being built in Illinois farm country; plenty of sun and no solar panels. Drafty McMansions with too much square footage that requires heating and cooling vs. a smaller home that was energy efficient. A decade of wealth wasted away for vacuous vanity.
Fair Econ-- "Au contraire".
Yes: fewer, less, later, slower and better.
That won't be the end of the adjustments we have to make, but it's a good start.
"In Russia, GosPlan has published a list of 295 "strategic sectors" it deems worthy of financial support. "
Gosplan still exists?
Oh, I read your last paragraph. So what has Gosplan evolved into?
Union givebacks? Wow.
Rob Dawg | Homepage | 12.27.08 - 10:40 am | #
Time to start talking about ESOPs & 'CO-OPs' in the trades too it looks like.
Agree with rps. Too much invested in Business As Usual, not near enough invested in a resource-limited world with increasing energy expenses.
Let's not forget the hidden costs that go along with the half priced illegal labor (welfare, education, healthcare etc..) and who pays for these. Yes the taxpayor. So we all subsidize this labor force to the benifit of corporations.
That's a better deal vs union labor wage/benifits which makes it possible for their members the pay these same expenses??
The last line in the posted article is the best --
Mr. Blank of the Urban Land Institute said he has taken to giving the following advice to real estate executives: We told them to take up golf.
Time to start talking about ESOPs & 'CO-OPs' in the trades too it looks like. - dryfly
The ugly McMansion development nearest me paid one of the subs with one of the lots. This was the 90s RE crash. Expect more payment in kind after all we have way too much supply and apparently nowhere near enough credit. Ugggh.
"SUVs and flat screens are a human right.."
For some reason I don't feel deprived. We haven't turned on the TV for years. Maybe we should put an icon over the screen.
Oh, I read your last paragraph. So what has Gosplan evolved into?
Pavel Chichikov | 12.27.08 - 11:50 am | #
I think it translates into TARP.
Lionel,
I saved that line for a future post. The ULI is very much responsible for the next leg down for the core urban areas. It was their disingenous advocacy of urban renewal, infill, new urbanism, neo-traditional, TOD, smart growth and all the rest that is leaving these inner rings unsustainable as the tide goes out.
More NY CRE pain...a year ago there were no stories, now they are a dime a dozen...brother can you spare a dime:
Housing Slump, Internal Strife Bedevil Property Renovation - WSJ.com
I think it translates into TARP. - dryfly
At least Ford is correctly parsing the deal as a TRAP. It will be interesting to see if we evolve a two track capitalism with a government side that stops at every corner and an express private line. We can likely predict results similar to public v private education.
hello all,
Met with a midsized regional bank VP on friday, and they feel the suspicions of many here are correct.
CRE is muerto. RRE is muerto. Revenues are way, way off.
My question:
Once Russian-style business gangsterism infiltrates the local economy, how do you remove it? Ideologues on both sides are going to have strokes once our new future shapes up nothing like they think.
Pavel - The list of 295 "strategically important" companies was announced yesterday by the Russian Government. This is the Russian version of a comprehensive bailout - companies on the list can count on the government support, from cheap credit to tax breaks to government orders.
At least the Russian government did not give preferential treatment to banksters only.
"Oh, I read your last paragraph. So what has Gosplan evolved into?
Pavel Chichikov | 12.27.08 - 11:50 am | #
I think it translates into TARP."
I have a photocopy of the signature of the head of Gosplan.[really]] How much do you think it can be auctioned for? [not really asking].
It occurred to me this morning that many people will not be adapted to whatever new economic and cultural dispensations develop over the next years. Could make for much disorder.
Denmark is a good role model once the Goldman Sachs criminal bank/wall st. fails into submission. Sucking up future taxpayer labor/revenue via Paulson to maintain a dead status quo for the few is intolerable. As the top of 10% Gordon Gecko's greed and "it sucks to be you" model implodes, I hope, the pheonix that rises out of the ashes will be about conservation. Less is more and taxation increased expotentially with profit and earnings. The Friedman model is the floating bloated deadman.
It occurred to me this morning that many people will not be adapted to whatever new economic and cultural dispensations develop over the next years. Could make for much disorder.
Pavel Chichikov
Not to worry. i plan on owning and operating a for profit chain of reeducation camps. State funded and to big to fail of course. And at graduation rather than robes, everyone wears a tarp.
Meanwhile, as I have been saying for 4 years now, CRE in the near future is going to make RRE disaster look like a walk in the park.
Broker | 12.27.08 - 10:59 am | #
I think the disagreement here (among commentors & CR) is what constitutes 'disaster'. CR looks at the MBS losses & construction jobs lost in CRE vs RRE and concludes (rightly I believe) that CRE losses will be less IN AGGREGATE... due mostly to the smaller size of the market (total dollar volume one fourth that of RRE or something like that right?)... But that is only part of the story.
When RRE is being built it has a significant impact on the economy (materials, financing & job site labor). Then as the initial homeowners move in we have more economic activity (RE agents, insurance, appliance buy & movers, etc.). But once settles there isn't that much activity any more - it sort of goes 'dormant'.
But CRE has all initial activity that PLUS workers working in those CRE buildings (in addition to whatever activity the buildings were designed to support - retail, light industrial, warehouse space, etc.). THAT is where I believe the CRE bust will leave the biggest mark - we'll have all the same problems RRE had (CMBS failures taking down banks, job site lay offs & such) but then also not produce the job growth & tax revenues those projects were supposed to produce. Those knock on effects will drive more job loss and failures down the CRE 'value stream'. I don't think we have any idea how far this effect could spread - it will be anything but contained to the CRE projects themselves.
IMHO anyway.
Denmark site
Denmark - The official website of Denmark
Compared to Denmark's current and future goals of renewable energy, healthcare, and taxation, the USA is presently living in the Dark Ages of Greed and criminal political cronyism.
LOL!
Rob Dawg's Misean Institute Local 401...
Love it.
C
Elvis writes:
The Donald wil be BK soon.
...again.
Regarding NYC busts, I wonder if there will be a Modoff "Boomerang Effect?" People who loaned money to Madoff, expecting those fat returns to help pay for financing they had drawn for construction loans or condo-flipping?
After all, they had the funds invested with Madoff to show as "assets" - for qualifying for loans! And it sounds like some of the losers didn't even know they had Madoff funds... due to the opaquery of "fund of funds" chicanery.
Will be interesting to see how this rug gets pulled up.
Jas, you can appreciate this bit of schadenfreude from Sillycon valley.
A Six-Figure Car at Silicon Valley's Repo Man - meltdowns - Gawker
Happy holidays and please continue your harsh but reality laden posts.
It occurred to me this morning that many people will not be adapted to whatever new economic and cultural dispensations develop over the next years.
That has been the problem for about 70% of K-16 graduates the past 20 years...
More evidence of total economic collapse.... brought to you by the money grubbing, big business, GOP elite and their supply side, "conservative" economic model.
I'm happy to see we're finally going to abandon this failed experiment.
Subcommander Doom writes:
Sushi Chefs, Yoga Instructors, Interior Decorators, er ... lets see ... Personal Trainers, Pet Manicurists, and my personal favourite, Life Coaches will soon be the occupations of lore.
I would add Wealth Psychologists and Stock Brokers
Subcommander Doom | 12.27.08 - 11:44 am | #
In Dubai, I saw an ad for a 'Lifestyle Architect'.
I have nothing against frivilous bottom feeder occupations.
I was just making an observation that these, like other luxuries, are the first to go when times are tight.
When things pick up, pilates for pets will be all the rage.
Actually no, you just do not switch like that from paying 400-500 dollar salaries per month per worker in Asia back to 3000-4000 per month in the US. The manufacturing companies are already starving for cash and they do not have even necessary money to relocate.
one_timmy | 12.27.08 - 11:11 am | #
In most mfg - labor cost is less than 10% of the cost of production - raw materials, capital & overhead are the lions share of cost. Saving pennies to produce crap in Asia never did make sense EXCEPT for inexpensive labor intensive consumer products (cheap plastic crap & 'lawn furniture' like stuff).
And you don't need a gazillion engineers to scale many plants back up in the US - I been there, done that.
Why won't China go away completely? Because they need products for their own market and SE Asia region in general. I work w/ companies who have both US & China ops and REFUSE to ship back to the US from China even though their customers here ask for it thinking they'll get a lower price - they won't. It costs MORE to produce their products in China, ship to ports, transit the Pacific, unload & ship to US plant site than just make the stuff here even though the US work force gets paid tens times or more as much as China - that is still a small fraction of the total cost.
But China demand was (at least until recently) exploding - so THAT is why they were there - waiting for Gadot to show up in China. Now there is fear that demand could also go away or never develop. Waiting and watching.
When China blows up (and it will) a lot af manufacturing jobs will come back (at least temporary) to the States.
I think any manufacturing jobs lost there will just be migrated to the next third world country where labor prices are minuscule and the countries politicians will keep taxes on those businesses low. It's just my opinion, but I don't think we'll ever see those jobs come back. There will always be someone out there willing to do the work for pennies compared to the dollars the same thing would require back here and the Holy Grail of these businesses is: profit.
What's worse? In what's probably a bigger indictment upon myself...I can't say that I blame them.
Rob Dawg's Misean Institute Local 401...
Love it. - Counterpointer
I'm gonna make them wear pinstripe overalls in the exercise yard too.
Deficits don't matter... until they do. And a lot of social safety nets are getting stretched. Has anyone seen Obama's revised plan for balancing the USG budget ?
Fuse is getting shorter on that explosive device...
Zigo, dryfly beat you to it. Heed the fly.
Pavel,
I agree re shortages, especially short term, unexpected.
I've been re-reading Wendell Berry this vacation. If you don't know him, you might appreciate his cogent, beautiful prose and socio-cultural analysis of food production in this country.
Dryfly,
You left out several additional high components to using Chicomm products. Set aside bribes and vig but just consider the cost of negotiating viable and enforceable contracts. And my favorite, quality control gatekeeping. Important parts had damn well better be 110% reinspected here. Not there. Then you can add in the cost of returning 30% for credit when you discover voids in the casting obscured by shot peening for instance.
Au contraire. We make plenty of stuff with relatively few people. Employment of the future will be increasingly services of the kind you mention although some of those are comparatively frivolous.
Fair Economist | Homepage | 12.27.08 - 11:37 am | #
I told my sister we need fewer mfg workers than ever - just need to produce a lot more per plant & employee so we can offset our necessary imports (like oil) with some kind of tradable & keep the deficit in check... but we don't want more workers, they just get in the way. At least NOT in the factory - they can hang out in the lunch room or the office or go golfing with the vendors but please keep them out from under foot in the plant - the machines pretty much run themselves.
If you haven't seen 'lights out' manufacturing - you should tour modern plants - it will blow you away.
Zigo, dryfly beat you to it. Heed the fly.
My apologies. The fly is wise.
"bearly writes:
Deficits don't matter..."
Deficits Don't Matter
There is no housing bubble
The economy is fundamentally sound
Saddam has WMD's
Katrina response was a success, Good job Brownie
We didn't expose a CIA agent
You people got duped and can't admit it.
The US is still the number one manufacturing economy in the world.
But it is the high valued products. Low value, labor intensive products are produced overseas.
El Cliffo writes / joe the carpenter writes: No. We'll just sit on our asses as the illegals do the available work at half wages ... But what about the alleged power of unions to create prosperity for American workers? Surely unions can force the developers to build new projects and pay union scale and keep those furriners off the construction sites. Which side are you on?
Of course the big claim to fame of the original Right-wing Conservative fascists of the 20th Century was their sincere hatred of labor unions.
One would think that all Americans would know this history and what came from it ... but the Cons have ushered in a new kind of citizen that doesn't bother with things like history or shared reality.
So here's a tip, anti-union folks: this is a case in which you definitely should NOT "go with your gut."
Old joke:
Factory of the future has two employees - a man and a dog. The man's job is to feed the dog. The dog's job is to bite the man if he touches anything in the factory...
Dryfly, any links to show us proles where these factories of the future are being made? Somebody has to make the machine that makes the machine, right?
Disaster in Tennesee:
Environmental disaster in Tennessee - Greenpeace USA Blog
Environmental disaster in Tennessee - Greenpeace USA Blog
Thats ok JR. The hateful authoritarian conservatives are gonna get a dose of medicine that will make the 1981-2008 era of graft and theft by the big business wealthy elite seem like heaven.
Re: Unionization - N.C. isa right to work state. When I was a kid, I used to hear grownups gabbing about being able to make $12/hr in the unionized plants, and $12.10/hr in the non-unionized ones, because mgmt would pay a small premium to prevent organizing from happening.
BTW, $12/hr was considered a great wage in the 1970s. You "had it made".
JR, Unions have accomplished much for the American worker. Unfortunately, they were a little bit too successful, and their employers are slowwly dying from the burden, as lower cost producers take business from them.
You left out several additional high components to using Chicomm products. Set aside bribes and vig but just consider the cost of negotiating viable and enforceable contracts. And my favorite, quality control gatekeeping. Important parts had damn well better be 110% reinspected here. Not there. Then you can add in the cost of returning 30% for credit when you discover voids in the casting obscured by shot peening for instance.
Rob Dawg | Homepage | 12.27.08 - 12:37 pm | #
Thank you RD - all 100% correct. BTW - when they have to eat their own dog food as opposed to shipping to us round eyes - they are now a lot more likely to try and get it right [else the very public executions]. Doing business in China definitely is a trip.
My apologies. The fly is wise.
Zigo | 12.27.08 - 12:39 pm | #
My wife & kids would spit all over the key board if they read that.
It costs MORE to produce their products in China, ship to ports, transit the Pacific, unload & ship to US plant site than just make the stuff here even
It never had anything to do with comparative advantage. It was a play on temporary cost differentials, current position in the credit cycle and currency manipulations.
If this is the end of the current credit cycle, then most of the service outsourcing will turn into a problem, too. Many of the current outsourcing projects were initiated with expectations of a rising dollar.
On a personal note, I'm surprised at the number of perverts that wanted to see me in leather but I'll try to satisfy that demand better with a new suppy of kinkier pictures after NYE.
dryfly,
"My apologies. The fly is wise.
Zigo | 12.27.08 - 12:39 pm | #
My wife & kids would spit all over the key board if they read that."
Oh, I thought that was supposed to be a joke. I shall do a proper spit take now.
/ducks
Nostrovia,
The party of Nixon is quite happy to own their racist and economic terrorism roots.
isnt it a given that workers in any industry- union or not- are going to have less or no work available in the future? why the constant drumbeat of talk about union wage cuts, negotiations, clawbacks, etc. Are there comparable adjustments being aimed at management, shareholders, ownership, etc? are they still taking standard commisions in RE sales, for instance?
I can see this argument doesnt apply perfectly in the CRE and RRE world- but im bothered by the non-stop talk of union workers and immigrants taking cuts when they have to know its inevitable. This only reinforces the negative perception of union workers and or immigrants- while "The Man" continues to take his slice, enjoying reduced labor expenses.
im sure that was nicely bungled. fire away.
how did we get to 100 posts without a Sopranos reference?
don't see how this will evolve into a cheap plastic crap manufacturing boom in the states.
General Chiang Kai Gerkinov | Homepage | 12.27.08 - 11:05 am | #
I agree- but hopefully we won't manufacture cheap plastic crap.Move up the quality and value scale and perhaps we might be able to make it. It will also require us to move away from our disposable society.
"Are there comparable adjustments being aimed at management, shareholders, ownership, etc?"
uh, i think shareholders of companies like BSC, LEH, GGP, IMB, etc have experienced a few significant 'adjustments' along with Joe Lunchbucket's 401K
The party of Nixon...
DNFTT.
@Dryfly:
Your comments re: a US manufacturing renaissance are very encouraging, backed by your first hand experience. Encouraging, except for the last comment that fewer workers are needed.
I envision, rightly or wrongly, that transition from the "doing each others laundry" economy is going to require some employment bases that produce physical product.
Do you have any thoughts on that?
I told my sister we need fewer mfg workers than ever
Still need a way to redistribute income. I'll mention it again because, even now, nobody talks about it.
Average workweek in 1929 - 48 hours
Average workweek in 1938 - 40 hours
If you haven't seen 'lights out' manufacturing - you should tour modern plants - it will blow you away.
dryfly | 12.27.08 - 12:37 pm |
When I was auditing mfg plants 10 years ago, I was amazed at the empty parking lots. Any place that was compeitive had reduced head count by 50%+ in a short period of time. Employees were incentived to eliminate positions. One guy designed a blown in foam contraption at a refrigerator mfr and received a decent bonus for cutting head count in his area. That particular company was gaining market share and had other areas for the semi-skilled. Funny thing was that soon after, that company was purchased and the new owners stopped bonuses for non-management. Innovation stopped.
Shorten the workweek again to distribute the work and income.
I'd have to agree that the GOP is the party of Nixon and Rove was mentored in the school of hate by a Nixon operative. Divisive, sneaky, distorting, hateful, etc.
dryfly, very good point and not much to add to your post, except for the fact that investors loses (%) will be horrific.
"Let's not forget the hidden costs"
the contractor paying cash and not asking questions and the feds are basically in cahoots here - the feds have no SS payout commitment, the contractor has no commitment at all, while the state and county is often on the hook in terms of schools and emergency health care.
microcosm of the larger picture, methinks. we've shifted all kinds of burdens onto the sub-federal level.
Head count needs have declined substantially in financial services and other industries as computers and other technology has replaced or leveraged the productivity of each worker.
"Not to worry. i plan on owning and operating a for profit chain of reeducation camps. State funded and to big to fail of course."
Anything is possible with black holes.
Funny thing was that soon after, that company was purchased and the new owners stopped bonuses for non-management. Innovation stopped.
lama
Yet another example as to why capitalism as we know it is dead. The dog that begins by eating his tail soon devours half of his body, and he becomes stuck, paralyzed
My apologies. The fly is wise.
Zigo | 12.27.08 - 12:39 pm | #
My wife & kids would spit all over the key board if they read that.
dryfly | 12.27.08 - 12:49 pm | #
A prophet is never honored in his hometown?
BTW - lights out mfg. -- wouldn't that stimulate the economy of machine repair?
Dryfly, any links to show us proles where these factories of the future are being made? Somebody has to make the machine that makes the machine, right?
Blue Guy Red State | 12.27.08 - 12:43 pm | #
A lot of the machines I run into (machining centers for metal parts - producing either 'hog out' or 'machined castings') come from Germany & Japan, mostly Japan. This I think (as a BTW) is why Japan's exports & mfg tanked recently - they make a lot more cap ex product today than actual end use consumer products and those purchases collapse during the front end of a recession.
But even if you spend a million bucks on a CNC machining center from Japan (easy to do) you then spend a million or more 'facilitating' (putting it in & rigging it up) and on tooling. It is not unusual to spend 2-3 times as much on tooling, programming & fixtures for the machining center (to reduce machining labor) than you spend on the machine itself. That work is mostly domestic and 'on going'. It is very good business.
As for a site - here's a company I respect a lot: Remmele Engineering
I don't work with them currently but have toured some of their facilities in the past - they typify 'lights out'.
Not surprisingly, unemployment in the construction industry is soaring: in October, it was up by more than 50 percent from the same period last year, labor statistics show.
How many of them are going to show up in unemployment #s?
microcosm of the larger picture, methinks. we've shifted all kinds of burdens onto the sub-federal level.
bgates
Under the guise of "State's rights" conservatism.
So here's a tip, anti-union folks: this is a case in which you definitely should NOT "go with your gut."
JR | Homepage | 12.27.08 - 12:42 pm | #
Your almost there, just follow that thought to it's logical conclusion.
Here, I will help.
No industry, no unions, shell of an economy, and I will be your overseer and warlord, as I have the physical and economic and organizational will to compel you to act in my regard.
You are my slave, because you had an ignorance of reality, and instead focused on politics (a quite useful control mechanism, not as good as religion, but almost).
Now get me an iced tea and dust the generator shed.
Serfdom and slavery, it gets s*&t done!!
Another point of history about fascists and union-busting:
The saying that "Dictators make the trains run on time" comes from Mussolini's Italy. The train labor unions held strikes which paralyzed transportation, and the Blackshirts beat up the strikers and drove the trains themselves. That's what made the trains run "on time."
Of course, once fascism took hold the trains did not run much at all for a very long time.
If people knew their history I don't think we would have become a nation of dopes and Cons. It is an insult to the WWII legacy of this nation that we today harbor a new strain of corporate "Conservatives."
When I was auditing mfg plants 10 years ago, I was amazed at the empty parking lots. Any place that was compeitive had reduced head count by 50%+ in a short period of time
Although the preponderance of IT workers on CR will shriek in denial, I'll suggest that information technology may be nearing the same outcome.
The IT boom was driven by a certain slice of the overall attention span. That time slice probably entered its inflection point sometime around the first Crash (2001) and the second Crash is partially a recognition that we passed through the inflection point.
Graphs from May, 2007, foretelling the layoffs at Yahoo and collapse of Google stock -
http://www.realmeme.com/roller/page/realmeme/?entry=internet_state_change
In other words, there's just less and less value in people-based IT.
Most of the growth will be back-end stuff that shifts current human-to-IT interactions into chip transactions.
I envision, rightly or wrongly, that transition from the "doing each others laundry" economy is going to require some employment bases that produce physical product.
Do you have any thoughts on that?
Of course, but it can be quite small. At one point 90%+ of the population grew food. We're down to about 2% of the population actually growing food. But that's plenty. Then there's another 20-30% moving, storing preparing, serving, selling, etc. Most people do other stuff. And it works just fine.
Manufacturing will be the same way. A tiny percentage making enough stuff for everybody, a larger groups distributing and customizing it, and most people simply doing something else.
Don't forget the #1 unmet need in the developed world - health care (broadly defined, so including the yoga instructors my mom doesn't use). We have plenty of food, cars, houses, knickknacks, and appliances. But we certainly don't have enough health care. Perhaps we never will, if you include basic research into new ways to improve and extend life.
"Under the guise of "State's rights" conservatism."
I see the fiscal and hot-button issues on that as being different, though maybe part of the solution is found therein - why shouldn't california tax weed to fill the revenue gap left by federal greed, incompetence and stupidity?
"Thats ok JR. The hateful authoritarian conservatives are gonna get a dose of medicine"......
Reality check guys.....Dems are in charge of the WhiteHouse and both chambers of legislature.....wasn't there a movie called "Dumb & Dumber"?
Since Reps have become finally tired of their crooks & layabouts, when that happens to the Dems, should be interesting......
"Still need a way to redistribute income. I'll mention it again because, even now, nobody talks about it.
Average workweek in 1929 - 48 hours
Average workweek in 1938 - 40 hours"
A rational and humane solution is implied here.
There are some occupations, like farming, which can't be timed exactly and may require long hours at certain seasons. There are others in which, hypothetically, 30 hours per week at 40 hours pay would be sensible, so long as value added is produced.
Dryfly,
Japan, Germany and Oxnard. Are you forgetting Haas Automation?
You are correct, machine centers are the free razor handles of industry. Oh, you want blades? That gonna cost ya.
BTW - lights out mfg. -- wouldn't that stimulate the economy of machine repair?
Outsider | 12.27.08 - 1:01 pm | #
Yup - maintenance & support is where the head count is and some if not all of that is done via 'sub-contract'. Same with tooling design/build and fixtures. Even robotics to load & unload. There is a lot more iceberg below the tip we usually see.
"which can't be timed exactly and may require long hours"
this could also be applied to our only two major export industries besides weapons and food - entertainment and software
The nuts like to conflate fascism, better known as corporatism with capitalism and subsequently fly the lofty banner called "free market capitalism" as a means to foist it onto the public. What they really mean is free markets for us who must work 40-50 hours a week... Bailouts and welfare for those at the top.
Ever wonder about this "service economy" thing? Look up the word service in Greek. Its translation is SLAVE.
Rob Dawg's Misean Institute Local 401.
Core curriculum : Term One
Term 2 : Applied Course TBA
C
A lot of the machines I run into
dryfly | 12.27.08 - 1:01 pm | #
Dryfly, I remember your telling us about how much of the inventory of machine tools had been sold off - either exported or scrapped.
That wouldn't come back to haunt us, now, would it? (Rhetorical question.)
Serfdom and slavery, it gets s*&t done!!
It's possible but recent history implies that it's an inferior model on a level-playing field.
Current master-slave model works with temporary cost differentials maintained through fake currency.
.
Japan, Germany and Oxnard. Are you forgetting Haas Automation?
Rob Dawg | Homepage | 12.27.08 - 1:07 pm | #
I run into some HAAS - but they are pretty rare compared to the Mazaks, Okumas, Morei Seki's etc. FWIW I do run into a lot of HAAS at aluminum foundries doing secondary ops - run into the Japanese more at iron foundries, 'steel' shops and 'hog out' facilities. Do you see the same thing?
Pavel, A 30 hour workweek would require a 33% increase in employed workers (vs 40 hours). We would have a severe labor shortage. Thus, forcing even more employers to move offshore.
However, a reduction of 2 hours would balance pretty well with the current labor supply and demand.
Dryfly's point is what a lot of analysts are missing imho. If the money/loan supply had been stable over the last decade then there would have been massive deflation owing to manufacturing automation and communication latency drops.
Instead, there's been a rogue positive feedback loop goosing the debt supply, which more or less counterbalanced the deflation.
When the financial system has finished thrashing itself to death - well, the technological progress doesn't go away.
-- w
"which can't be timed exactly and may require long hours"
this could also be applied to our only two major export industries besides weapons and food - entertainment and software
There's the crunch-sabbatical cycle for that. A strict 4-day week doesn't work for a lot of people but the basic idea of less work and more time enjoying the results works for almost everybody.
maintenance & support is where the head count is
The big buzz is to pile into healthcare. But there are only so many health care $$ to go around.
Another route we should be promoting is machine maintenance/repair. I would imagine building our mfg. base would be more productive in the long run than promoting better health -- in terms of $$ of course and not humanity issues.
As many have said -- once our mfg. base goes, our plants go, our equip. goes, and our expertise -- how are we going to ramp up again?
We need to produce. Is it possible to shift back from a service economy to a production economy, or is it too late for that?
"Black Ranch writes: Since Reps have become finally tired of their crooks & layabouts, when that happens to the Dems, should be interesting......"
I have been tired of the Dem crooks for a long, long time. You probably are (or were) a team Con Republican, since you are now pretending Republicans got "tired" of their crooks. My what honorable folks you all are! hahahaha
You lost, without honor. There was no high morality in the abandonment of the Republican Party faithful, only reaction to their declining bank balances.
Also you seem Conservative in that you make huge steroetyping comments that imply that Dem supporters are all one thing, and that the Dem leadership is actually the representation we wish.
However, since the corrupt Dems are the ones going along with the Republicans, you have to start somewhere.
Business, led by the corporatists owe their employees a very large sum. And it will be extracted.
Ever wonder about this "service economy" thing? Look up the word service in Greek. Its translation is SLAVE.
But that's (partly) why we are where we are. There's an equilibrium (or more likely, many possible equilibriums) of production versus consumption and distribution.
The Henry Paulsons of the world may believe that they want to own EVERYTHING in the world but the downside is that they have to CONSUME everything in the world, too.
I suspect that many minds on Wall Street are re-considering basic beliefs.
Dryfly, I remember your telling us about how much of the inventory of machine tools had been sold off - either exported or scrapped.
Comrade Terry | 12.27.08 - 1:12 pm | #
Mostly old & tired - talk to mp about that. Lights out mfg operations only run the latest & greatest - that stuff costs money.
But you make an interesting point - if the dollar gets low enough - look for more low volume 'cellular mfg' returning. That requires a lot more labor but offers much greater flexibility and uses older machines grouped together in 'cells'. It is 1980s technology that still has a place IF the currency & labor differentials aren't too great. I know a number of firms who are actually increasing business right now (depression or no depression) based on this strategy.
Long post, sorry.
Mr. Mortgage sez:
With respect to rates, most borrowers do not have a perfect 740+ score and 80% and below loan-to-value meaning they do not get the rates being advertised. Even a small deviation in borrower profile such as a subordinated second mortgage, 700 credit score or 90% loan-to-value can result in a 100bps rate spike at least. Only a year ago the latter profile would have been considered Prime their 90% loan-to-value today would have been 50% equity back then.
Lastly, Jumbo money both Agency Jumbo from $417k to $625k and bank portfolio over $625k are priced terribly in the 6.5% to 7% and 7.5% to 9% ranges respectively. That is if they can even get the loan made. The problem with this is once you get out of the Subprime universe, a large percentage of Alt-A and Prime loans are over $417k. The Alt-A, Jumbo Prime and Prime universes are on very shaky ground right now and these are the borrowers who could really benefit from a low fixed rate right now.
This harsh reality could spur a new wave of defaults and walk-aways from borrowers that were not considered at-risk before. This takes the crisis into the Prime universe very quickly because Prime borrowers represent the majority of new refi applicants. This new wrinkle brings the Prime Implosion to the forefront much quicker than my original, more linear time-line of Subprime to Alt-A to Jumbo Prime then Prime with some overlap.
Additionally, when borrowers with Jumbo loan amounts over $417k find out that 30-year fixed rates are anywhere from 6.5% to unavailable the reality that that they are stuck in that loan and likely that home indefinitely will set in. The macro-economic effects of this are unknowable.
With underwater or near underwater home owners that are unable to sell or refi totaling 42% nationally and about 65% to 70% in the bubble states, this news is not surprising. However, it likely will be surprising to the media, analysts and markets when the facts get out in a couple of months.
In a nutshell those that dont need the credit can get it and those that do cant. This is the perfect credit crisis storm - one which low rates cant fix.
The only thing that can be done to get money into borrowers hands quickly is to waive appraisals for Agency and FHA loans as Lockhart has suggested. That is of course if the borrowers are ignorant enough to consider this option. James Lockhart, Fannie and Freddies regulator, said last week they were considering waiving the requirement to get new home price appraisals before refinancing loans they hold a move that could greatly increase the scope for refinancing.
But no appraisal refis are a disaster that takes the housing crisis to an entirely different level because now the tax payer will be on the hook for trillions in mortgages that are essentially unsecured credit lines. Nobody will ever buy these loans or securities derived from them. That being said, given the extent of the negative-equity in America with no way to fix it other than aggressive proactive loan modifications allowing principal balance reductions, my money is on them seriously considering this radically destructive move out of sheer panic. -Best Mr Mortgage
ren writes:
mock turtle,
I'm reluctant to spark a round of immigrant bashing, but I had a conversation with a documented neighbor of mine a couple months ago.
Quote. "The people without papers are hungry". That was in October.
Hey ren
im with ya
not the least bit interested in immigrant bashing, doc or no doc aside
btw i spent a few years supervising dept of natural resource forestry work crews...most of these guys were in their late teens and early twenties
many of the crews were largely hispanic
along the way,i got on friendly speaking terms with many of the workers and their families
i was almost invariably impressed with the strong work ethic shown by those young men was we fought fires and planted trees in the forests of the pacific north west
i learned that a good many of the immigrants were induced to walk across the boarder as factory and farm owners banked on these immigrants to work hard, work for less and not complain cause they had to keep their heads down or be deported
an effective way to weaken unions and hold wage pressures down
now many of these people are caught in the middle
"However, a reduction of 2 hours would balance pretty well with the current labor supply and demand."
38 hour work week! 38 hour work week!
Nothing like turning complex economic dislocations into bumper sticker slogans. Cuz, you know, any hour worked doing anything by anyone are at least roughly equivalent.
Vive La France!
Nostrovia,
"Also you seem Conservative in that you make huge steroetyping comments that imply that Dem supporters are all one thing, and that the Dem leadership is actually the representation we wish."
JR, I see that you are also stereotyping with abandon.
Instead, there's been a rogue positive feedback loop goosing the debt supply, which more or less counterbalanced the deflation
People have to operate within certain assumptions which appear to be permanent (like the 40 hour week). I suspect that increasing govt' employment has INCREMENTLY balanced the distribution equation over the past fifty years, allowing the illusion of the "permanent" forty-hour workweek to stay in place as a cultural foundation.
Broward, your pragmatism in the face the myriad social singularities (causing tremendous upheaval and manifested as incredulity by the ideologues) that will eventually INCREASE state control while simultaneously DECREASING the American standard of living, is admirable.
I look forward to long conversations in your tent.
@Fair Economist: "Most people do other stuff. And it works just fine."
It works fine so long as there is are marginal contributions which justify sufficient wages to maintain the social fabric - the "middle class," if you will.
The middle class was built on manufacturing, because the wages were justified by the physical product. The globalization advocates understood that the removal of physical product creation and replacement by service --much of it superfluous-- would reduce wages.
The "ownership society" and the public policies encouraging bubble wealth were arguably attempts to replace the lost income with consumption of the inflating values of household assets.
Going forward, the mis-priced and impure credit, as well as the opportunity to carve off pieces of the house, or Pets.com before that, to buy the next consumer foible are gone.
Do you see the same thing?
dryfly
For the record I occasionally design structures for ummm, stuff that flies. You know the g-d-mn jerk that causes the machine tool programmer to swear "just how many f$%*n axes do you think we have!?" So yes, aluminum, similar metals in the group are what I see more of.
Here in South Carolina and in most of the south, economic terrorism is alive and well and it is the natural extension of racism. I think it will be coming to an end very very soon.
We need to produce. Is it possible to shift back from a service economy to a production economy, or is it too late for that?
Outsider | 12.27.08 - 1:15 pm | #
I don't think it's too late at all - in fact the dollar getting weaker is forcing us to do that no matter what we wish or want. We need to make more stuff (with people or machines) and then trade it for some of the stuff we buy from others - balance the dollar flows with goods BOTH WAYS - it's what will happen... only question is will it happen in a prosperous US or a pauper US. Regardless of which path we go down - the world isn't going to take our paper promises much longer - they want more. They deserve to get more for their efforts too.
I had my first awesome, religious-level sex last night. I need food so I've gotta wake J up. Later.
but the basic idea of less work and more time enjoying the results works for almost everybody.
Unless people measure results exclusively in terms of stuff acquired. Which is the case in America.
Pavel Chichikov(Excellent) writes:
For some reason I don't feel deprived. We haven't turned on the TV for years. Maybe we should put an icon over the screen.
May I recommend St. Martin of Tours. =)
Increasing the share of the economy inside government is essetially the equivilent of reducing the aggregate number of hours devoted to productive labor.
Unfortunately, this does not give the benefit of reduced hours to those who remain productive. It just creates a larger class of quasi productive people to share the production with.
Gave my TV away on Freecycle a few weeks ago. Hadn't plugged it in for a year anyhow.
"I had my first awesome, religious-level sex last night."
Years ago, traveling I-40 through OK, I heard a country song with the refrain: "While I was preying on her body, she was praying for my soul."
Never heard the song again, and can't find the lyrics via online search. Probably a local group record.
But anyway, is that the kind of thing you are referring to?
Anonymous:"But no appraisal refis are a disaster that takes the housing crisis to an entirely different level because now the tax payer will be on the hook for trillions in mortgages that are essentially unsecured credit lines. Nobody will ever buy these loans or securities derived from them."
I think this ignores the fact that the GSE's are on the hook anyways and streamline refi's (Rate and term only, no cash-out) of loans they already own only serve to make the borrower stronger.
I bet the real reason this isn't done instantly (it is under discussion) is because the GSE's would have a new loan to sell rather than one that is most likely securitized already and that would cause a strain on capital.
A video for people who like cool CNC stuff. Cylinder head porting used to be a very time consuming job. Now,with CNC you hand port,digitize and crank em out. I can buy top of the line cylinder heads for 25% of what it cost 10-15 years ago...
YouTube - CENTROID 5 axis cnc cylinder porting machines at PRI 07'
Chris
For the record I occasionally design structures for ummm, stuff that flies. You know the g-d-mn jerk that causes the machine tool programmer to swear "just how many f$%*n axes do you think we have!?" So yes, aluminum, similar metals in the group are what I see more of.
Rob Dawg | Homepage | 12.27.08 - 1:23 pm | #
I see more steel and iron - heavy tool loads, slower speeds & feeds and very robust fixtures required. The sound of a big powerful machining center bitting deep into a large ductile iron casting [say a housing for a large tractor transmission] is pretty amazing the first time you hear it - very different than the screaming high pitched whine of a HSMC hogging out an air frame structure.
But both are totally cool to watch.
--
Ian from Austin: Jas, you can appreciate this bit of schadenfreude from Sillycon valley.
From the article: Cisco stealthily laid off employees even as its cheerleading CEO John Chambers said the company wouldn't cut staff.
No one lies all the time but good liars know when to lie.
Happy holidays
Happy Holidays to all.
and please continue your harsh but reality laden posts.
Sadly, the reality in America is harsher than my commentsAn EVIL government, defended by morally bankrupt dopes, brainwashed from birth far more than Nazis ever could brainwashed Germans.
Jas
At least you can see the chips. All I get to see is a spray of lubricant and occasional sliver stuck to the plexiglas. Then again no machine replaces some titanium hand finish work. Man are we geeks or what?
Jas, I too am amazed at the volume level of the shrinking minority of apologists for the anti-tax, corporatist, supply side agenda.
[That being said, given the extent of the negative-equity in America with no way to fix it other than aggressive proactive loan modifications allowing principal balance reductions, my money is on them seriously considering this radically destructive move out of sheer panic. -Best Mr Mortgage]
I for one would really like to know how this is going to be accomplished on a broad scale without massive fraud and abuse and a lot of backlash from honest debtors. Everyone is going to want in on this game.
If the basis is mortgage > appraisal I think there's going to be A LOT of money made issuing below mortgage appraisals. A furious race to the bottom deflating house prices.
"May I recommend St. Martin of Tours. =)"
A Roman soldier who gave half his cloak to a beggar. But why St.Martin in particular?
The tomb of St. Martin was venerated as a holy shrine. St. Gregory of Tours in his History of the Franks writes with exasperation about the Merovingian nobles, a notably rough bunch. For example, two families engaged in a bloody feud agreed to meet at the tomb of the saint to exchange pledges of peace. They hadn't been in there for long, writes Gregory, when people began to be carried out of the tomb feet first. After telling other stories about the Franks in this vein, Gregory remarks: What's a bishop to do with people like this?
A story still apropos I think.
At least you can see the chips. All I get to see is a spray of lubricant and occasional sliver stuck to the plexiglas. Then again no machine replaces some titanium hand finish work. Man are we geeks or what?
Rob Dawg | Homepage | 12.27.08 - 1:39 pm | #
Ya but geeks have to have fun too.
brainwashed from birth far more than Nazis ever could brainwashed Germans.
Godwined after only 164 comments. Paging CR, new thread required.
Anonymous writes:
Godwined after only 164 comments. Paging CR, new thread required.
Anonymous | 12.27.08 - 1:43 pm
lol
[Broward Horne writes:
I had my first awesome, religious-level sex last night]
Care to post his first name?
The middle class was built on manufacturing, because the wages were justified by the physical product. The globalization advocates understood that the removal of physical product creation and replacement by service --much of it superfluous-- would reduce wages.
And once upon a time the middle class was built on the yeoman farmer. You could build it on health workers too. There's nothing particularly special about manufacturing work. Of the three I've mentioned, manufacturing work is probably the worst basis for a middle class as line workers need less skill than farmers or healthworkers. The middle class is most stable when a middle-class mind - experienced, reliable, and knowledgeable - is essential for middle-class work.
Look in the Mirror JR writes:
Increasing the share of the economy inside government is essetially the equivilent of reducing the aggregate number of hours devoted to productive labor."
You don't need to regurgitate your propaganda to me. It is interesting that all I have to do is point out some history, and misspelling Con freaks think they know who I am and what I believe.
I'm not for "big" government (that would be the Cons, objectively) but I am for transparent, responsive better government. And I want it to be stronger than Big Business because government by the People can be affected by the People, whereas Big Business cannot.
Conservative fools handed our nation to the merchants because they spun some pretty lies. Own up to it and have some respect for the ideas that gave you the prosperity you destroyed.
Bush Data Threatens to Overload Archives
The National Archives has put into effect an emergency plan to handle electronic records from the Bush White House amid growing doubts about whether its new $144 million computer system can cope with the vast quantities of digital data it will receive when President Bush leaves office on Jan. 20.
The technical challenge was an inevitable result of the explosion in cybercommunications, which will make the electronic record of the Bush years about 50 times as large as that left by the Clinton White House in 2001, archives officials estimate. The collection will include top-secret e-mail tracing plans for the Iraq war as well as scenes from the likes of Barney Cam 2008, a White House video featuring the first pet.
Under federal law, the government has complete ownership, possession and control of presidential and vice-presidential records. The moment Mr. Bush leaves office, the National Archives becomes legally responsible for the custody, control and preservation of the records.
If the electronic records of the Bush White House total 100 terabytes of information, as archives officials estimate, that would be about 50 times the volume of electronic records left behind by the Clinton White House in 2001 and some five times the contents of all 20 million catalogued books in the Library of Congress.
Pavel Chichikov(Excellent) writes:
But why St.Martin in particular?
Common mask of the orixa of crossroads and communication networks.
"I think the disagreement here (among commentors & CR) is what constitutes 'disaster'. CR looks at the MBS losses & construction jobs lost in CRE vs RRE and concludes (rightly I believe) that CRE losses will be less IN AGGREGATE" - dryfly
My comment related to RRE being "a walk in the park" compared to CRE. RRE is already and expectedly brutal and devastating. I think the CRE collapse will be brutal and devasting, too. Maybe equally devastating when everthing is considered, but CRE will not make the RRE shakedown look small.
JR writes:
Conservative fools handed our nation to the merchants because they spun some pretty lies. Own up to it and have some respect for the ideas that gave you the prosperity you destroyed.
I'm constantly amazed how the libertarian conservative nuts will stand by their ideology, even in the midst of the wreckage piled up around them. They truly meet the definition of DELUSIONAL.
I for one would really like to know how this is going to be accomplished on a broad scale without massive fraud and abuse and a lot of backlash from honest debtors. Everyone is going to want in on this game.
bearly | 12.27.08 - 1:41 pm | #
Call it a 'reset', 'reboot', 'jubilee' or 'mulligan'... it is either going to get done up front in some sort of mass debt workout or it will be done surreptitiously via currency debasement and inflation. I think the fact that people are coming to this understanding is helpful - at least now we can discuss how we get out.
BTW a 'jubilee' is admission by the econ wonks that 'deflationary forces' won. Those holding the debt won't be any happier about that than if they were fed inflation. It was always about counter-party risk and soon they will know all about that.
--
Born-and-bred dopes are particularly bad at handling criticism of America and the American system. That is the most important part of BREEDING American dopes -- attacks the critics.
Jas
it would be lovely to see some good news to come out of this like some of these obnoxious ground floor banks disappearing that squeeze out small local businesses on the best streets of Manhattan.
Take Back The Media! Our Sponsors
"I had my first awesome, religious-level sex last night. I need food so I've gotta wake J up. Later.
Broward Horne"
Did you weep immediately after?
"The middle class is most stable when a middle-class mind - experienced, reliable, and knowledgeable - is essential for middle-class work."
My point exactly. Maybe I was using manufacturing as an icon for that. But whether it is manufacturing, or health care, or farming, the capital-labor ratio has been changed. Look at the self-described machine tooling "geek" posts above: particularly, the reference to the machine tool programmer.
An essential component of the middle class mind set that you refer to above is pride in work and a feeling of contribution.
I am just not sure what is going to provide that opportunity in sufficient breadth.
[Broward Horne writes:
I had my first awesome, religious-level sex last night]
Don't let the left hand know what the right hand does.
Wells Fargo came out with their predictions for the new year:
"We are forecasting
another 3.7 million job
losses in 2009 as service
businesses find themselves
overstaffed to meet expected
demand. Since services
businesses comprise about
85 percent of total non-farm
payrolls, the weakest service
sector in decades will
have an outsized impact on
the national unemployment
rate and total job losses.
This brings the expected
total recession job losses to
around 5.5 million for a
peak to trough decline of
4.0 percent in non-farm
payrolls. This will push the
U.S. unemployment rate by
year-end to between 8.5 and
9.0 percent."
https://www.wellsfargo.com/downloads/pdf/com/research/economic_indicators/eijan2009.pdf
[You could build it on health workers too]
We need to balance trade. How exactly can we export a yoga class ?
"An essential component of the middle class mind set that you refer to above is pride in work and a feeling of contribution."
Do the majority of people here assume that the middle class has to work for somebody else? Just curious...
And once upon a time the middle class was built on the yeoman farmer. You could build it on health workers too. There's nothing particularly special about manufacturing work. Of the three I've mentioned, manufacturing work is probably the worst basis for a middle class as line workers need less skill than farmers or healthworkers. The middle class is most stable when a middle-class mind - experienced, reliable, and knowledgeable - is essential for middle-class work.
\t Fair Economist | \t \t \tHomepage | \t12.27.08 - 1:46 pm | #
There's tons of health/social stuff that needs doing that can be ultimately productive to society if done right; for example, somehow making sure that kids grow up right and don't turn into 1) dopers, 2) convicts, or 3) goofy-ass bastards who go dirt-bike riding without a helmet and turn into parapalegic wards of the state for the rest of their lives. Any one of these outcomes easily costs the state $50+K per person per year. Yeh, the prison guards might not like it, but they can get jobs with the SPCA, if they qualify.
And you can say, it's the duty of the parents. But what, if you're running a manufacturing plant you knock of quality control because "it's the duty of the assemblers?" Yeh, right.
Born-and-bred dopes are particularly bad at handling criticism of America and the American system.
Indians are too stupid to realize that repeating the same thing day after day doesn't make them prophets.
"Wells Fargo came out with their predictions for the new year:"
Wells Fargo lost all creditability awhile ago. I see the name, and I roll my eyes. Used to be a good place.
Apologists are too stupid to realize that making the same excuses day after day make them apologists.
--
"JR writes: "Conservative fools handed our nation to the merchants because they spun some pretty lies. Own up to it and have some respect for the ideas that gave you the prosperity you destroyed."
wmbz: "I'm constantly amazed how the libertarian conservative nuts will stand by their ideology, even in the midst of the wreckage piled up around them. They truly meet the definition of DELUSIONAL."
What part of America is a nation full of born-and-bred dopes led by propagandists don't people get?
Many of the propagandists ARE born-and-bred dopesthey believe their own BS!
The FIX is in!
Jas
[Broward Horne writes:
I had my first awesome, religious-level sex last night]
I hope this has nothing to do with breaking media reports of the missing altar boy.
"for example, somehow making sure that kids grow up right and don't turn into 1) dopers, 2) convicts, or 3) goofy-ass bastards who go dirt-bike riding without a helmet and turn into parapalegic wards of the state for the rest of their lives."
don't forget
"Do the majority of people here assume that the middle class has to work for somebody else?"
I, for one, certainly do not. Vertical integration for financial, rather than production, motives, is one of the things that got us here.
But one of the offshoots of capital intensity is that, well, it takes capital.
wmbz(Unrated) writes:
I'm constantly amazed how the libertarian conservative nuts will stand by their ideology, even in the midst of the wreckage piled up around them. They truly meet the definition of DELUSIONAL.
The issue is about institutional compromise, not institutional thesis.
The treasonous Bushites are wrong. People on the Progressive wing of the Democratic party and points further left are also wrong.
At the most basic level, it is merely a matter of administrative competency, the rulers and the organs of the state cannot compose effective policy. That is independent of their political alignment and speaks of the milieu.
At the larger level, the problem is that you cannot grapple with the fact that the capitalist endeavor was a success and is now over. The ideologies of our era are worn out and irrelevant and the successor ideals are yet-unborn.
The best thing I see out there now are the neotribals and young anarchists, primarily because they aren't conspiring to fill the world with more capital goods we don't need.
That's kinda sad, they're pretty lame worldviews.
box of Annie's Sour Cream and Onion Cheddar Bunny crackers containing an envelope stuffed with $10,000
Now this is what I call a stimulus plan. Dump a few grand in various packaged goods. Stores would be busy and $$ would flow to consumers, cutting out the crooks/bankers
wmbz writes:
Jas, I too am amazed at the volume level of the shrinking minority of apologists for the anti-tax, corporatist, supply side agenda.
wmbz | 12.27.08 - 1:39 pm | #
Talk about agendas. Sheesh dude, the war is over, get the plate out of your head. We all lost, don't you get it?
Your inability to see past your anger is what will define your future. Drink more, pop a Xanax, smoke dope.
The more ideologically driven should just get it over with and start a civil war. Wise folks will let you slug it out and collect your boots and belts.
Do ANY of you think substantive change is possible? Universal health care? Tax cuts?? You are smoking some good s*&t, puff, puff, give, stare at the wall and wait for the next good war. Just give it up already.
But whether it is manufacturing, or health care, or farming, the capital-labor ratio has been changed...An essential component of the middle class mind set that you refer to above is pride in work and a feeling of contribution.
Well, many services are good for that, because most of the capital is between the ears of the service provider and quality is a top issue. Healthcare, exercise instruction, food prep, decorating - these are all excellent middle-class jobs on these criteria. Some services, especially around fashion, are not good because there's a "feast or famine" effect - there's one Madonna and a bazillion Vegas showgirls and no obvious way to share out the income (leaving aside equity issues about whether fashion flops deserve a cut of fashion successes).
Hmmm. Perhaps I could fashion that into an argument for copyleft - discouraging work that favors highly inequitable income distributions.
"Senorito On-Topico writes:
wmbz writes:
Do ANY of you think substantive change is possible? Universal health care? Tax cuts??"
Taxes need to be RAISED substantially. And yes, universal health care is going to happen along with tax increases(as they should).
--
Dopes protest too much!
Some 80% of my dope comments are in reply/reaction to protests by dopes. Then the dopes protest comments that they themselves give rise to.
The dope problem is the most serious problem in America and how is putting down Indians, or other countries and groups, going to help? Dopes are in denial of their own problems.
Jas
We've still got plenty dopes apologizing for the Corporatist Crime Syndicate. It's sad.
Fair Economist writes: And once upon a time the middle class was built on the yeoman farmer.
I am stuck on history today, because it seems that people really don't know it.
The first Middle Class rose in the ancient Roman Republic, which grew from the Great Strike on Rome. The two-class system of Roman politics was corrupted by the party of business, the Optimates (or "Best Men"). The Middle Class was wiped out by Roman merchants and reduced to "the masses."
The Middle Class never revived in ancient Rome; in fact the common standard of living fell and did not recover until the 18th century. The Middle Class was extinct during the Dark Ages, and it was not until the Renaissance and the rediscovery of classical liberalism during the Enlightenment that the ideas and reality of a Middle Class were restored.
So no, the middle class was never built on the yeoman farmer. Conservatism wishes a return to a mythical past; in reality, conservatism represents a two-class system: very rich and very poor. That is what Conservatives signed up to bring to America.
People should examine history before embarking on wild political movements that demonize others. Really, they should.
Do the majority of people here assume that the middle class has to work for somebody else? Just curious...
IMO self-employed bourgeois is the best basis for a middle class. However, I'm with AustinTex that increased capital requirements (and also specialization) makes it harder to be truly independent.
Bob Dobbs - yes, teaching (in a broad sense) is a double-plus-good middle class profession. How could I omit it?
Jas...Fifth generation American dope gets it..Got it the first time you said it, matter of fact already knew it.
Now there is Broward Horne i'm concerned about right now, trying to figure him out.
wmbz, Well, I hope for all of our sakes, that the CHOSEN ONE delivers on all the change he promised. I have little faith. When a politician raises and spends a record amount all that means is he has a record amount of debt to repay. Somehow change is the last thing that comes to mind...
Spending Doubled as Obama Led Billion-Dollar Campaign (Update1) - Bloomberg.com
wbmz,
the point myself, Byz and Jas are making is that NOTHING other than poverty and a continued decline in the American standard of living is possible. IT'S ALL GONE. You are too late, your conservative counterparts are too late. Stop fooling yourself that FDR and LBJ will magically reappear. Your condition is called "cognitive dissonance", Google it.
What do you do next. Ask that question and answer it, instead of focusing on pipe dreams.
Both John Birch and Che Guevarra are dead. The ideals of the last 50-80 years are moot, and 6 months from now you can be angry still, or you can adjust. Adjust already.
IMO self-employed bourgeois is the best basis for a middle class.
Fair Economist | Homepage | 12.27.08 - 2:15 pm | #
Been there - done that (or doing that now & have done it for almost 25 years). Not all it is cracked up to be.
BTW - not singling you out but most of the folks who suggest this is a good gig have not done it or not done it for long. Just sayin'.
Senorito - but but, we were told we could use the credit card to pay the mortgage! It's worked so far, so why not do it nationally?? For ever?
C
JR wrote: conservatism represents a two-class system: very rich and very poor.
actually, human history resembles the above statement. The last 80 years, like the Roman era, have been the exception, not the rule.
Embrace your inner animal.
At least Ford is correctly parsing the deal as a TRAP.
Rob Dawg | Homepage | 12.27.08 - 12:01 pm | #
Remember who Henry Ford used to hang out with--Firestone, Edison, a few others. With a Ford at the helm, I would have been surprised to see one of the last family (for all intents and purpose) enterprise go the way of GM and Chrysler. I should think that there will be one company and one GSE for US automakers.
The first Middle Class rose in the ancient Roman Republic, which grew from the Great Strike on Rome. The two-class system of Roman politics was corrupted by the party of business, the Optimates (or "Best Men"). The Middle Class was wiped out by Roman merchants and reduced to "the masses."
The middle class in Rome was absolutely the yeoman farmer; more specifically the yeoman farmer-warrior, just as with all the "democratic" Indo-European communities, including the Greeks and the (largely forgotten) contemporary Indian city-states. The Romans idolized such people - see Cicero or the Cincinnatus story.
Shopkeeping and craftwork, to a modern the essence of middle-class, were frowned upon pretty much universally until the Industrial Revolution.
BTW - not singling you out but most of the folks who suggest this is a good gig have not done it or not done it for long. Just sayin'.
dryfly | 12.27.08 - 2:20 pm | #
Could be the only tenable reality for many, being in business for oneself that is. I've done it, I'm doing it now. We'll see.
Fair Economist(Unrated) writes:
Hmmm. Perhaps I could fashion that into an argument for copyleft - discouraging work that favors highly inequitable income distributions.
Ever heard the word "Ójafnarðarmaðr"?
It's part of the conceptual library of the Icelandic Free State, it's a person (usually an ambitious goði) who seeks to accumulate too much power in the name of ego or avarice and destabilized the Free State's social dynamic.
" the orixa of crossroads and communication networks."
aka mercury. chango has a slightly more original identity, reinforced by being in drag.
Been there - done that (or doing that now & have done it for almost 25 years). Not all it is cracked up to be.
Best in the sense that a lot of people like you would make for a very healthy society. Not in the sense that it's easy or even workable.
"...discouraging work that favors highly inequitable income distributions."
So much of the consumption of the last 15 years was driven by wealth illusions, or, at least, the popular mindset of what wealth should look like.
And that, I think, is changing. As it does, the employment to which you refer will shrivel.
Now, I have to hitch up the mule and drive a wagon load of folks to the airport in the ongoing drive to return to normality, such as that is.
"The middle class in Rome was absolutely the yeoman farmer"
hard to say if such a person ever really existed in the original or in the jeffersonian versio
--
"NOTHING other than poverty and a continued decline in the American standard of living is possible."
Howard Davidowitch, the best retail analyst, has been shouting that for about a year (he really does shout). I forecasted that this was going to happen, for sure, ten years ago and now WE ARE THERE.
That is what the Greater Depression is all aboutfalling American living standards for decades, if not forever.
Jas
Recent HopeNow results anaysis...
http://www.hastingsgroup.com/Whiteupdate.pdf
"[o]nly 35% of modifications in the November 2008 report reduced monthly payments below the initial payment, while 20% left the payment the same and 45% increased the monthly payment."
No wonder the redefault rate is so great.
It is truly entertaining to see the opponents of conservatism and libertarian principles attempt to redefine the tenents of their respective positions in the most negative and distorted ways possible.
Ever heard the word "Ójafnarðarmaðr"?
It's part of the conceptual library of the Icelandic Free State
No, I haven't. Thanks.
"ten years ago"
i'd be bitter too if i'd been holding shorts throughout '99 and '03-'07
I get the feeling jobs are an entitlement for many. Simple rule in my world is if you are as good as you think, jobs find you or you can control your destiny by starting your own business. Chronic unemployment is for the unemployable.
"I forecasted that this was going to happen, for sure, ten years ago and now WE ARE THERE."
Did you forecast that it would occur now, or were you terribly wrong about the timing? (like the boy who cried wolf).
Bearly is right in contradicting this: [You could build it on health workers too]
We need to balance trade. How exactly can we export a yoga class ?
However it is done, the US needs to start exporting in some balance with imports. Part of the rebalancing will come from lower consumption, which was doomed to happen from demographics anyway. But part will come from constrained consumption. I remember the 70s. People were tight. There's a whole group of people just a few years younger than I am that never experienced that before, and it will come as a massive shock.
You can't expand government services to make up for it either. The productive part of the economy, which is almost solely private, has to pay for that overhead as well as making enough profit to continue investing in productive capacity. The jig is up; the day of reckoning is almost upon us. That is one major difference between this recession and the more recent ones - this time, government will be forced to retract as well.
If we do succeed in massively inflating to destroy debt, the end result is that we will be less able to pay for imports and will end in making more of the stuff he
Best in the sense that a lot of people like you would make for a very healthy society. Not in the sense that it's easy or even workable.
Fair Economist | Homepage | 12.27.08 - 2:27 pm | #
Got it - misunderstood your drift.
BTW - I morph into the crazy dryfly whenever Libertarians go all Ayn Rand Galt Gulch on me. The vast majority of them usually turn out to be employee cogs at some large corporation or university and know nothing about 'producing'... most turnout to be little more than 'eaters' with a big imagination. So I apologize for my over-reaction.
bgates(Unrated) writes:
aka mercury.
Or Lord Ganesha, Prince with the Elegantly Bending Trunk!
Pretty resilient concept! Way to work yourself up from a minor spirit of misfortune -- from the Five Rivers to the Mississippi delta!
Knowing gods have many names doesn't make you bigger than a concept several thousand years old.
" The vast majority of them"
the fact that they aren't in the 2% of the workforce that isn't in the service economy and doesn't work for a larger organization definitely negates all of their thoughts
OT but recommended reading is
SSRN-Just How Capitalist is China? by Yasheng Huang
It is essentially the first chapter of
Yasheng Huang's new book on the true nature of the Chinese economy.
He suggests that in the major metropolitan areas the appropriate economic model is not US Capitalism but more like South America. Where an collaboration of politics and the uberrich has left little to "trickle down" to the poor.
Hmmm
The price of Democracy is eternal vigilance
the fact that they aren't in the 2% of the workforce that isn't in the service economy and doesn't work for a larger organization definitely negates all of their thoughts
bgates | 12.27.08 - 2:38 pm | #
Walk in the shoes dude before you tell the rest of us they fit great.
We need to balance trade. How exactly can we export a yoga class ?
We do indeed need exports to balance our imports, and services are generally poor exports. However, the export production need not take up a large proportion of employment. We could probably balance our trade pretty well with food exports if we were more thrifty with oil.
Fair Economist(Unrated) writes:
No, I haven't. Thanks.
Amazon.com: Medieval Iceland: Society, Sagas, and Power (9780520069541): Jesse L. Byock: Books
I seem to recall the one above is very good.
Amazon.com: Feud in the Icelandic Saga (9780520082595): Jesse L. Byock: Books
That one there's pretty good too.
IMO, sseful stuff to learn from the Icelandic Free State --
Restraint as a social virtue.
Why did it happen?
How they worked their legislative and fiat monetary system.
Places of the goði and small freeholding farmers. Really looking at the freeholders seems to be a rewarding possibility.
If we do succeed in massively inflating to destroy debt, the end result is that we will be less able to pay for imports and will end in making more of the stuff he[re]
That particular end result is of course inevitable regardless of the course we take. The issue of intercountry balance of basic production (which is that it needs to be fairly even) is separate from the issue of how many people need to be involved in basic production (only moderate at present, and dropping).
However, the export production need not take up a large proportion of employment.
Fair Economist | Homepage | 12.27.08 - 2:41 pm | #
In fact I can take that one step further - export production BETTER not take up a lot of domestic employment or those workers are going to be as poor as those that export to us. It has to employ a lot more capital - if we run huge CADs that means a lot of the capital is owned by somebody else [and we are still poor]. If we want to have well paid Yoga Instructors we need to invest capital in stuff that produces exports - miniMcMansions don't do that. We're seeing that now.
MoM - [You can't expand government services to make up for it either]
I'm not so sure. We may have the hole card. It might come to a government-sponsored enterprise, of a slightly different shade.
While the pacifists among us cling to green energy (noble, yet semi-defeatist cause) as the savior, we don't have a lot of time on our side. Won't be long before ferners no longer voluntarily support our consumption with their excess capital.
In a less stable political world there's likely to be quite a brisk business in protection and military-industrial enterprise.
That's what I am betting on...
We have one very significant export that people rarely consider or comprehend: Reserve Currency.
World demand for a reserve currency expands with the world trade volume. The dollar is the main reserve currency, and the volume of non-returned dollars grows with the trade volume.
We can run trade deficits with no penalty as long as this relationship continues. However, if the dollar status reverses we will be in a world of hurt as those dollars come flooding back.
"If we want to have well paid Yoga Instructors we need to invest capital in stuff that produces exports"
Perhaps Yoga instructors could expand their services to increase their incomes.
The dope problem is the most serious problem in India and how is putting down Americans, or other countries and groups, going to help?
I agree completely.
Roman quotes seem on topic atm:
A Roman divorced from his wife, being highly blamed by his friends, who demanded, ''Was she not chaste? Was she not fair? Was she not fruitful?'' holding out his shoe, asked them whether it was not new and well made. ''Yet,'' added he, ''none of you can tell where it pinches me.
-Plutarch
And more on topic:
But then the Roman Empire fell like this- "oh shit". And we went into
what the historians called the Stupid Fucker period. Where everyone
was going -"er, I dunno. Is that a Roman road? Can we eat it?" Then
there was the dark Ages. " I can't even see you! Where are you?"
-Eddie Izzard
New York isn't the only one-
Talked to a friend in Austin about the economy over the holiday, who helps with permitting for the city.
He says-
Almost all permits are being allowed to lapse. If progress is not shown then, the permits must be reapplied for, which can be a significant effort in time delay and paperwork.
The lapses include not only new homes and owner upgrades, but also some very large commercial projects. Some will be left with bare steel, others which have been cleared will not be built, and many may be left with partial completion.
Apparently, there could be significant legal/tax issues with a few of these. Some companies have received tax breaks dependent on project completion. Obviously, they don't intend to do so in a timely manner. There were also apparently city ordinances passed which create punitive tax situations for companies that do not finish large structures in the city limits. This was due to the infamous Intel building which sat in the middle of down town jagged and with half built steel for years, until it was bought by the state.
Santa Clara may wish they had done something similar.
"military-industrial enterprise."
The mercenary next door...
--
"Did you forecast that it would occur now, or were you terribly wrong about the timing? (like the boy who cried wolf)."
Curious,
No, I did not know the starting point in time but I thought that it wasn't too far away. We are talking about a cycle that is 300-500 years long (I termed them the Longer Wave cycles) for the Modern Western Civilization and few years is the best precision one can have in forecasting the turning points of these cycle.
Anyway, I get attacked about my forecasts all the time because I forecast them way ahead of time unlike most economists who play the game of chicken. To a dope forecasting something way ahead of time is a bad forecast.
Jas
Zephyr(Unrated) writes:
We have one very significant export that people rarely consider or comprehend: Reserve Currency.
I think most of the people in this conversation are trying to think in a post-Treasury Panic context at one level or another.
Zephyr writes:
We have one very significant export that people rarely consider or comprehend: Reserve Currency.
So far. The PTB are at work as we speak creating the 'next thing' after this all comes screeching down. Yes, screeching--mechanical, human, animal, nature we'll most likely go to our doom screaming.
"Walk in the shoes dude"
are you kidding? save it for the amish.
Ok, If someone disagrees with you they are a dope. I get it.
Jas Jain: I one day hope to be as smart as you.
" To a dope"
or to someone with actual skin in the game, god forbid
We can run trade deficits with no penalty as long as this relationship continues. However, if the dollar status reverses we will be in a world of hurt as those dollars come flooding back.
Zephyr | 12.27.08 - 2:49 pm | #
I fear that horror movie is coming to a theater near you SOON.
Seriously - the world doesn't need a reserve currency per se - Fx market arbitrage to a floating basket of currencies & PMs could make it as redundant as horse and buggy in an eye blink. The only thing that has kept the USD as reserve currency is the need on th epart of exporters to manipulate exchange rates to protect access to US consumer. When that ends the need for USD reserves also ends. So when does that happen?
On a personal note, I'm surprised at the number of perverts that wanted to see me in leather but I'll try to satisfy that demand better with a new suppy of kinkier pictures after NYE.
Broward Horne | Homepage | 12.27.08 - 12:50 pm | #
Your are going to a New Year's Eve party in the Castro?
Of course, Volker will scream heroically with his ax raised and ready to strike, metaphorically.
On a personal note, I'm surprised at the number of perverts that wanted to see me in leather but I'll try to satisfy that demand better with a new suppy of kinkier pictures after NYE.
Broward Horne | Homepage | 12.27.08 - 12:50 pm | #
Do you have one in that little maid's outfit?
bgates(Unrated) writes:
or to someone with actual skin in the game, god forbid
bgates v. Jas Jain!
Thrill as mental daikaiju battle it out in the intellectual neotokyo that is Calculated Risk.
And the board goes Burning Chrome!
I likum.
C
dryfly(Excellent) writes:
I fear that horror movie is coming to a theater near you SOON.
So I'm curious, man, what convinced you?
" battle it out "
sadly, i agree with the gist of jas' perspective, notwithstanding the recycled elliot-wave/kondratieff/armstrong shtick
Thrill as mental daikaiju battle it out in the intellectual neotokyo that is Calculated Risk.
Comrade Byzantine_Ruins | Homepage | 12.27.08 - 2:57 pm | #
LOL. Does it come in wii?
Dryfly, It depends on what you mean by need. The world does need (benefit from) a reserve currency. It does not have to be the dollar. Large volumes of trade are conducted between countries using an unrelated reserve currency.
"I fear that horror movie is coming to a theater near you SOON."
Going to Marley & Me now. Dogs make the world a better place.
--
Example...
In 1998 I forecasted that the current longwave that began in 1950 would end in Deflationary Depression. I just heard that some Wall Street firm is forecasting -0.3% YoY CPI rate for 2009 when deflation it is already here.
All the dopes were forecasting hyperinflation and very high inflation for 2009-10 period because of Helicopter Ben "Printing Money." These dopes don't understand home the monetary policy and the economy actually work.
Jas
No matter how you look at it overcapacity in a global economy is a real bitch. Deflation and debt destruction are the cure but governments will do anything before allowing that to happen so how is the overcapacity going to be remedied? People only buy into the idea of debt when they are optimistic about the future. The past 3 months have done a lot of long term damage to "optimism". It's not just going to remarkably come back once the illusion has been shown to be unreal.
dryfly...Could that be the elephant that's parked trying to figure out how to walk backwards. (kinda boxed in.)
dryfly(Excellent) writes:
LOL. Does it come in wii?
The Calculated Risk fighting game would be awesome beyond words.
It would have to be like Smash Bros though, with people constantly falling off the screen and dying, etc.
Deflation and debt destruction are the cure
Debt destruction is the cure. Deflation is an anti-cure; it amplifies debt.
"All the dopes "
right, jas, you're above the whole timing thing, and were far too noble and farsighted to stoop to participate in the commodity bull of 2002-2006.
likewise with the next one, i assume.
Anyway, I get attacked about my forecasts all the time because I forecast them way ahead of time unlike most economists who play the game of chicken. - Jas
I can absolutely guarantee the implosion of US long bonds. Total carnage, less than 50¢ on the dollar, illiquid type scenario. As much as that prediction is a stone cold sure thing you could go broke mistiming it. See? No time/date stamp = no value whatsoever.
2007 current account balances:
Overall -5.30%
Goods -5.93%
Services 0.86%
Income 0.59%
Unilateral Transfers -0.82% (remittances, donations, and foreign assistance)
Jas, I think you are smart guy - but you sure are quick to start name calling when someone has a different view.
It remains to be seen if it will be the "dopes" you refer to who will be wrong.
"It would have to be like Smash Bros though"
such a thing exists. vegas and multiplayer computer games are a pale, pale shadow of the fun and games on the nyse.
--
"Debt destruction is the cure."
Fair Economist,
True.
"Deflation is an anti-cure; it amplifies debt."
No, sir, DEFLATION IS THE NATURAL OUTCOME. "Printing Money" dopes don't understand Debt.
It is the debt, Stupid!
Jas
At one point 90%+ of the population grew food. We're down to about 2% of the population actually growing food. But that's plenty.
Fair Economist | Homepage | 12.27.08 - 1:04 pm | #
That was accomplished by substituting mechanical energy (hydrocarbons) for human and animal energy (plowman & draft animals) combined with cheap transportation to move ag products to market. If that long distance supply chain breaks down, we could require more local ag workers.
The saying that "Dictators make the trains run on time" comes from Mussolini's Italy.
Democratic President John F. Kennedy's famous saying, "Ask not what your country can do for you, ask what you can do for your country" comes from Mussolini (translated from the Italian).
So I'm curious, man, what convinced you?
Comrade Byzantine_Ruins | Homepage | 12.27.08 - 2:59 pm | #
I have been expecting the fall of the dollar as reserve currency for YEARS. Even when talking w/ Chines business contacts I keep asking them 'why give it away - is you labor and time on this earth that worthless'? I can tell you - they were NOT happy with the situation regardless of party policy.
I think the cost is now so high to maintain the peg and the US consumer so tapped out that only FREE get's the consumers attention - that it has to happen soon. I am waiting to hear how deep the discounting really was the last couple days - anecdotal evidence posted on sites like this aside. I am guessing very deep - almost FREE. I don't think they can push the RMB that low to maintain the volume at those prices. We are moving into phase two - something akin to Plaza whether they like it or not.
Make sense?
dryfly...Could that be the elephant that's parked trying to figure out how to walk backwards. (kinda boxed in.)
Statusquo | 12.27.08 - 3:01 pm | #
Ya - I think so. And they aren't going to walk that beast backward to 2003 even if house prices blow back to before 2000.
"Ask not what your country can do for you, ask what you can do for your country"
The earliest use of this line was Cicero, a Roman statesman.
That was accomplished by substituting mechanical energy (hydrocarbons) for human and animal energy (plowman & draft animals) combined with cheap transportation to move ag products to market. If that long distance supply chain breaks down, we could require more local ag workers.
NorkaWest
Thank you Mr. Kunstler. how's that long emergency looking with $35 oil and global cooling? We only do energy intensive agriculture because it is cheap and efficient. If it stops being either cheap or efficient we'll do something else not devolve to subsistence farming.
Dryfly, The chinese have been subsidizing their exports directly and through exchange rate contol/manipulation for a long time. Full employment is a mission critical goal for the Chinese leadership.
We are moving into phase two - something akin to Plaza whether they like it or not.
It would be nice if this phase was managed instead of getting all disorderly and whatnot. But I'm not sure if the Chinese government/power structure as a whole "gets" that the imbalances must come to an end. The Japanese, OTOH, understand it quite well.
Fair Economist writes:
Debt destruction is the cure. Deflation is an anti-cure; it amplifies debt.
Fair Economist | Homepage | 12.27.08 - 3:03 pm
Good point about deflation being the anti-cure since it increases real debt. I think it's coming anyway though as a way to hasten a reduction in global overcapacity. Demand is going to sink and deflation (whether cause or effect or both) is going to be either a significant driver or the result.
Thank you Mr. Kunstler. how's that long emergency looking with $35 oil and global cooling? We only do energy intensive agriculture because it is cheap and efficient. If it stops being either cheap or efficient we'll do something else not devolve to subsistence farming.
Rob Dawg | Homepage | 12.27.08 - 3:11 pm | #
I'd like to be so confidant.
confident
--
Calling proven dopes, e.g., those forecasting hyperinflation for the past many years, dopes is no sin.
Jas
"since it increases real debt."
perhaps those following Jas' 300-500 epochal visions miss that our nation went through this 120 years ago. the only difference is that then we leveraged into overpriced midwestern farm land as opposed to overpriced coastal McMansions. thankfully, our money is purely imaginary in this go-round, making the adjustment much easier.
"I have been expecting the fall of the dollar as reserve currency for YEARS."
I have held a similar view. I have long expected the dollar to slowly lose market share as a reserve currency. That is why I thought the Euro would appreciate after its initial decline to about 80 cents. I expected the Euro to gain market share as a reserve currency. I would expect some other erosion of dollar market share as well. But I think it is a gradual process that will have ebbs and flows.
Dryfly, The chinese have been subsidizing their exports directly and through exchange rate contol/manipulation for a long time. Full employment is a mission critical goal for the Chinese leadership.
Zephyr | Homepage | 12.27.08 - 3:13 pm | #
I know that - but the cost to manipulate gets ever higher. How much more MBS do they want to buy? Or our treasuries?
I agree they are going to try to do it - they said they would devalue RMB by something like 30% in 2009 - but it is going to be massively expensive and is that going to be enough to keep their export growth to the US high enough to achieve that 'mission critical' you mentioned? When does reality jump up and stop them and they move on to 'Plan B' - whatever that turns out to be?
I think we are closer to that than we know. That some of Hank's trips to China this last Fall was to stall - buy time.
I really think we are at a 'Plaza Accord' like watershed without any of the 'accord'.
JMHO.
making the adjustment much easier.
bgates | 12.27.08 - 3:18 pm | #
Less certain, not easier.
What kind of drugs do those who still stand by the failed model called Reaganomics do?
But I think it is a gradual process that will have ebbs and flows.
Zephyr | Homepage | 12.27.08 - 3:18 pm | #
I sort of agree. I agree that it will be gradual until it isn't. How close are we to the latter? No idea else I'd be gaming it in the forex - but I believe we are much closer than we or the market realizes. Again - this advice is worth exactly what people pay for it. Diddly squat.
"Ya - I think so. And they aren't going to walk that beast backward to 2003 even if house prices blow back to before 2000."
dryfly | 12.27.08 - 3:09 pm | #
Just for you...
3 /1988 IMPROVED $93,000
8 /1997 IMPROVED $125,000
11/1999 IMPROVED $100
7 /2000 IMPROVED $120,000
7 /2006 IMPROVED $432,000
Current ask on the MLS...220k.
It gets better. This house just closed last month. It is less than 1/4 of a mile from the other on twice the property...And twice as big.
2 /2005 IMPROVED $250,000
5 /2006 IMPROVED $350,000
7 /2008 IMPROVED $100
11/2008 IMPROVED $80,000
Can we go back to the early 90's ???
Chris
I am having a difficult time understanding what the Fed is trying to accomplish.
They are simultaneously trying to create inflation and by threats driving down treasury yields. These actions are counteracting forces.
It's like an earthquake fault line building up forces until all at once the ground explodes.
What happens? Deflationary depression or massive inflation and USD destruction... or both?
If it stops being either cheap or efficient we'll do something else not devolve to subsistence farming. - Rob Dawg
I'd like to be so confidant/confident - Comrade Volker the Viking
Attend the second semester of one of my reeducation camps where we deprogram Kunstlerites and New Urbanists.
"Calling proven dopes, e.g., those forecasting hyperinflation for the past many years, dopes is no sin."
True. But lumping everyone who disagrees with you into the dope category is unfair and incorrect. There are many very smart people who do not hold your views. Perhaps you could allow for that possibility in your tone.
Is it just me, or is the commentary here even funnier after everyone spends some quality time with relatives?
The path of least resistance is to devalue our way out of trouble. Seems about as obvious as the credit bubble or the .com bubble. It's ugly, but there is NO other way.
Dryfly The only thing that has kept the USD as reserve currency is the need on the part of exporters to manipulate exchange rates to protect access to US consumer.
Amen to that. And that's what needs to end, so I think we'd better get past that part of our thinking. I have been reading Chinese and Indian economic and business journals for several years, and they are not thrilled with the returns they are getting for making our shoes!
Fair Economist, no, we don't need to have a huge amount of employment tied up directly in exports, so long as we do have the exports. As for oil being the primary imbalance, yes, but food production does use a lot of energy and petroleum-based chemicals, so you can't separate the two. Since 2005, we have been running trade deficits of over 700 billion, and 2008 won't be any different. I invite everyone to take a look at the progression from 1994 (pdf). Going from 100 billion to 700 billion plus deficits in 12 years explains a lot about our economic situation.
Can we go back to the early 90's ???
Cobradriver | 12.27.08 - 3:21 pm | #
If so do the Chinese have to go back to wearing Mao Suits? I guess everything old is new again someday.