so the final program will be $150bn of tax cuts and $50bn of job training beginning next year and lasting until 2015?
no this is an election year
call it max $400bn, subtract to some nice cute round number like $384bn, and spend it over Q2 and Q3
I would listen to an economist who said, "history is full of examples of good economies. Here is what you need: sound currency; honest weights and measures; markets that are generally free but regulated to prevent fraud, collusion, and coercion; liquidation of bad debt; and peace. Let's change any of our policies that differ from those, and watch things grow again."
Fuck you, Krugman. Right on cue: the stimulus isnt working because it isn't big enough. It will never be big enough. The New Deal wasn't big enough; as soon as it was scaled back, down went the economy. You can't make people consume, invest and produce when it isn't in their interest to do so.
So we want to offer a job stimulus at the same time we are adopting programs and implementing policies that cause small businesses to reduce headcount and when access to credit is still being cut.
"history is full of examples of good economies. Here is what you need: sound currency; honest weights and measures; markets that are generally free but regulated to prevent fraud, collusion, and coercion; liquidation of bad debt; and peace.
Name one that had less regulated markets than ours, and less public subsidy of production/education.
LL, I'd like at least 1250 sq ft. Preferably 2+2+garage. Townhome is better than condo style... Oh wait, in FL I might be able to get a SFR!
I used to go long-distance swimming regularly in the Pacific, off Corona del Mar (near CR's place). My swimming buddy there went to FL once, and saw a very big fish out of the corner of his eye, and would never swim there again. Any safe swim beaches in FL?
Krugman has an amazing ability to be both right and wrong simultaneously. He appreciates the idea that this is a non-recovery for most Americans. But welfare is not an economy.
don't be so rough on the K-man
no one here is going to pay for any of the increased debt
and the stimulus was much too small, and far too dispersed to achieve the desired effect of stasis until the pegs are broken
stop thinking about America, you need to treat this like a video game to make the right decisions
there is no one economic recipe, because you always have to be moving in one direction or the other and whatever direction you choose to head in is dependent on where you are and where you were last heading. you can't tell me where to turn the hot and cold taps for a bathtub without knowing how much water is already in there, at what temperature, what the flow rate is out of the tap, and what the temperature at the tap is. and possibly if the drain is closed, or if the tub is already or near overflowing.
K-man has been pretty reasonable during this crisis, although I was the first to criticize him for using circular logic in projecting massive auto sales rebounds
Sooner or later we have to figure out that we are a failed empire up to its ears in debt, and the smart thing to do is use some of our holdings to pay off the debts--before they just get taken away from us.
I'm thinking Hawaii to the Japanese, Alaska or Taiwan to the Chinese. The Arabs might consider their debts satisfied if we stop sending aid to Israel.
But even such radical measures won't help much if we don't fix the problems that caused this mess.
When do we stop listening to his ilk? At this point he wants to cover up his past failures and get a roast beef to go.
K-man is not the problem. Look at what his colleagues Mankiw or Blinder say
You're just dog-piling him for advocating spending $1 more
$s are irrelevant now, it's about distributing massive existing losses (in my opinion, riffing on Richard Koo)
Most people don't like my jobs and healthcare plan.
Have people behave in ways that make them healthier. Lower cost of healthcare, lower cost of employees. Lots of other good stuff. We could start by removing subsidies to the sugar industry. We could encourage different rates from health insurers based on whether people smoke. We could impose an actual information system for medical care, rather than the 1980s collection of stuff we have now. Fewer bad drug interactions, better informed physicians.
I think Stiglitz has been the best of the main stream economists so far.
Honestly, the economics profession has shown itself up thrice over in this little recession. Once for failing to see the problems building up, twice for failing to see the seriousness of the initial cracks, and thrice for advocating cleaning up afterward by pouring money into the things that went wrong and need to shrink, instead of into the things that were ignored before and now need to grow.
Because the free market will create jobs for all. Unless there happens to be some oligarchy which would want a reserve army of the unemployed to keep wages down and profits up, in relative terms.
But that's Commie talk.
Welfare is for bankers, not the unemployed. The American Way.
I think Stiglitz has been the best of the main stream economists so far.
I like Sitglitz too.
Other leaders are currently Rogoff, Reinhardt, Eichengreen, Keen, White, El-Erian
and lots of good work preserved in text by people who last faced similar circumstances Galbraith, Fisher, Minsky
I don't know how Krugman shows up in the media, but it is my sense from these comments that he is just serving as a proxy for the $787bn stimpack which didn't reflect what he advocated for
I wonder though, if totally reckless fiscal policy with serial stimpacks, 1 bigger than the next, would have the effect of kneecapping the dollar and thereby forcing China to de-peg. Might be Krugman's sly economic warfare play.
Have people behave in ways that make them healthier.
Just postpones the problem. Think about how much we want to spend on an average person's health care over their entire lifetime. Everyone will go through that last 6 month's of life. How much do we want to spend on that? Express that as a % of how much the average person earns over their lifetime. Only then do we have a framework for rational discussion.
It is if it is used to minimize the pain of restructuring to a sustainable economy. All these people have a vested interest in perpetuating the past - they all benefited handsomely from it.
"The first-best answer — that is, the answer that economic models, like my old Japan’s trap analysis, suggest would be optimal — would be to credibly commit to higher inflation, so as to reduce real interest rates. "
What do you want to bet none of his list of desirable jobs looks anything like my list? [did anyone save my list?]
Krugman says himself "So it’s time to try something different." We tried massive deficit spending, higher taxes and artificially low interest rates. His idea of something different is more. "Hypocrite" is too kind an appellation. CYA with OPM.
Bullshit. No one Krugman advises will but every wage slave surely will. Where do you come up with this statement?
You are wrong. You may lose some apparent wealth in savings that are only denominated in USD, or house prices -- but that wealth was always virtual and never there, it's only a matter of recognizing that at this point.
There is no way the US can maintain its debt-load. There is no other larger economy whose growth can be piggy backed off of like Japan did in maintaining its GDP.
The time to be outraged for excessive spending was back in the 1960s, and each iteration has required always increasing amounts to have the same impact. You're too late, well past the event horizon
Express that as a % of how much the average person earns over their lifetime. Only then do we have a framework for rational discussion.
What we need to do is give every Medicaire recipient a life time cap on Medicaire benefits and allow them to will any left over to their heirs. My guess if individuals could see the benefit of their decisions going to their children we will make better decisions. Will that mean that some parents will sacrifice their care so that their children are better off? Absolutely. But isn't that what a parent does through out their life?
When you say we won't pay for the debt, do you mean we will repudiate it, or inflate it away?
I'm saying it is impossible for it to be repaid. Effective default is a must. Could be repudiated, could be inflated away, but it cannot be repaid. All that is happening is choosing how it won't be repaid, and who the winners/losers will be.
edit: to answer your question, last October they set the course of what ends in hyperinflation. however because currency pegs persist, this will show up with very low inflation followed by a step-shift into high inflation. to repeat one of my old analogies, they are choosing which side of a tight rope to fall off of
EHP
"no one here is going to pay for any of the increased debt"
Bullshit. No one Krugman advises will but every wage slave surely will. Where do you come up with this statement?
Increased public debt is always paid via a combination of three options:
- Higher inflation
- Higher tax rates
- Bigger economy
Krugman's point that the third option (bigger economy) is obviously the best and hence one should incur additional debt to re-ignite the economic growth.
At times, when the recession is driven by a supply/demand shock, it does not really matter which jobs to create. These recessions end quickly and the government can withdraw its support gracefully.
The challenge for slower, balance sheet driven recession is to create sustainable jobs, which will not depend on the continued large-scale government support (e.g., most infrastructure jobs are not sustainable without the government support).
Paulie if people don't have jobs and they know prices are going to go up tomorrow they become more depressed and spend less on discretionary items. You know the things that people with jobs make.
What we need to do is give every Medicaire recipient a life time cap on Medicaire benefits and allow them to will any left over to their heirs. My guess if individuals could see the benefit of their decisions going to their children we will make better decisions. Will that mean that some parents will sacrifice their care so that their children are better off? Absolutely. But isn't that what a parent does through out their life?
Best single contribution to the mostly barren health care debate I have seen in a long while. Of course, that means there is zero chance of its being adopted in any form.
The question is what jobs can still be retained here in the US. Many high end engineering companies (pumps, aircraft assemblies, earth moving, constuction, high end tooling) that do most of the custom designed engineering work are moving to set up shop in China and India.
Our company is cutting costs here by laying off highly skilled (no move up skills) people in areas such as stress analysis, modeling, CFD. These jobs are now being done in off-shore facilities in India. IMO, the engineers in China and India are hingrier and do decent work if trained properly. There is no great mystery to CFD and Stress analysis if the proper training and context is provided. A lof of these companies are run by people that are soley focussed on the stock price. The only way to show profitability for these industries in these times is to cut costs - highl salaries in the US and start operations in India/ China. Examples of success are caterpillar, GE's R&D, John Deere, Flowserve, Bosch facilities in India.
I disagree we could repay our debt providing we don't create anymore and our economy grows fast enough to create revenues sufficient to pay the interest. I don't think in 1992 anybody imagined that the US could pay off its debt. But there we were in 2000 with the real prospect of doing so.
I said they were shot, not killed. But some were killed. Final nail in Hoover's re-election bid, although he denied giving MacArthur the go ahead. Patton regretted the episode.
Paulie if people don't have jobs and they know prices are going to go up tomorrow they become more depressed and spend less and save more.
I think most economists just don't understand human behavior. IMO people have a savings target in mind. They don't go through some econometric model to calculate the trade off between inflation and interest rates etc. Thus when they are earning less on their savings they save more because they have an absolute number in their heads. I think if one contrasts domestic consumption in China and India - consumption is higher in India than China because interest rates are higher in India.
States are facing a revenue cliff once the current stimulus is spent because unemployed people do not generate taxable income or buy taxable things. The cuts they are planning will have an impact on the indicators that suggest a recovery is underway. Another stimulus is coming. He might as well argue for it or something like it.
Will new govt. stimulus jobs be sustainable jobs in the productive economy?...How much will each 'job' cost the govt. and taxpayers?
This job stimulus maybe should have come before the unfunded obligations and deficit got so Big...maybe...
we already have huge jobs plans in the health, education, and defense sectors. and of course, all those sectors perform suboptimally in producing jobs. the issue isn't the magnitude of the spending, but how that spending is distributed. simply too much of the capital gets washed by the finance sector and then funneled to the existing holders of wealth.
I have a lot of cash. I am not investing it in productive enterprises in the US because I have no faith in the government or the dollar. So I invest in China. I assume there are many like me. Krugman, and his kind, don't understand that you can't force people to save, invest and produce. All the stimulus is doing is putting more dead-eyed clock watchers on the government payroll.
But the private sector and the real economy suffers greatly when the gov't tries to get its balance sheet in order by causing inflation.
Interests rates go up because those who loan the money don't want to lose principal
That is not always true.
It is true when the government and the private sector are competing for loans.
At present the aggregate private demand for loans is low (loans that are likely to be repaid, that is). There is no evidence for crowding out of debt at the moment. There is evidence that there is much more savings than the desire to invest. Hence the government is able to enjoy astonishingly low interest rate even on long maturities.
But the private sector and the real economy suffers greatly when the gov't tries to get its balance sheet in order by causing inflation.
Interests rates go up because those who loan the money don't want to lose principal
Some people (yeah, I'll pick on Krugman here) see money primarily as a tool to oil the machine of day-to-day economic transactions. Others see it primarily as a reliable store of value. Both purposes are critical. Ignoring the critical importance of both undermines the value and use of the currency, and that leads to serious real economic problems. Inflation is not a panacea, although it always looks like the easy way out.
I didn't disagree with what you said - I was merely adding to it. I think the low interest rate policy is actually depressing consumption rather than increasing it. There is very simple evidence for it. If 29.99% interest rates don't discourage people from carrying a balance it seems their consumption is not interest rate dependent. On the other hand savers who by definition are more prudent are more likely to cut consumption in the face of declining interest rates. This is not different than insurance sold for lost credit cards. Contrary to what one might think - it turned out to be a very profitable product for the insurance companies because the people who concerned about losing their credit cards and therefore bought insurance were also the people who were careful about not losing their credit cards.
Careful, Nuke, just like the British once invested in the Colonies. Then we had a tea party just for them. China made tea then, and does now. There is one big Party. But good luck as an absentee owner. Every few Centuries one gets lucky.
I have no faith in the dollar either, but I would gladly invest in US enterprise once the currency is made reliable.
Krugman could go a long way toward credibility by turning on his masters and pointing out that much of the $600b decanted annually to service our needs for financial expertise from bankers and brokers is in fact a drain on the economy.
That's the tough choice we have to make.
Inflate Assest prices to help the Boomers and their parents or get down to old fashioned capitalism with real competition and true winners for long term growth
Most people don't like my jobs and healthcare plan.
Have people behave in ways that make them healthier. Lower cost of healthcare, lower cost of employees. Lots of other good stuff. We could start by removing subsidies to the sugar industry. We could encourage different rates from health insurers based on whether people smoke. We could impose an actual information system for medical care, rather than the 1980s collection of stuff we have now. Fewer bad drug interactions, better informed physicians.
There are a lot of choices here.
I just heard on CH4 here in MA, where we already have mandated Universal Health Care, that costs had risen 5-8% in this past year. These dreams of savings in the system are :pipedreams:
Really!
29.99% interest rates don't matter, it's the availability of a larger credit line and low monthly payments to a vast number of consumers.
The primary reason the aggregate consumer revolving credit is declining is not reduction of lines and not increase in APRs by credit card companies but changes in the consumer behavior: more consumers have realized that they actually need to pay down their balances, which are quite expensive to carry!
29.99% interest rates don't matter, it's the availability of a larger credit line and low monthly payments to a vast number of consumers.
That is precisely my point - therefore low interest rates hurt demand by forcing savers and those living of their investments to cut back without increasing the propensity of borrowers to increase their spending. If the Fed really wanted to help they would make available 50 year funding that could be extended to consumers.
Savings in health care will mean rationing (lots of it), automation, and, most important, wage and job cuts. Since health care is the only sector (besides govt) that has reliably added jobs in the past 20 years, this is a political impossibility. 8% annual premium increases are here to stay.
They are our financial and political leaders, regulators, and monetary administrators, managers, etc. who determine economic and political polices and carry them out as planned and legislated regardless of what public opinion and/or voting has to say...something like that...
I'm saying it is impossible for it to be repaid. Effective default is a must. Could be repudiated, could be inflated away, but it cannot be repaid. All that is happening is choosing how it won't be repaid, and who the winners/losers will be.
edit: to answer your question, last October they set the course of what ends in hyperinflation. however because currency pegs persist, this will show up with very low inflation followed by a step-shift into high inflation. to repeat one of my old analogies, they are choosing which side of a tight rope to fall off of
Regrettably, you are correct. The best approach one can take at this point is to determine what is valuable to them, and invest there. If you choose assets that have value to you, you won't be as disappointed in the end when virtual assets like "money" are defaulted on.
I just heard on CH4 here in MA, where we already have mandated Universal Health Care, that costs had risen 5-8% in this past year. These dreams of savings in the system are :pipedreams:
Really!
Until we grasp two simple truths - we will keep chasing our tails. We spend so much on health care because we consume so much of it. New technology in health care drives up expenses rather than reducing it as in the rest of our economy. Given that it is a mathematical certainty that we will be spending ever increasing share of our income on health care.
"Our company is cutting costs here by laying off highly skilled (no move up skills) people in areas such as stress analysis, modeling, CFD. These jobs are now being done in off-shore facilities in India."
Is this happening in defense industries as well? That would be self-destructive, no?
it's like with college tuition increases. how much of the price inflation, supported by debt or government subsidies, went to upgrade actual teaching infrastructure,especially labor, as opposed to physical or administrative overhead?
Have people behave in ways that make them healthier. Lower cost of healthcare, lower cost of employees. Lots of other good stuff. We could start by removing subsidies to the sugar industry. We could encourage different rates from health insurers based on whether people smoke. We could impose an actual information system for medical care, rather than the 1980s collection of stuff we have now. Fewer bad drug interactions, better informed physicians.
There are a lot of choices here.
Tim - Have you read any of Krugman's research papers? I'm just curious how you made this statement.
The problem with economists is not they don't math. Most of them do, and some of that math (like stochastic calculus) is quite nice and original.
The problem arises when economists get carried away by the beauty and power of math and forget about the flimsy flip-flopping foundations, like assuming fully rational behavior and fully efficient markets.
I was an Economics major, but Statistics or "Econometrics" were not yet required. If they had been, I would have chosen a different major. The Panda meant that mathematics applied to Economics to predict human affairs is generally bullshit, but the Economics establishment won't admit that the minimum wage is a political decision, not a "scientific" one..
Hi. havent read all the comments yet but I am at work and I never know when I will have enough time so i will post my question about this and then read the comments.
He mentions job sharing. So is that like two people working making 70k each, and instead of one keeping thier job at 70k and one getting the boot for 0 they have one job between them, split the hours and the 70 k and both employed? That wont work unless they both get all their debts crammed down to where 35k will support their family going forward. If they dont get the old debt wiped out or crammed down then a job at 35k aint gonna cut it. Or did he mean something else?
I am very slow somtimes but Browards work theory is seeping in. There is not enough work out and about to support all the jobs that are needed. therefore make each individual job smaller and smaller and you have enough jobs for all---its just like magic!! OOOOH wew are hitting the promised land of 20 hr work weeks and massive amount of leisure!! snort.
Does anybody seriously believe that this trend will reverse itself? If not then how can the present form of society/political system continue to exist?
I spoke with Mish about this a few days ago and he sent me this article. It makes a very similar point that I have made for years, that by 2050 we will see 50% unemployment. My mantra has been that the last two digits of the year will match the unemployment rate until the system changes.
How we cope with this new reality will determine the future of our society and IMO the future of our species. Ignoring reality and fighting the last war fervently will not do us any good.
The problem arises when economists get carried away by the beauty and power of math and forget about the flimsy flip-flopping foundations, like assuming fully rational behavior and fully efficient markets.
Yes. It doesn't matter what mathematical techniques are applied to a set of false initial assumptions.
Mathematics as I understand uses proven universal laws and constants. There are no laws or constants in economics that I know of... its mostly observed phenomena and assumptions
OT... kinda. Anyone surfing around today, who isn't a coastal resident, take a peek at Curbed LA : The Los Angeles Neighborhoods and Real Estate Blog. There is no recession, everything's fine! Condos selling out! 800k crackerboxes are a bargain! New construction! New restaurants! High end! LA is the anti-Detroit.
Either everything really is fine, or this going to spectacularly blow up at some point. I really don't get it. /
It is a bit longish but well worth reading, so I will just re-post it entirely (emphasis mine): Krugman Misses the Point about Kurzarbeit
Give him credit for recognizing that a society-wide policy of work-sharing is much more humane and rational than America’s current slash-and-burn labor market devastation. Especially in light of the increased unemployment risk faced by minorities and youth, it would be much better for government to push companies to reduce hours rather than bodies. So far so good. But this is not the main reason Germany has an institutionalized short-work (that’s the translation of Kurzarbeit) program. The Germans have this strange belief that working builds skill: you go through an apprenticeship, you work with master craftspeople, you learn the subtle ins and outs of the particular firm you are attached to (in German you work “with” and not “for”), and lo and behold you become more productive. The key purpose behind Kurzarbeit is to not lose this accumulation of human capital.
Oddly, Krugman writes, “Now, the usual objection to European-style employment policies is that they’re bad for long-run growth — that protecting jobs and encouraging work-sharing makes companies in expanding sectors less likely to hire and reduces the incentives for workers to move to more productive occupations. And in normal times there’s something to be said for American-style “free to lose” labor markets, in which employers can fire workers at will but also face few barriers to new hiring.....But these aren’t normal times.”
In normal times the US runs a massive trade deficit with Germany, unable to compete in industry after industry on quality-price comparisons. Labor in this country is strictly an expense, not an asset, and therefore quickly shed when sales go down. Note Krugman’s language: it is “occupations”, not workers who are productive. Even our most knowledgeable pundits can’t imagine an economy in which the skill of the average worker is the main competitive advantage, the last resource you would want to shove out the door.
Here is one of his papers now
Japan's trap
Gave it a once over nothing of substance
American economists and politicians loved giving Japan advice back then, too. These same people somehow manage to rationalize a belief that we aren't repeating the same mistakes.
As long as this is being discussed, I would add that I have never seen the application of technology (computers, etc) make a business more competitive.
wrong, wrong , wrong... typical answer to unemployment, "* we don't have a jobs problem, it's a money problem, so we'll throw more money at it "*
reduce the government , reduce taxes, give business assurance the dolts, idiot crooks in government won't get in the way. Put all the global warming cap & taxers, free health care, social service nut jobs esp. Pelosi on a fast boat to the newly opened camp Gitmo.
that protecting jobs and encouraging work-sharing makes companies in expanding sectors less likely to hire and reduces the incentives for workers to move to more productive occupations.
Like, oh, tenured professors, perhaps?
And in normal times there’s something to be said for American-style “free to lose” labor markets,
Let's hear his take on it when we begin outsourcing academic economists. Walk a mile, academician.
Oh, I do get it. And to bring this on topic... It's just an example of the "stimulus" money flowing directly into the pockets of people who don't need it. We talk about it here a lot, I get to see it every day. Sickening.
Think of the consequence of 29.99% CC interest. By paying only the interest each month, in 3.3 years the debtor will have paid as much as the principle - AND HE WILL STILL OWE THE PRINCIPLE!
That is the banks' strategy.
Some debtors will pay the interest "forever" just to keep access to their credit line. They will make the bank rich.
Some will pay for a while until they can't. From the bank's standpoint the longer the better.
Some (the bank hopes few) will realize that it's good money after bad and they have little to lose by defaulting ASAP.
The first group are going to be poor consumers; the last group may actually have some money to buy things.
The banks objectives and a consumer driven economy are clearly at cross-purposes.
Last thing I will say about Krugman is that he continues to say that any used capacity must be used but neglects to discuss whether that capacity should be have been there in the first place and whether there is sustainable demand for that capacity.
He assumes all capacity that was added over a fixed number of years was well-throughout and rational. In my almost 30 years this have never been true.
I have never seen the application of technology (computers, etc) make a business more competitive.
Those fancy models of risk on mortgage backed securities sure enabled a lot more lend-and-flip mortgages to be sold than lend-and-hold.
More seriously, don't modern machining tools beat the crap out of the old ones? I have no first hand experience here, having never myself dealt with a tool more sophisticated than a screwdriver.
Offshoring is obviously another significant contributor.
Well, we can forgive Adam Smith for linking the prosperity of the firm to the prosperity of state, can't we.
In 1776, Smith had no way of knowing that an outfit like Nike could roam the globe like locusts in search of the lowest labor cost and shift production to other countries after only a few days notice.
The Wealth of Nations is totally obsolete. It's eighteenth century economics.
The Wealth of Nations is totally obsolete. It's eighteenth century economics.
I assume what you're saying is that globalization hasn't worked out well. But, whatever its problems, aren't they just the problems that communities within the US have as they trade with each other, writ large?
As long as this is being discussed, I would add that I have never seen the application of technology (computers, etc) make a business more competitive.
Another holy mantra that is total bullshit.
I totally agree. However, that will not change the way things will evolve. We now have a connected world and ever increasing numbers of jobs that can be either automated or outsourced. You may remember the article I posted that Chinese college graduates out of college now earn equal or less money than migrant laborers.
As to "I have never seen the application of technology (computers, etc) make a business more competitive.", I think "lights out" manufacturing would likely counter that argument. At least, dryfly made a pretty good case for it.
As long as this is being discussed, I would add that I have never seen the application of technology (computers, etc) make a business more competitive.
Another holy mantra that is total bullshit.
Airfares.
Wal-Mart, PayPal, Amazon, FedEx
Of course technology can be copied, but the advantage is still there, even if only for a period of time
The reason is that everyone acquires it. It's like an arms race.
Now I understand what you meant. This is the whole point why I don't believe that we will ever see increasing wages again for the majority and as a consequence an ever shrinking pie of available jobs..
You could do that easily. In fact, if that's all you want space-wise,
you could prolly get that plus a river or ocean view on the space
coast. The rivers are wide. There are manatees and dolphins.
You could get something very nice in Fort Lauderdale or Miami,
but prolly not water view.
You could easily get a single family house.
As to safe swimming beaches.
Ummm, our water is (relatively) clean. Hence there are fish.
And there are sharks to eat the fish. You could step on
a crab. I have at least once.
If there are a bunch of sharks in a sort of school, they will
tell you. There are occasional rip currents. They will tell you
that too. I never give a single thought to it.
I mean alligators eat small dogs with relative frequency, and
you are warned NOT to bother the alligators when it's mating
season, but I've only seen wild alligators 3 times, when I was
on foot. Once in Miami where some idiot was feeding a small
(cute?) alligator bread in the canal. But I never bother to think
about it went I go for a walk.
It's annoying when the turtles get in the garden and snap off
the tops of the green beans (they don't seem to like anything
else).
And of course we have tons of lizards and moles and possums
and raccoons (annoying because they are clever, with hands,
and can get off garbage can lids), and bunnies and large birds.
And wild hogs, and snakes,mostly black harmless ones and
spiders and our state bug, the cockroach, /snark.
There is an eagle nest not too far north of here in the space
compound, and we see them flying once in a great while.
I don't worry about any of them any more than Manhattanites
worry about the occasional peregrine falcon.
This is the whole point why I don't believe that we will ever see increasing wages again for the majority and as a consequence an ever shrinking pie of available jobs..
If you want to talk with me about the wealth of nations, you've got to stop talking about The Wealth of Nations
The reason is that everyone acquires it. It's like an arms race
I am in a business with an average product half-life of less than a year, and no ability to patent. Nevertheless, we crank out new products all the time. No one really has a competitive advantage for more than a few months, but that's enough to keep us all cranking like crazy.
On a macro level, if the technological innovations increase productivity then, even if no single firm captures the benefit as a lasting competitive advantage, society at large does as the same or better output is created with the same of fewer inputs, freeing people and resources for other pursuits, like blogging.
interesting comment - I'd love to listen:
"I would listen to an economist who said, "history is full of examples of good economies. Here is what you need: sound currency; honest weights and measures; markets that are generally free but regulated to prevent fraud, collusion, and coercion; liquidation of bad debt; and peace. Let's change any of our policies that differ from those, and watch things grow again."
Here is what you need: sound currency; honest weights and measures; markets that are generally free but regulated to prevent fraud, collusion, and coercion; liquidation of bad debt; and peace.
MrM
I think the spending to date, whether providing any return on investment or not, has been necessary to keep things afloat. The alternative is a deflationary spiral where real interest rates rise, as if the situation wasn't bad enough. I don't think they can indefinitely maintain this treading water, I think Japan only managed it because they could get by with the rest of the world growing at a good rate.
I actually wasn't referring to Wealth of Nations with that comment but to the fact that in any competitive environment, once superior tools are available(my view is that human labor has been commoditized) the tools arms race starts and the battle will not end until one side loses the war. In this case it is human labor.
On a macro level, if the technological innovations increase productivity then, even if no single firm captures the benefit as a lasting competitive advantage, society at large does as the same or better output is created with the same of fewer inputs, freeing people and resources for other pursuits, like blogging.
And we don't want companies to be able to harvest rents forever - imagine of MSFT were still the unquestionable dominant powerhouse of the home and small business computing. Thanks to Linux, Apple and Google, even MSFT has to innovate.
If there are a bunch of sharks in a sort of school, they will
tell you. There are occasional rip currents. They will tell you
that too.
Thanks, LL.
When I swam off Corona del Mar, it was for hours at a time, and I was far from any lifeguard, or indeed any other person. If I did that in FL, it sounds like I'd be at an elevated risk of shark attack. I'd have to stay close to shore and within sight of on-duty lifeguards.
The coastal view (ocean or river) sounds very nice. Any areas you recommend I pull up on the real estate search services, to get an idea? I want to avoid high-crime areas.
...once superior tools are available(my view is that human labor has been commoditized) the tools arms race starts and the battle will not end until one side loses the war. In this case it is human labor.
If you look at the history of business, you'll find that management and capital have always shared in profit.
Labor never did in any significant way, and that's got to change.
That's why, as a businessman, I've always maintained that we need unions. It helps to balance the competing interests.
Supply Side economics has supplied us with a big fat D. Toss out structure and regulation of markets and you get the wild-wild west. Create a tax code that only a masochist would love, allow corporation doing business in the USA endless means to avoid taxation by incalculable amounts and the upper 1-5% is estimated at least 100bl annually (not including tens of thousand hiding it overseas) Warren Buffet even spoke about his receptionist paying much more in taxation than he does in personal taxation.
Banking and finance serves a utility in society. We're looking at the wrong problems and asking the wrong questions. As one operates a business they have a responsibility to their clients/patrons, to the employees who make it possible, to the nation which supplies the workforce. A big stick got taken out of sustainable job creation. Its a negative-feedback loop as we don't have industries that feel any responsibility to anyone except of of course their shareholders (maybe). People are now viewed solely as a commodity from which to profit, thats it in a nutshell.
Much of recent financial innovation was the simple conversion of ordinary personal and business income into lower taxed categories by changing business structures. Sixty-six % of busineses earning profits over $1 million annually are not incorporated. Corporate Tax Laws Put Obama in a Bind -- Politics Daily
Not only did W again cut the capital gains rate, as well as the rate on dividends, but it was extended to business and individual income sheltered in private equity and hedge funds. Thus it is possible for some to pay an effective rate near 50%, while most business owners do not. Over 10,000 private equity and hedge funds are regulated as partnerships, but most of their business income is taxed at 15% capital gains. Their management is conferred investor status, and despite not investing their own capital proportionally, they pay 15% on ordinary income. In 2007, the top 50 managers earned $29 billion, and alone, their loop-hole cost us $5 billion. Obama Seeks To Kill Hedge Fund Tax Break Applicable, and effective tax rates range wildly among the top, which makes it near impossible to make generalizations about taxes except that they are ineffective, inefficient, and unequally applied.
credit to a dear friend who keep the focus in the right place.
Harvard business school models exacted in their extreme is the problem. Globalization on 'efficiency' unregulated markets and exchanges and ever present inflation that the fed is very intent on reintroducing. Supply side economics sounds good on the surface until the sharks eat up all the meat- it created a lawless land of profiteering. Those financial 'innovations' have concentrated wealth absurdly while those with wealth did not live up to the responsibilities comes with wealth, not even to their own nation, let alone their own businesses. Outsourcing means that only 10% of our GDP is manufacturing now, the dollar declined 17% over the last 10 years while the financial gurus took more and more without producing anything of value, nothing tangible and nothing which benefited our society except for CNBS kool-aid. Greedy little animals that we are, many bought into it hook, line and sinker.
So I say the problem is systemic and falls at the feet of those who created it in the first place, who now are 'called' to fix it. Of course they aren't.
Probably someone posted earlier (I've not been around today) but Nouriel Roubini is also focusing on UE in US, that it will get worse before it gets better. Why is it that its okay to throw TRILLIONs into the lap of those who executed this mess but heaven forbid we spend direct stimulus in sustainable job growth, taking inefficiencies, inflation, metering of care for profit created by insurance companies out of health care, etc., etc. Thats too much like those of us who are taxed out the wazoo at higher rates than a billionaire actually getting something in return besides a nice big shafting made possible by being the schmucks who actually pay our tax dollars isn't it?
Honestly, the economics profession has shown itself up thrice over in this little recession. Once for failing to see the problems building up, twice for failing to see the seriousness of the initial cracks, and thrice for advocating cleaning up afterward by pouring money into the things that went wrong and need to shrink, instead of into the things that were ignored before and now need to grow.
True. However, just like lobbyists, poor men seldom hire economists.
I remember reading in a book about the Scotch and
engineering, that the laboring/lower class Scotch never
ever benefitted at all from the Scotch part of the Industrial
Revolution. Hence all those Scotch engineers who went
someplace else to earn a decent living. This was nice
for the cross fertilization of ideas, but not at all nice for
the Scotch people. The Scotch part of the Industrial
revolution ended without any trickeling down. The promise
was never kept. Beam me up Scotty.
That's why, as a businessman, I've always maintained that we need unions. It helps to balance the competing interests.
While individual businesses might be tempted to squeeze their labor to improve their margins, they want other businesses to pay their respective labor more to be able to buy more and better products.
A society that wants to grow economically has to ensure its median income is growing.
MP- so if it is 18th century obsolete economics---if we tweak the way it is now then it works again right? So if we make it so a gallon of gas is 8 bucks and transporting the superwidget that was made in china is now sooooo expensive it cant be done economically. presto. the old school economists win!! oh boy and if the cheaper labor countries suddenly become so unstable that no one can produce or consume there then another win-win for home consumption. And the econimists of today can study it and give it some neato name like 'economically sustainable locality -adjacent production and consumption' and they can win a nobel and get roast beef everyday.
ok recap 1. huge inflation
2. destabilization and wars
will lead to
1.economic stabilization
2. prosperity for all (well, all in the USA)
Dont worry and fret so much MP. It will allll lead to even more skittles and rainbows for all. Once we tweak enough so that the old style works again.
Does anybody seriously believe that this trend will reverse itself? If not then how can the present form of society/political system continue to exist?
In order to change it we first have to stop reacting every time somebody screams socialism. Then we have to mandate that the maximum a CEO can get paid is some multiple of the average/median wage. FDR recognized that sometimes capitalism needs to be saved from itself. We can either accept a little less of it or later give it all up.
It is a good hypothetical question- what if the share of corporate profits went from around 12% of GDP to say 6% of GDP with the difference going towards wages. Would the stock market fall and if it did would that be a bad thing?
patient- there were plenty of sharks off corona del mar while you were swimming...great white sharks roam a mile offshore or closer...
I've seen blue sharks right next to the jetty there..
the chinese drywall in that condo will kill you before a shark does.....
Oh, sorry, I wan't specific. My absolute first choice would be somewhere close to the water, within walking distance of a downtown with good bookstores and bakeries and grocery stores. I don't need the gift or souvenir or antique stores. But in places I've lived until now, that starts at well over a million. But, like I say, I don't know FL and the market there, so I guess I'll start at the top.
My family have all retired, and almost all have chosen nice homes in very picturesque locations in tiny towns (with populations as low as a few dozen people), sometimes at the coast, sometimes inland. I always enjoy my visits, so I guess that tiny-town setup would work for me too.
Savings in health care will mean rationing (lots of it), automation, and, most important, wage and job cuts. Since health care is the only sector (besides govt) that has reliably added jobs in the past 20 years, this is a political impossibility. 8% annual premium increases are here to stay.
I disagree. It's quite easy to save money in healthcare. It's just that little of what is proposed involves savings.
There is a saying in analysis of cost of medical plans. For any particular group of people, providers will try to get savings by changing utilization. It is so deeply embedded in insurers' and governments' approaches to healthcare that they often don't realize there are alternatives. Fewer drug interactions, better specialized care, fewer smokers, fewer people overweight, better compliance with doctor recommendations, better rankings of providers, and better information systems.
In the longer term, new medical procedures, vaccines, and treatments can have a huge effect on reducing cost. One of the problems there is incentive. Without government or charitable support, some research just won't get done. New treatments that could save many lives and much suffering, but wouldn't make much money for the firm.
"Historically, the safety record for piston and prop-jet aircraft has not been as good as that for pure jets," Barnett says. "US regional jet flights have a splendid safety record," he goes on. "They have suffered only one fatal crash in the past two decades. "
According to Barnett's analysis, your risk of death on your next regional jet flight in the US is 1 in 30 million. In other words, you can travel every day for the next 82,191 years - on average - before you will die on a regional jet. (For comparison, your chance of dying on your next trip on a major carrier - one of the big airlines - is 1 in 60 million).
I am again posting my current chart favorite. I believe that real hourly wages will turn down from now on and productivity will continue to sky.
This has been a repeated concern as different new technologies came into place. It was originally a worry about agriculture, then manufacturing, then computers. So far, each time some other major form(s) of employment arose. In fact, this is one of the ways that large increases in productivity are possible for an economic sector.
I disagree. It's quite easy to save money in healthcare.
Just like it is to balance the budget? I think we have to stop kidding ourselves that there are easy fixes to both these problems. Waste only gets you so far. As I keep saying to my liberal friends - if you eliminated all the profits of the insurance companies, their overhead and the pay of their CEO we would be in exactly the same position that we are in 3-5 years. We have pretty much taken care of the things that could be done on a bulk basis- from here on in medical technology is devoted to curing rarer and rarer conditions and the unit cost of each treatment goes up exponentially. At some point as a society we are going to have to say "sorry you won the misfortune lottery".
patient- there were plenty of sharks off corona del mar while you were swimming...great white sharks roam a mile offshore or closer...
I've seen blue sharks right next to the jetty there..
C'mon, CCLT, bite me. Oh, bad choice of words. I agree that the great whites were in the neighborhood, but the density was low. I think there are more sharks in FL.
Well there were quite a few ads for a 2-2 on the water with
an garage, townhouses and condos, in your price range--
and that was asking of course. You will have to drive to
bookstores.
There was an ad for a condo overlooking the banana river
within walking distance of Merritt Square Mall and 2 bookstores--
big ones. I wouldn't swim in that river, but it's a 10 minute drive
to the Ocean. You can see launches from there. But that
building didn't do all that well with one of the measelly storms
we had in the years of the 8 hurricanes. Still, it's fixed now.
If you look at the history of business, you'll find that management and capital have always shared in profit.
Labor never did in any significant way, and that's got to change.
The neoliberal dream, from Reagan through Clinton through Bush and now Obama: take all the cream for management and capital, and let labor inject the heroin of credit cards.
It worked, for a couple decades. The present crisis has brought this pinstriped drug peddling to its end game.
That's why, as a businessman, I've always maintained that we need unions. It helps to balance the competing interests.
The difference this time is that we introduced hundreds of million of low wage workers into the global economy at the same time. when India and China run out of cheap labor then you will see productivity gains going towards labor. Ironically Global Crossing whom nobody will remember in 10 years is the unsung hero/ villain (depending on your perspective). The internet destroyed geographical boundaries. Thus unlike previous introduction of technology which still required using the work force within a geographical area (essentially the speed of horse) until the introduction of trains and later automobiles this time around labor could be hired anywhere.
the reason why the world growing at a good rate is necessary to keep things afloat is that the only way to maintain output/income while increasing savings to repair your balance sheet is through an increase in net exports. Once growth is scarce, the easiest and most likely result is from net importers to raise tariffs to boost their own domestic economy.
The reason why they can manage to tread water right now is that pegging-countries are absorbing the hot money and/or eating the negative carry on higher domestic interest rates vs the low US Treasury rates they earn on reserves. Their balance sheets aren't bottomless, and unlikely to tide us over until a miracle happens
"The answer is that I don’t think I’ll get anywhere, at least not until or unless the slump goes on for a long time." - The Honourable Sir Professor Paul Krugman Esquire, PhD
I.e. he doesn't argue for what is right because nobody will believe him? That is sooooo disingenuous.
I love that name! If you can't live at a real address that says "Banana Republic", then living on the Banana River is the next best thing. I think that fits the bill, Liz. I can bicycle to the water for my daily swim, and hang out at the bookstores and bakeries before and after. Sounds very tolerable! How do you work with the hot summer weather? Just stay indoors?
(and the reason why country's are likely to use their trade deficit as an asset is that for now, the labor force is growing and without economic growth, real incomes decline and that is a powerful political force easily harnessed)
So, I would have to challenge Mr. Krugman to point us to a single example of successful stimulus in a large-scale modern economy.
In the long run, Hoover dam was a pretty good one even if it didn't do enough to tread water. But it was an investment, and a well timed one because labor was cheap at the time. Stimulus can just be a monetary process to print and distribute money. There is also an economic side to stimulus, where you could spend to stop people from freezing/starving in the streets and take the sharp edge out of the adjustment being muddled through.
I think a Keynesian aspect is valid, but not applicable to the current adjustment -- this is more than a hiccup. However for the Keynesian aspect to be complete, you must be willing to tax the hell out of people during a boom if you want to spend like hell during a bust.
You're firing on all cylinders today -- good stuff.
To reinforce your point about not having to pay our debt, I'd add that the Volcker option expired at least $4T in debt ago. There's no way out now without some form of default.
So long term it all balances out and there is no competitive advantage, like the saying "if everyone is special, then no one is special".
So to go a step further on MP's assertion. If there is no technology, no gimmick, no neato thing that will give a business the advantage in the longterm since if it is a beneficial thing soon all business will have it or die then what does ultimately and in the longterm give a business an advantage?
Answer: The people laboring for the company. hahahaha. I find it so rich that in order to fund and obtain the newest thing they are gutting the one thing that will help them in the long term.
Hmm, hence the germans focusing on the people working, labor, and institutional knowledge. Fill me in, but arent they. like, y'know the most legendary engineers and industrialists? BMW, VW etc?
This has been a repeated concern as different new technologies came into place. It was originally a worry about agriculture, then manufacturing, then computers. So far, each time some other major form(s) of employment arose. In fact, this is one of the ways that large increases in productivity are possible for an economic sector.
This was easily possible while average human intelligence and ability was still dominant. That is an assumption that cannot be sustained today and even less in the future. BTW I worked all my career on "saving people" and I wasn't selling religion.
However for the Keynesian aspect to be complete, you must be willing to tax the hell out of people during a boom if you want to spend like hell during a bust.
There is a Banana River Drive, and one of my son's brief girlfriends lived
on it, on the water, in a rather crummy house. I wouldn't want to be that
close to the water, personally.
Rock Hudson as Cdr. James Ferraday in the movie "Ice Station Zebra":
"The Russians put our camera made by our German scientists and your film made by your German scientists into their satellite made by their German scientists. "
Hmm, hence the germans focusing on the people working, labor, and institutional knowledge. Fill me in, but arent they. like, y'know the most legendary engineers and industrialists? BMW, VW etc?
To reinforce your point about not having to pay our debt, I'd add that the Volcker option expired at least $4T in debt ago. There's no way out now without some form of default.
Someone could try and repay the debt, but the pain -- and I use that word very consciously -- would be too much. Probably enough to support an overthrow of the government. Interest rates would have to be kept low to keep the debt affordable, which means growth would have to be kept low, which means it would take forever to pay it down, and that would cause a similar backlash. So sharp + quick or dull + long, the debt will not be repaid under any extreme
*However for the Keynesian aspect to be complete, you must be willing to tax the hell out of people during a boom if you want to spend like hell during a bust. *
or
tax the hell out of an estate once they die - this to me is the biggie in Amerika, I think estate taxes will go exponential in the next 10-15 years
I think estate taxes will go exponential in the next 10-15 years
The WIllie Sutton approach -- go where the money is. If (and I say "if") extremely high taxes are in our future, then I'd expect some form of very progressive property taxation, too. When there isn't enough income you go after assets.
Rock Hudson as Cdr. James Ferraday in the movie "Ice Station Zebra":
"The Russians put our camera made by our German scientists and your film made by your German scientists into their satellite made by their German scientists. "
tax the hell out of an estate once they die - this to me is the biggie in Amerika, I think estate taxes will go exponential in the next 10-15 years
most retirees have zilch for savings. Those that have 'real money', probably can avoid most of it short of a communist-style grab anyone who looks rich. just playing the opposition's advocate, I don't really feel strongly on the matter. Would want to see what the US gini coefficient is post-housing bottom via the survey of consumer finances (surveyed next in 2010, every 3 years), because Brazil (and colonies throughout history really for another example) have managed highly stratified incomes/wealth -- and I don't know if/when/where that breaking point is. 5 years into the future is at the frontiers of my imagination
Glad I could do it for you MP, but shhhhhh! or Mrs. Mp might get a little miffed,eh?
I have another question and you seem to have a very deep knowledge of business history. If you cannot/will not answer it would you prehaps know where to send me to start findingout on my own?
I have heard through the years about the aftermath of WWII being one of the reasons for the massive growth in GDP and productivity in USA during the 50's and sixties, and it makes sense.
The rest of the world in tatters and flattened, barely able to subsistence feed the remaining population nevermind industry.
But isnt this today the flip side of that? Whole nations were flattened, infrastructure obliterated, a whole generation slaughtered so they rebuilt and during the rebuilding had to rely on manufacturing from usa but as they rebuilt they had newest buildings, newest tech, newest machines combined with the institutional knowledge and the desire of the whole people to re-acquire the ability to not only do for themselves but become leading manufacturors again.Hasnt that led to huge advantages to usa in the now? I mean even china fits that kinda, even though they werent flattened like Germany was, but they started from rural commie pigfarmers and were able to build state of the art new factories, warehouses, roads, etc instead of tired old detroits and other rustbelt holdovers.
Isnt this just part of the same thing, just benefitting the other side now?
My way of looking at it, genius in its simplicity, is this is not going to work. The economy is a firetruck and the engine won't turn over. They think they need to charge the battery. It's not the battery. Until they figure that out they just going to keep charging and jumpstarting. Eventually they will try replacing the battery. That won't work. Meanwhile half the town has burned down.
In the 1920's, human remains were excavated from the Royal Tombs of Ur in present day Iraq. The tombs date back 45-hundred years to ancient Mesopotamia. It was believed that many of the thousands buried there were part of a ritualistic human sacrifice. When a king or queen died, those who served the dead royalty were to provide accompaniment and continued service in the afterlife. But new research by Dr. Janet Monge, Keeper of Skeletal Collections at the Penn Museum in Philadelphia and an Associate Professor of Anthropology at the University of Pennsylvania, suggests something more grisly. Modern forensic techniques were applied to two skulls from Ur. A small hole in each skull was revealed, indicating blunt force trauma with an ax-like instrument. The loyal retainers may not have gone so willingly into the afterlife, after all. CBC Radio | Quirks & Quarks | Nov. 14, 2009
The entire royal administration were killed and then buried along with the King in his tomb. Gives a whole new meaning to regime change
If the government wants to create jobs, it needs to do something that will create the NEED for people to do something. War, space exploration etc. Throwing money at the problem is silly considering how indebted we are. Any job growth needs to be durable. I don't know where these guys think we'll get the money from. Our debt to GDP ratio is skyrocketing. Since the nations that are LENDING to us have skyrocketing ratios themselves - we'll need new sources of cashola. Maybe we can beg Chavez or sell the Taliban some weapons.
nova
how about we're on a boat that has been hit below the waterline. no matter how fast they bail, there is always more water. so they sit up top on deck chairs while pretending the problem is under control because swimming to shore is a lot of work (the lifeboats were sold earlier to pay for more liquor) and maybe aliens on a trade mission from planet Xungor will come and save them first. Once everyone gets to land, they'll all be terrified of going out on the SS Debt again. But over a long period of time where we rebuild, and memories fade over generations, we'll go back out with a hopefully better set of captains that won't try to see how fast and far they can get from dry land to one-up the last guy at the helm.
Are you thinking of buying gold LL? I don't think I'd have the nerve to do that. I cashed in a poorly performing IRA (small) in 1999 and bought a few ounces of gold for $250/ounce. I watch gold prices go up mainly as sheudenfraude (or whatever that word is).
Except that we are being flattened now, so maybe then
we will have the advantage shortly??
Not sure if it counts as flattened, but similarly the West's wired telecommunications infrastructure became an albatross cpmpared to the undeveloped world once wireless and satellite became available. US is now probably one of the lesser advanced (not sure if that's the correct choice of word) personal communications society.
Almost every time Krugman talks about more stimulus, someone mentions Hari Sheldon. However, I think of the psychologist BFSkinner and his novel written in the late 50's or 60's about the 21 century. He correctly predicted that there wouldn't be enough full time work to employ all Americans who needed to work. IIRC he thought that all jobs would be divided in two and each worker would work 4 hrs. perday for regular wages and people would have a lot more free time. I guess that's partly a make work program and maybe the government would pick up part of the cost. I don't remember if or how Skinner covered the economics of his idea.
mp
inflation is over in Zimbawbe, they just renounced their currency and overnight the problem was solved.
they could even soon be the next destination for the caravan of multi-national factories now that Asia and Emerging Europe are too expensive.
inflation in Germany was absurd, it was deflation that led to the real problems of declining real incomes and unemployment (eg Hitler's first Thyssenkrup supported coup during hyperinflation failed, but his second Thyssenkrupp supported coup during deflation succeeded, and I'm the term coup loosely because the second one was technically legitimate)
I think they know the SS Debt needs to be rebuilt but the owners won't pay for it. Plus how can they make money while its in the yard? They just tell the captain "Hey! You survived one heck of a storm. Get back out there. We got goods to sell to the natives." So the captain does a couple shots, sighs, and puts out to sea again.
"and forget about the flimsy flip-flopping foundations"
such as the dollar itself, which is a purely political entity which changes in relative 'value' literally every second and is generally unfit for any manner of mathematical enterprise which involves anything beyond referencing itself (and even quite poor at that).
economics is really just the marketing branch of political science.
IIRC he thought that all jobs would be divided in two and each worker would work 4 hrs. perday for regular wages and people would have a lot more free time.
Yes, works fine except for those damn "externalities" like cheap transportation and even cheaper offshore labor.
First: if you don't know where you are going (a mid-long term goal), then any road will take you there.
Do we really want a one-world capital/labor market (with clearly more mouths to feed than jobs/income to supply them)?
Or do we want an acceptable economy for US (or US/Canada/Mexico)?
Very different goals.
Do we know where our leaders think we should go?
Do our leaders know where our people want to go (given a choice that is informed?
One world vs one continent? A big choice. Will the other continents let us get away with a US choice of going mostly alone, even with say a decade or two of transition? Will mother nature allow us to ignore the rest of the world? (global climate change).
I don't see how we as ciitizens can define what to do this year and within 5 years with our domestic economic and monetary policies without knowing where we are going. The default seems to be one world. Can our people and system accept the costs (personal and financial) of a least common denominator economic world?
In the meantime, we need jobs, or we won't have the social structure to decide for ourselves.
if you eliminated all the profits of the insurance companies, their overhead and the pay of their CEO we would be in exactly the same position that we are in 3-5 years. We have pretty much taken care of the things that could be done on a bulk basis- from here on in medical technology is devoted to curing rarer and rarer conditions and the unit cost of each treatment goes up exponentially. At some point as a society we are going to have to say "sorry you won the misfortune lottery".
Well, I see that you have some of the same problems with assumptions which plague Congress and the insurers. Don't feel bad. They have concentrated so much on certain topics that others don't even get aired.
There are a number of conditions or treatments which cost 5-10x as much in the US as in other countries with very good healthcare systems. There are also a number of conditions much more prevalent here, like obesity and diabetes.
But that is exactly what MP means. It aint the tech. The tech is just a tool.
It is the people and the knowledge they hold that will make or break a business in the long run.
Many times the new toy, the tech, the neato spiffy new way of doing things are needed and necessary, if only to stay in business against those that do have it but it always and forever comes down to the people working within that business.
Ha from the ceo to the toilet scrubber. It be the people and the gray stuff between their ears. the smart and able business organism has the poeple within itself to utilize the neato new stuff correctly. and in thelong run they will be the business that lives, vs a business with all the neato spiffy bells and whistles without the gray matter to use it right. *not that Mp uses neato, spiffy, or silly words like that. that is alllll me.
mp
I think the what will be the lead problem that needs to be addressed is jobs. Having something everyone can do indefinitely that lets them put food on the table for their household. That at such time savings is already meaningless, regardless of monetary -flations. We have some monetary delays that are expensively keeping the status quo ante going forward, after that it is burning through people's pride (and shame of not being able to support their household), then it's possibly the sum of all fears. I'm not supporting any authoritarian rule when I say this, but it is important that we have a real leader by then. A doctor ready to operate instead of a nurse just trying to stem the bleeding. A captain instead of a gilligan. A leader instead of a manager. There are no maps for where we're going
"and their leather overcoats and iron cross award draped by Hitler personally"
I met someone once who'd received a decoration from Hitler, pinned on him personally by the dictator. He was a Balt (ethnic German) from Estonia. He wore a leather overcoat - in winter in northern Virginia - and walked a large Alsatian dog. Central casting? No, reality.
He wasn't wearing the decoration on his leather coat, though.
Name one that had less regulated markets than ours, and less public subsidy of production/education.
That's easy, look at the U.S. from 1870-1920. Government taxes, interventions, size, regulation, everything easily less than 1/10th of the present.
In 1921 President Harding cut the peacetime budget by 40%, a reduction contemporaneous with overcoming the quickest recession (they called it a depression) in American history.
Perhaps you don't realize just how small the government used to be, and how big it is now. Thomas Jefferson was THE Department of State, by himself. He asked Hamilton what the Treasury Department was going to do; he could think of no useful purposes.
Now, I defy you to read all the bills passed in Congress in any single day. They come out faster than an Evelyn Wood graduate can read. The Federal Register spews thousands of pages every week. It's night and day.
"ok. Nuke out did me. his point is better, too. pretty much sums up what i feel."
Has it occurred to any of us that perhaps no one knows precisely what to do - not the experts, nor anyone here? Where is it written in bronze that there are obvious solutions to this predicament?
Spent my boyhood in Florida so here are my 2 cents.
If someone likes to live near water, then the first question is what type: fresh or salt.
If fresh water, then explore living on one of the many rivers in north or central Florida: St John's River or Crystal River.
If salt water, then decide between on or near the beach or else, on or near the intercoastal waterways. If your choice is near the beach, then concentrate on property on one of the barrier islands.
Since you are moving from California, rent (don't buy) until you are certain that you can handle the climate. First, it is a wet, soggy heat, not at all like the dry heat in much of California. Second, there are swarms of mosquitoes at dusk so plan on screening in your outdoor space or staying inside. Third, Florida is flat, so don't plan on wonderful landscape views. Fourth, the sunsets are spectacular.
If you have young grandsons (8-14), consider inviting them to spend the summer with you, if they know how to swim. Buy a dingy with oarlocks, spend a couple of days teaching them to sail and row the boat, and then, let them loose upon the water to explore.
I hope you buy a house soon, so we can hear your arguments as to why the Fed-Gov should be trying to maintain housing prices
Barfly, I will put all my arguments for that in my post-purchase book, titled "Triumph of Self-Interest"
LL, I am still mulling which continent to choose as my retirement home, so I probably won't be pulling the trigger within the year. Florida is intriguing, I must say. I like warm weather, and the water.
Sure, why not. The first one worked so well...
$300B.. $3T... Doesn't really matter.. it's all about covering things up with significant inflation.
$6 gas will make your $1500 mortgage payment seem easy.
so the final program will be $150bn of tax cuts and $50bn of job training beginning next year and lasting until 2015?
no this is an election year
call it max $400bn, subtract to some nice cute round number like $384bn, and spend it over Q2 and Q3
I would listen to an economist who said, "history is full of examples of good economies. Here is what you need: sound currency; honest weights and measures; markets that are generally free but regulated to prevent fraud, collusion, and coercion; liquidation of bad debt; and peace. Let's change any of our policies that differ from those, and watch things grow again."
Krugman did not say that.
Fuck you, Krugman. Right on cue: the stimulus isnt working because it isn't big enough. It will never be big enough. The New Deal wasn't big enough; as soon as it was scaled back, down went the economy. You can't make people consume, invest and produce when it isn't in their interest to do so.
Being out of touch with reality got us into this mess, and godd*ammit it will get us out of this mess.
ok-this surely will be slammmed...
Jobs to do what? sustain the unsustainable? Growing a living arrangement that has no future? Creating more suburbia?
credit to jhk
When do we stop listening to his ilk? At this point he wants to cover up his past failures and get a roast beef to go.
So we want to offer a job stimulus at the same time we are adopting programs and implementing policies that cause small businesses to reduce headcount and when access to credit is still being cut.
As Cheney said, " Deficits. Don't. Matter."
Go to recovery.org. 787 billion wasn't enough? Again, fuck you Krugman.
Seriously patient.
Florida is big.
You want to buy in a college town like Gainesville, very pleasant.
Orlando?
Space Coast?
South Florida?
The Keys.
How many square feet. It is just you?
You speak Spanish?
Parts of Florida are the south, and parts are like nowhere
on earth. Parts are rednecky.
Comrade Rally Monkey wrote:
Maybe to rebuild all those unsafe subway systems that LaHood wants to take over.
Name one that had less regulated markets than ours, and less public subsidy of production/education.
LL, I'd like at least 1250 sq ft. Preferably 2+2+garage. Townhome is better than condo style... Oh wait, in FL I might be able to get a SFR!
I used to go long-distance swimming regularly in the Pacific, off Corona del Mar (near CR's place). My swimming buddy there went to FL once, and saw a very big fish out of the corner of his eye, and would never swim there again. Any safe swim beaches in FL?
Krugman has an amazing ability to be both right and wrong simultaneously. He appreciates the idea that this is a non-recovery for most Americans. But welfare is not an economy.
As Frankel said it back in february: "Is $800 Billion Too Big or Too Small? Yes."
http://raphaelkahan.blogspot.com/2009/02/frankel-is-800-billion-too-big-or-too.html
don't be so rough on the K-man
no one here is going to pay for any of the increased debt
and the stimulus was much too small, and far too dispersed to achieve the desired effect of stasis until the pegs are broken
stop thinking about America, you need to treat this like a video game to make the right decisions
there is no one economic recipe, because you always have to be moving in one direction or the other and whatever direction you choose to head in is dependent on where you are and where you were last heading. you can't tell me where to turn the hot and cold taps for a bathtub without knowing how much water is already in there, at what temperature, what the flow rate is out of the tap, and what the temperature at the tap is. and possibly if the drain is closed, or if the tub is already or near overflowing.
K-man has been pretty reasonable during this crisis, although I was the first to criticize him for using circular logic in projecting massive auto sales rebounds
lawyerliz wrote:
Sounds good. I stayed one night in Athens, GA, a million years ago. Really liked the small town college atmosphere.
Sooner or later we have to figure out that we are a failed empire up to its ears in debt, and the smart thing to do is use some of our holdings to pay off the debts--before they just get taken away from us.
I'm thinking Hawaii to the Japanese, Alaska or Taiwan to the Chinese. The Arabs might consider their debts satisfied if we stop sending aid to Israel.
But even such radical measures won't help much if we don't fix the problems that caused this mess.
Rob Dawg wrote:
K-man is not the problem. Look at what his colleagues Mankiw or Blinder say
You're just dog-piling him for advocating spending $1 more
$s are irrelevant now, it's about distributing massive existing losses (in my opinion, riffing on Richard Koo)
I think Stiglitz has been the best of the main stream economists so far.
Most people don't like my jobs and healthcare plan.
Have people behave in ways that make them healthier. Lower cost of healthcare, lower cost of employees. Lots of other good stuff. We could start by removing subsidies to the sugar industry. We could encourage different rates from health insurers based on whether people smoke. We could impose an actual information system for medical care, rather than the 1980s collection of stuff we have now. Fewer bad drug interactions, better informed physicians.
There are a lot of choices here.
Look at what Summers, Bernanke, Orzsag, Geithner, Emmanueal say/do
They are the ones who shepherd the spending. They set the goals
Nuke wrote:
Honestly, the economics profession has shown itself up thrice over in this little recession. Once for failing to see the problems building up, twice for failing to see the seriousness of the initial cracks, and thrice for advocating cleaning up afterward by pouring money into the things that went wrong and need to shrink, instead of into the things that were ignored before and now need to grow.
Because the free market will create jobs for all. Unless there happens to be some oligarchy which would want a reserve army of the unemployed to keep wages down and profits up, in relative terms.
But that's Commie talk.
Welfare is for bankers, not the unemployed. The American Way.
EHP
"no one here is going to pay for any of the increased debt"
Bullshit. No one Krugman advises will but every wage slave surely will. Where do you come up with this statement?
Nuke wrote:
I like Sitglitz too.
Other leaders are currently Rogoff, Reinhardt, Eichengreen, Keen, White, El-Erian
and lots of good work preserved in text by people who last faced similar circumstances Galbraith, Fisher, Minsky
I don't know how Krugman shows up in the media, but it is my sense from these comments that he is just serving as a proxy for the $787bn stimpack which didn't reflect what he advocated for
I wonder though, if totally reckless fiscal policy with serial stimpacks, 1 bigger than the next, would have the effect of kneecapping the dollar and thereby forcing China to de-peg. Might be Krugman's sly economic warfare play.
EHP:
When you say we won't pay for the debt, do you mean we will repudiate it, or inflate it away?
some investor guy wrote:
Just postpones the problem. Think about how much we want to spend on an average person's health care over their entire lifetime. Everyone will go through that last 6 month's of life. How much do we want to spend on that? Express that as a % of how much the average person earns over their lifetime. Only then do we have a framework for rational discussion.
Some investor guy, why do you hate America? You suggest we shrink consumption/GDP growth.
Bond Girl wrote:
It is if it is used to minimize the pain of restructuring to a sustainable economy. All these people have a vested interest in perpetuating the past - they all benefited handsomely from it.
NYS has a social service economy supported by a small bankster class in Manhattan. We will see how that works out. It has killed of Upstate.
from Krugman's blog. How to fix US economy
"The first-best answer — that is, the answer that economic models, like my old Japan’s trap analysis, suggest would be optimal — would be to credibly commit to higher inflation, so as to reduce real interest rates. "
It’s the stupidity economy - Paul Krugman Blog - NYTimes.com
I just can't take this guy seriously. Argentina should be named Krugland
We could shoot the returning veterans instead of giving them welfare, like we did with the WWI bonus marchers.
What do you want to bet none of his list of desirable jobs looks anything like my list? [did anyone save my list?]
Krugman says himself "So it’s time to try something different." We tried massive deficit spending, higher taxes and artificially low interest rates. His idea of something different is more. "Hypocrite" is too kind an appellation. CYA with OPM.
Tim waiting for 2012 wrote:
You are wrong. You may lose some apparent wealth in savings that are only denominated in USD, or house prices -- but that wealth was always virtual and never there, it's only a matter of recognizing that at this point.
There is no way the US can maintain its debt-load. There is no other larger economy whose growth can be piggy backed off of like Japan did in maintaining its GDP.
The time to be outraged for excessive spending was back in the 1960s, and each iteration has required always increasing amounts to have the same impact. You're too late, well past the event horizon
Tim waiting for 2012 wrote:
Don't write him off too quickly. He may be saying what Summers is thinking and Bernanke is planning.
yogi:
Wrong. The bonus marchers were evicted, but none were killed.
patientrenter wrote:
What we need to do is give every Medicaire recipient a life time cap on Medicaire benefits and allow them to will any left over to their heirs. My guess if individuals could see the benefit of their decisions going to their children we will make better decisions. Will that mean that some parents will sacrifice their care so that their children are better off? Absolutely. But isn't that what a parent does through out their life?
Nuke wrote:
I'm saying it is impossible for it to be repaid. Effective default is a must. Could be repudiated, could be inflated away, but it cannot be repaid. All that is happening is choosing how it won't be repaid, and who the winners/losers will be.
edit: to answer your question, last October they set the course of what ends in hyperinflation. however because currency pegs persist, this will show up with very low inflation followed by a step-shift into high inflation. to repeat one of my old analogies, they are choosing which side of a tight rope to fall off of
EHP
"no one here is going to pay for any of the increased debt"
Bullshit. No one Krugman advises will but every wage slave surely will. Where do you come up with this statement?
Increased public debt is always paid via a combination of three options:
- Higher inflation
- Higher tax rates
- Bigger economy
Krugman's point that the third option (bigger economy) is obviously the best and hence one should incur additional debt to re-ignite the economic growth.
At times, when the recession is driven by a supply/demand shock, it does not really matter which jobs to create. These recessions end quickly and the government can withdraw its support gracefully.
The challenge for slower, balance sheet driven recession is to create sustainable jobs, which will not depend on the continued large-scale government support (e.g., most infrastructure jobs are not sustainable without the government support).
Japan's trap
More Krugman BS.
Paulie if people don't have jobs and they know prices are going to go up tomorrow they become more depressed and spend less on discretionary items. You know the things that people with jobs make.
Well New York City always tries to vote in higher taxes, and upstate goes Republican. So they killed themselves off.
"Have people behave in ways that make them healthier. "
You could make them run back and forth to work while carrying heavy packs. Great for orthopedists, but not so good for the auto industry.
crazyv wrote:
Best single contribution to the mostly barren health care debate I have seen in a long while. Of course, that means there is zero chance of its being adopted in any form.
The question is what jobs can still be retained here in the US. Many high end engineering companies (pumps, aircraft assemblies, earth moving, constuction, high end tooling) that do most of the custom designed engineering work are moving to set up shop in China and India.
Our company is cutting costs here by laying off highly skilled (no move up skills) people in areas such as stress analysis, modeling, CFD. These jobs are now being done in off-shore facilities in India. IMO, the engineers in China and India are hingrier and do decent work if trained properly. There is no great mystery to CFD and Stress analysis if the proper training and context is provided. A lof of these companies are run by people that are soley focussed on the stock price. The only way to show profitability for these industries in these times is to cut costs - highl salaries in the US and start operations in India/ China. Examples of success are caterpillar, GE's R&D, John Deere, Flowserve, Bosch facilities in India.
I disagree we could repay our debt providing we don't create anymore and our economy grows fast enough to create revenues sufficient to pay the interest. I don't think in 1992 anybody imagined that the US could pay off its debt. But there we were in 2000 with the real prospect of doing so.
Read carefully, Nuke:
I said they were shot, not killed. But some were killed. Final nail in Hoover's re-election bid, although he denied giving MacArthur the go ahead. Patton regretted the episode.
EHP
Sorry flew off the handle.
EHP-MrM
But the private sector and the real economy suffers greatly when the gov't tries to get its balance sheet in order by causing inflation.
Interests rates go up because those who loan the money don't want to lose principal
Tim waiting for 2012 wrote:
I think most economists just don't understand human behavior. IMO people have a savings target in mind. They don't go through some econometric model to calculate the trade off between inflation and interest rates etc. Thus when they are earning less on their savings they save more because they have an absolute number in their heads. I think if one contrasts domestic consumption in China and India - consumption is higher in India than China because interest rates are higher in India.
We aren't restructuring anything.
States are facing a revenue cliff once the current stimulus is spent because unemployed people do not generate taxable income or buy taxable things. The cuts they are planning will have an impact on the indicators that suggest a recovery is underway. Another stimulus is coming. He might as well argue for it or something like it.
Will new govt. stimulus jobs be sustainable jobs in the productive economy?...How much will each 'job' cost the govt. and taxpayers?
This job stimulus maybe should have come before the unfunded obligations and deficit got so Big...maybe...
crazyv
I meant to say they spend less money on discretionary items they don't necessarily save more cash.
ok...you got us...nice joke
we already have huge jobs plans in the health, education, and defense sectors. and of course, all those sectors perform suboptimally in producing jobs. the issue isn't the magnitude of the spending, but how that spending is distributed. simply too much of the capital gets washed by the finance sector and then funneled to the existing holders of wealth.
And China will expropriate those factories as soon as it sees fit. They can't claw much back by foreclosing on US skyscrapers: rent is paid in $.
I have a lot of cash. I am not investing it in productive enterprises in the US because I have no faith in the government or the dollar. So I invest in China. I assume there are many like me. Krugman, and his kind, don't understand that you can't force people to save, invest and produce. All the stimulus is doing is putting more dead-eyed clock watchers on the government payroll.
But the private sector and the real economy suffers greatly when the gov't tries to get its balance sheet in order by causing inflation.
Interests rates go up because those who loan the money don't want to lose principal
That is not always true.
It is true when the government and the private sector are competing for loans.
At present the aggregate private demand for loans is low (loans that are likely to be repaid, that is). There is no evidence for crowding out of debt at the moment. There is evidence that there is much more savings than the desire to invest. Hence the government is able to enjoy astonishingly low interest rate even on long maturities.
EHP - '...they set the course...' Yes.
$1 million, $5million?
Tim waiting for 2012 wrote:
Some people (yeah, I'll pick on Krugman here) see money primarily as a tool to oil the machine of day-to-day economic transactions. Others see it primarily as a reliable store of value. Both purposes are critical. Ignoring the critical importance of both undermines the value and use of the currency, and that leads to serious real economic problems. Inflation is not a panacea, although it always looks like the easy way out.
+100
We aren't restructuring anything.
And in some cases we are making things worse, like the financial industry landscape.
That is the key problem, without which no amount of additional spending will help.
'Last October, they set the course of what ends in hyperinflation.' - EHP
Yes, they did.
I didn't disagree with what you said - I was merely adding to it. I think the low interest rate policy is actually depressing consumption rather than increasing it. There is very simple evidence for it. If 29.99% interest rates don't discourage people from carrying a balance it seems their consumption is not interest rate dependent. On the other hand savers who by definition are more prudent are more likely to cut consumption in the face of declining interest rates. This is not different than insurance sold for lost credit cards. Contrary to what one might think - it turned out to be a very profitable product for the insurance companies because the people who concerned about losing their credit cards and therefore bought insurance were also the people who were careful about not losing their credit cards.
Bond Girl wrote:
Nominated for QOTD
Maybe the 'stimulus' jobs can be outsourced to save taxpayer money...
lawyerliz wrote:
That's where I grew up-
ok...you got us...nice joke
29.99% interest rates don't matter, it's the availability of a larger credit line and low monthly payments to a vast number of consumers.
Careful, Nuke, just like the British once invested in the Colonies. Then we had a tea party just for them. China made tea then, and does now. There is one big Party. But good luck as an absentee owner. Every few Centuries one gets lucky.
I have no faith in the dollar either, but I would gladly invest in US enterprise once the currency is made reliable.
Krugman could go a long way toward credibility by turning on his masters and pointing out that much of the $600b decanted annually to service our needs for financial expertise from bankers and brokers is in fact a drain on the economy.
Basel
That's the tough choice we have to make.
Inflate Assest prices to help the Boomers and their parents or get down to old fashioned capitalism with real competition and true winners for long term growth
some investor guy wrote:
I just heard on CH4 here in MA, where we already have mandated Universal Health Care, that costs had risen 5-8% in this past year. These dreams of savings in the system are :pipedreams:
Really!
Who the hell is "they?"
29.99% interest rates don't matter, it's the availability of a larger credit line and low monthly payments to a vast number of consumers.
The primary reason the aggregate consumer revolving credit is declining is not reduction of lines and not increase in APRs by credit card companies but changes in the consumer behavior: more consumers have realized that they actually need to pay down their balances, which are quite expensive to carry!
crazyv wrote:
It's not an empirical science, just the application of mathematics to political propaganda.
The theory of inflation expectations falls apart where there are high levels of structural unemployment.
steelhead wrote:
That is precisely my point - therefore low interest rates hurt demand by forcing savers and those living of their investments to cut back without increasing the propensity of borrowers to increase their spending. If the Fed really wanted to help they would make available 50 year funding that could be extended to consumers.
Cinco:
Savings in health care will mean rationing (lots of it), automation, and, most important, wage and job cuts. Since health care is the only sector (besides govt) that has reliably added jobs in the past 20 years, this is a political impossibility. 8% annual premium increases are here to stay.
Gotta go.
They are our financial and political leaders, regulators, and monetary administrators, managers, etc. who determine economic and political polices and carry them out as planned and legislated regardless of what public opinion and/or voting has to say...something like that...
Maury the Credit Responsibility Panda wrote:
I know math. Math is my friend. And sir, economics is not mathematics.
Dismal indeed. But it did invent the widget, which has infinite imaginary practical uses.
EvilHenryPaulson wrote:
Regrettably, you are correct. The best approach one can take at this point is to determine what is valuable to them, and invest there. If you choose assets that have value to you, you won't be as disappointed in the end when virtual assets like "money" are defaulted on.
Also, the media and internet has a role in carrying out political/economic policies & legislation regarding guiding the economy...
Cinco-X wrote:
Until we grasp two simple truths - we will keep chasing our tails. We spend so much on health care because we consume so much of it. New technology in health care drives up expenses rather than reducing it as in the rest of our economy. Given that it is a mathematical certainty that we will be spending ever increasing share of our income on health care.
"Our company is cutting costs here by laying off highly skilled (no move up skills) people in areas such as stress analysis, modeling, CFD. These jobs are now being done in off-shore facilities in India."
Is this happening in defense industries as well? That would be self-destructive, no?
In other words, 'They' is the Wild Bunch...
it's like with college tuition increases. how much of the price inflation, supported by debt or government subsidies, went to upgrade actual teaching infrastructure,especially labor, as opposed to physical or administrative overhead?
some investor guy wrote:
Apparently "freedom of choice" isn't one of them-
RD + 1
I know math. I worked with math. Krugman you sir are no mathematician
Basel
How about all the degrees certificates and other bullshit you have to get now to qualify for the same job a boomer got 2 years out of high school?
EHP wrote:
+1
Currency debasement, historically, has shown itself to be the path of least resistance.
I've thought for a long time the rhyme this time would be that the Smoot-Hawley moment plays out in the currency markets rather than the legislature.
Krugman you sir are no mathematician
Tim - Have you read any of Krugman's research papers? I'm just curious how you made this statement.
The problem with economists is not they don't math. Most of them do, and some of that math (like stochastic calculus) is quite nice and original.
The problem arises when economists get carried away by the beauty and power of math and forget about the flimsy flip-flopping foundations, like assuming fully rational behavior and fully efficient markets.
I was an Economics major, but Statistics or "Econometrics" were not yet required. If they had been, I would have chosen a different major. The Panda meant that mathematics applied to Economics to predict human affairs is generally bullshit, but the Economics establishment won't admit that the minimum wage is a political decision, not a "scientific" one..
Hi. havent read all the comments yet but I am at work and I never know when I will have enough time so i will post my question about this and then read the comments.
He mentions job sharing. So is that like two people working making 70k each, and instead of one keeping thier job at 70k and one getting the boot for 0 they have one job between them, split the hours and the 70 k and both employed? That wont work unless they both get all their debts crammed down to where 35k will support their family going forward. If they dont get the old debt wiped out or crammed down then a job at 35k aint gonna cut it. Or did he mean something else?
I am very slow somtimes but Browards work theory is seeping in. There is not enough work out and about to support all the jobs that are needed. therefore make each individual job smaller and smaller and you have enough jobs for all---its just like magic!! OOOOH wew are hitting the promised land of 20 hr work weeks and massive amount of leisure!! snort.
I am again posting my current chart favorite. I believe that real hourly wages will turn down from now on and productivity will continue to sky.
http://www.freeimagehosting.net/uploads/ee947bb285.png
Does anybody seriously believe that this trend will reverse itself? If not then how can the present form of society/political system continue to exist?
I spoke with Mish about this a few days ago and he sent me this article. It makes a very similar point that I have made for years, that by 2050 we will see 50% unemployment. My mantra has been that the last two digits of the year will match the unemployment rate until the system changes.
How we cope with this new reality will determine the future of our society and IMO the future of our species. Ignoring reality and fighting the last war fervently will not do us any good.
Robotic Nation, by Marshall Brain
MrM wrote:
Yes. It doesn't matter what mathematical techniques are applied to a set of false initial assumptions.
Hari Seldon is staring out from his Second Foundation smiling.
RE wrote:
How do you spell "hyperbole"?
MrM it was a joke.
Mathematics as I understand uses proven universal laws and constants. There are no laws or constants in economics that I know of... its mostly observed phenomena and assumptions
Here is one of his papers now
Japan's trap
Gave it a once over nothing of substance
OT... kinda. Anyone surfing around today, who isn't a coastal resident, take a peek at Curbed LA : The Los Angeles Neighborhoods and Real Estate Blog. There is no recession, everything's fine! Condos selling out! 800k crackerboxes are a bargain! New construction! New restaurants! High end! LA is the anti-Detroit.
Either everything really is fine, or this going to spectacularly blow up at some point. I really don't get it. /
Brown to Allow Regulators to ‘Tear Up’ Banks’ Bonus Agreements - Bloomberg.com
Well, gee. One less phony escape island banker "talent" can't threaten to flee to.
i love the fact that economic models assume rational actors.
Similar to the way those spell it without a clue.
JBR wrote:
Let's see. Where do we start? FHA, FNM, FRE, Fed's $1.2 trillion of MBS purchases, FHLB open wallet policies.... It's not that hard to get.
You will never see labor share in productivity gains.
Re job sharing
A very good post linked today by Yves Smith
It is a bit longish but well worth reading, so I will just re-post it entirely (emphasis mine):
Krugman Misses the Point about Kurzarbeit
Give him credit for recognizing that a society-wide policy of work-sharing is much more humane and rational than America’s current slash-and-burn labor market devastation. Especially in light of the increased unemployment risk faced by minorities and youth, it would be much better for government to push companies to reduce hours rather than bodies. So far so good.
But this is not the main reason Germany has an institutionalized short-work (that’s the translation of Kurzarbeit) program. The Germans have this strange belief that working builds skill: you go through an apprenticeship, you work with master craftspeople, you learn the subtle ins and outs of the particular firm you are attached to (in German you work “with” and not “for”), and lo and behold you become more productive. The key purpose behind Kurzarbeit is to not lose this accumulation of human capital.
Oddly, Krugman writes, “Now, the usual objection to European-style employment policies is that they’re bad for long-run growth — that protecting jobs and encouraging work-sharing makes companies in expanding sectors less likely to hire and reduces the incentives for workers to move to more productive occupations. And in normal times there’s something to be said for American-style “free to lose” labor markets, in which employers can fire workers at will but also face few barriers to new hiring.....But these aren’t normal times.”
In normal times the US runs a massive trade deficit with Germany, unable to compete in industry after industry on quality-price comparisons. Labor in this country is strictly an expense, not an asset, and therefore quickly shed when sales go down. Note Krugman’s language: it is “occupations”, not workers who are productive. Even our most knowledgeable pundits can’t imagine an economy in which the skill of the average worker is the main competitive advantage, the last resource you would want to shove out the door.
Tim waiting for 2012 wrote:
American economists and politicians loved giving Japan advice back then, too. These same people somehow manage to rationalize a belief that we aren't repeating the same mistakes.
No I missed the list. I am curious and would like to see it would you mind re-posting it? Thanks.
As long as this is being discussed, I would add that I have never seen the application of technology (computers, etc) make a business more competitive.
Another holy mantra that is total bullshit.
wrong, wrong , wrong... typical answer to unemployment, "* we don't have a jobs problem, it's a money problem, so we'll throw more money at it "*
reduce the government , reduce taxes, give business assurance the dolts, idiot crooks in government won't get in the way. Put all the global warming cap & taxers, free health care, social service nut jobs esp. Pelosi on a fast boat to the newly opened camp Gitmo.
MrM wrote:
Like, oh, tenured professors, perhaps?
Let's hear his take on it when we begin outsourcing academic economists. Walk a mile, academician.
Tim - That is one of his pop articles, like NYTimes columns.
A better choice would have been his original research like this one http://www.princeton.edu/pr/pictures/g-k/krugman/krugman-increasing_returns_1991.pdf
Oh, I do get it. And to bring this on topic... It's just an example of the "stimulus" money flowing directly into the pockets of people who don't need it. We talk about it here a lot, I get to see it every day. Sickening.
Um, you first, digalert.
mp wrote:
Exactly. Real wages have peaked for the majority. Offshoring is obviously another significant contributor.
mp wrote:
Yeah, that's one place where deflation is supposed to be a good thing.
Think of the consequence of 29.99% CC interest. By paying only the interest each month, in 3.3 years the debtor will have paid as much as the principle - AND HE WILL STILL OWE THE PRINCIPLE!
That is the banks' strategy.
The first group are going to be poor consumers; the last group may actually have some money to buy things.
The banks objectives and a consumer driven economy are clearly at cross-purposes.
Last thing I will say about Krugman is that he continues to say that any used capacity must be used but neglects to discuss whether that capacity should be have been there in the first place and whether there is sustainable demand for that capacity.
He assumes all capacity that was added over a fixed number of years was well-throughout and rational. In my almost 30 years this have never been true.
mp wrote:
Those fancy models of risk on mortgage backed securities sure enabled a lot more lend-and-flip mortgages to be sold than lend-and-hold.
More seriously, don't modern machining tools beat the crap out of the old ones? I have no first hand experience here, having never myself dealt with a tool more sophisticated than a screwdriver.
Well, we can forgive Adam Smith for linking the prosperity of the firm to the prosperity of state, can't we.
In 1776, Smith had no way of knowing that an outfit like Nike could roam the globe like locusts in search of the lowest labor cost and shift production to other countries after only a few days notice.
The Wealth of Nations is totally obsolete. It's eighteenth century economics.
Check out Effective Demand's website to see where the money is coming from and on what terms (e.g. down payments).
Bug eyes is recommending what Japan did. Let's ask them how that worked out, so far at least.
Sure, stimulate the hell out of it, and count the cadavers at the morgue from over stimulation.
mp wrote:
I assume what you're saying is that globalization hasn't worked out well. But, whatever its problems, aren't they just the problems that communities within the US have as they trade with each other, writ large?
mp wrote:
Airfares.
Japan/USA parallels:
Japan - Nation of savers.
USA - Becoming Nation of savers? Savings rate increasing... Hardly. Red herring - Nation of defaulters.
I totally agree. However, that will not change the way things will evolve. We now have a connected world and ever increasing numbers of jobs that can be either automated or outsourced. You may remember the article I posted that Chinese college graduates out of college now earn equal or less money than migrant laborers.
As to "I have never seen the application of technology (computers, etc) make a business more competitive.", I think "lights out" manufacturing would likely counter that argument. At least, dryfly made a pretty good case for it.
That's not my point. my point is that technology doesn't make a business more competitive except in the very short run.
The reason is that everyone acquires it. It's like an arms race.
Blogs.
(Or go read the newspaper...
)
volker the viking wrote:
What was it? 10 stimulus packages, each roughly 6% of GDP during the 90s alone (I quit keeping score after that).
During what should have been a period with near-perfect economic tailwinds for them. It doesn't bode well for us.
mp wrote:
As long as this is being discussed, I would add that I have never seen the application of technology (computers, etc) make a business more competitive.
Another holy mantra that is total bullshit.
Airfares.
Wal-Mart, PayPal, Amazon, FedEx
Of course technology can be copied, but the advantage is still there, even if only for a period of time
mp wrote:
Now I understand what you meant. This is the whole point why I don't believe that we will ever see increasing wages again for the majority and as a consequence an ever shrinking pie of available jobs..
Maury the Credit Responsibility Panda wrote:
but you don't have a Pulitzer
I'm glad someone does.
You could do that easily. In fact, if that's all you want space-wise,
you could prolly get that plus a river or ocean view on the space
coast. The rivers are wide. There are manatees and dolphins.
You could get something very nice in Fort Lauderdale or Miami,
but prolly not water view.
You could easily get a single family house.
As to safe swimming beaches.
Ummm, our water is (relatively) clean. Hence there are fish.
And there are sharks to eat the fish. You could step on
a crab. I have at least once.
If there are a bunch of sharks in a sort of school, they will
tell you. There are occasional rip currents. They will tell you
that too. I never give a single thought to it.
I mean alligators eat small dogs with relative frequency, and
you are warned NOT to bother the alligators when it's mating
season, but I've only seen wild alligators 3 times, when I was
on foot. Once in Miami where some idiot was feeding a small
(cute?) alligator bread in the canal. But I never bother to think
about it went I go for a walk.
It's annoying when the turtles get in the garden and snap off
the tops of the green beans (they don't seem to like anything
else).
And of course we have tons of lizards and moles and possums
and raccoons (annoying because they are clever, with hands,
and can get off garbage can lids), and bunnies and large birds.
And wild hogs, and snakes,mostly black harmless ones and
spiders and our state bug, the cockroach, /snark.
There is an eagle nest not too far north of here in the space
compound, and we see them flying once in a great while.
I don't worry about any of them any more than Manhattanites
worry about the occasional peregrine falcon.
It's a living ocean and stuff in it is alive.
If you want to talk with me about the wealth of nations, you've got to stop talking about The Wealth of Nations
It's history, nothing more.
Maury +1
Japan actually averaged 1% of growth over the "lost decade" and almost 2-3% from 02-07. trade surplus high levels of edu We will not be so lucky.
mp wrote:
I am in a business with an average product half-life of less than a year, and no ability to patent. Nevertheless, we crank out new products all the time. No one really has a competitive advantage for more than a few months, but that's enough to keep us all cranking like crazy.
On a macro level, if the technological innovations increase productivity then, even if no single firm captures the benefit as a lasting competitive advantage, society at large does as the same or better output is created with the same of fewer inputs, freeing people and resources for other pursuits, like blogging.
interesting comment - I'd love to listen:
"I would listen to an economist who said, "history is full of examples of good economies. Here is what you need: sound currency; honest weights and measures; markets that are generally free but regulated to prevent fraud, collusion, and coercion; liquidation of bad debt; and peace. Let's change any of our policies that differ from those, and watch things grow again."
mathurgrakesh wrote:
sounds like the Dutch Model
Nuke wrote:
Nuke - saw your post asking about the link from the last thread. I'm just getting caught up now. Recovery.gov shows a small business association loan to RINGSIDE COLLECTIBLES WWE Toy Wrestling Action Figures, Jakks Pacific, Classic Superstars Action Fig . It is in the amount of $689,000.
Hopefully I captured this link correctly - Project Summary
That pales in comparision to the $2+ million that went to the local school district
Recipient Project Summary
MrM
I think the spending to date, whether providing any return on investment or not, has been necessary to keep things afloat. The alternative is a deflationary spiral where real interest rates rise, as if the situation wasn't bad enough. I don't think they can indefinitely maintain this treading water, I think Japan only managed it because they could get by with the rest of the world growing at a good rate.
re: talk of developing countries earlier today
don't forget what the discussion was up until the crisis
The New Economics of Outsourcing - BusinessWeek
I actually wasn't referring to Wealth of Nations with that comment but to the fact that in any competitive environment, once superior tools are available(my view is that human labor has been commoditized) the tools arms race starts and the battle will not end until one side loses the war. In this case it is human labor.
On a macro level, if the technological innovations increase productivity then, even if no single firm captures the benefit as a lasting competitive advantage, society at large does as the same or better output is created with the same of fewer inputs, freeing people and resources for other pursuits, like blogging.
And we don't want companies to be able to harvest rents forever - imagine of MSFT were still the unquestionable dominant powerhouse of the home and small business computing. Thanks to Linux, Apple and Google, even MSFT has to innovate.
lawyerliz wrote:
Thanks, LL.
When I swam off Corona del Mar, it was for hours at a time, and I was far from any lifeguard, or indeed any other person. If I did that in FL, it sounds like I'd be at an elevated risk of shark attack. I'd have to stay close to shore and within sight of on-duty lifeguards.
The coastal view (ocean or river) sounds very nice. Any areas you recommend I pull up on the real estate search services, to get an idea? I want to avoid high-crime areas.
Driving to the beach is far more dangerous than swimming, even
with the sharks.
Are you retired or about to be patient? Work from anywhere?
If you look at the history of business, you'll find that management and capital have always shared in profit.
Labor never did in any significant way, and that's got to change.
That's why, as a businessman, I've always maintained that we need unions. It helps to balance the competing interests.
"you could do quite a lot that’s actually targeted on jobs"
I thought the first first 800B+ was targeted.... no??
Supply Side economics has supplied us with a big fat D. Toss out structure and regulation of markets and you get the wild-wild west. Create a tax code that only a masochist would love, allow corporation doing business in the USA endless means to avoid taxation by incalculable amounts and the upper 1-5% is estimated at least 100bl annually (not including tens of thousand hiding it overseas) Warren Buffet even spoke about his receptionist paying much more in taxation than he does in personal taxation.
Banking and finance serves a utility in society. We're looking at the wrong problems and asking the wrong questions. As one operates a business they have a responsibility to their clients/patrons, to the employees who make it possible, to the nation which supplies the workforce. A big stick got taken out of sustainable job creation. Its a negative-feedback loop as we don't have industries that feel any responsibility to anyone except of of course their shareholders (maybe). People are now viewed solely as a commodity from which to profit, thats it in a nutshell.
credit to a dear friend who keep the focus in the right place.
Harvard business school models exacted in their extreme is the problem. Globalization on 'efficiency' unregulated markets and exchanges and ever present inflation that the fed is very intent on reintroducing. Supply side economics sounds good on the surface until the sharks eat up all the meat- it created a lawless land of profiteering. Those financial 'innovations' have concentrated wealth absurdly while those with wealth did not live up to the responsibilities comes with wealth, not even to their own nation, let alone their own businesses. Outsourcing means that only 10% of our GDP is manufacturing now, the dollar declined 17% over the last 10 years while the financial gurus took more and more without producing anything of value, nothing tangible and nothing which benefited our society except for CNBS kool-aid. Greedy little animals that we are, many bought into it hook, line and sinker.
So I say the problem is systemic and falls at the feet of those who created it in the first place, who now are 'called' to fix it. Of course they aren't.
Probably someone posted earlier (I've not been around today) but Nouriel Roubini is also focusing on UE in US, that it will get worse before it gets better. Why is it that its okay to throw TRILLIONs into the lap of those who executed this mess but heaven forbid we spend direct stimulus in sustainable job growth, taking inefficiencies, inflation, metering of care for profit created by insurance companies out of health care, etc., etc. Thats too much like those of us who are taxed out the wazoo at higher rates than a billionaire actually getting something in return besides a nice big shafting made possible by being the schmucks who actually pay our tax dollars isn't it?
lawyerliz wrote:
Could be. But I'll probably work another 3-5 years, as long as I am having fun and am paid well.
Come to think of it, I'd be more scared of druggies or
pirates if I was that far away from shore.
patientrenter wrote:
True. However, just like lobbyists, poor men seldom hire economists.
Skin in the game, mp. If it motivates industrialists, why not laborers.
I think Japan only managed it because they could get by with the rest of the world growing at a good rate
That and the sizable current account surplus along with the high savings rate, which allowed the Japanese government to borrow domestically
So, the basic premise is that employment matters. Why?
I remember reading in a book about the Scotch and
engineering, that the laboring/lower class Scotch never
ever benefitted at all from the Scotch part of the Industrial
Revolution. Hence all those Scotch engineers who went
someplace else to earn a decent living. This was nice
for the cross fertilization of ideas, but not at all nice for
the Scotch people. The Scotch part of the Industrial
revolution ended without any trickeling down. The promise
was never kept. Beam me up Scotty.
As far as airfares go, I won't discuss it unless we can also talk about air transportation safety.
Fact is, the airlines are destroying each other using a business model and technology that is entirely inappropriate.
Just so you know, I won't ride on a commercial airliner.
I. just. won't. do. it.
because we can't digest wood properly.
That's why, as a businessman, I've always maintained that we need unions. It helps to balance the competing interests.
While individual businesses might be tempted to squeeze their labor to improve their margins, they want other businesses to pay their respective labor more to be able to buy more and better products.
A society that wants to grow economically has to ensure its median income is growing.
Let them eat termites!!
Easy, the next jobs program will be WAR. because if you fail at war people die. and the leftover will have work to do!
president Geithner/Bernanke/FED think War will save America.
I say Kill The Bankers!
MrM wrote:
The ability to devalue their currency.
Cheap energy for most of the 90s.
The fact that CRE - rather than RRE - crashed, with less direct effect on consumption.
A modicum of cultural homogeneity.
Again Patient, give me a clue. Urban/suburban, coast center etc, etc.
mp wrote:
For safety reasons? Commercial airlines have a pretty good safety record, I thought.
If I had a private plane, I'd use it as a first choice, for convenience. But... I don't have my own airplane.
MrM wrote:
which is impossible if the rest of the world wasn't growing at a good clip
Private airplanes are dangerous, if only because of
the idiots driving them. Doctors in particular kill themselves
a lot.
Scotch engineers + I won't ride on a commercial airliner
We are so screwed...
We need 8-10 million high paying / high benefit / low skilled jobs in the next 2 months or we start the next major leg down.
Gonna be interesting to watch the US currency begin to be tied to the unemployment reports.
Yes, absolutely. They scare the hell out of me.
EvilHenryPaulson wrote:
+1.
So, economists might want to start to think of Japan as the best possible outcome of stimulus.
Like Jack's character said "What if this is as good as it gets?"
=== ????
MP- so if it is 18th century obsolete economics---if we tweak the way it is now then it works again right? So if we make it so a gallon of gas is 8 bucks and transporting the superwidget that was made in china is now sooooo expensive it cant be done economically. presto. the old school economists win!! oh boy and if the cheaper labor countries suddenly become so unstable that no one can produce or consume there then another win-win for home consumption. And the econimists of today can study it and give it some neato name like 'economically sustainable locality -adjacent production and consumption' and they can win a nobel and get roast beef everyday.
ok recap 1. huge inflation
2. destabilization and wars
will lead to
1.economic stabilization
2. prosperity for all (well, all in the USA)
Dont worry and fret so much MP. It will allll lead to even more skittles and rainbows for all. Once we tweak enough so that the old style works again.
RE wrote:
In order to change it we first have to stop reacting every time somebody screams socialism. Then we have to mandate that the maximum a CEO can get paid is some multiple of the average/median wage. FDR recognized that sometimes capitalism needs to be saved from itself. We can either accept a little less of it or later give it all up.
It is a good hypothetical question- what if the share of corporate profits went from around 12% of GDP to say 6% of GDP with the difference going towards wages. Would the stock market fall and if it did would that be a bad thing?
patient- there were plenty of sharks off corona del mar while you were swimming...great white sharks roam a mile offshore or closer...
I've seen blue sharks right next to the jetty there..
the chinese drywall in that condo will kill you before a shark does.....
lawyerliz wrote:
Oh, sorry, I wan't specific. My absolute first choice would be somewhere close to the water, within walking distance of a downtown with good bookstores and bakeries and grocery stores. I don't need the gift or souvenir or antique stores. But in places I've lived until now, that starts at well over a million. But, like I say, I don't know FL and the market there, so I guess I'll start at the top.
My family have all retired, and almost all have chosen nice homes in very picturesque locations in tiny towns (with populations as low as a few dozen people), sometimes at the coast, sometimes inland. I always enjoy my visits, so I guess that tiny-town setup would work for me too.
Nuke wrote:
I disagree. It's quite easy to save money in healthcare. It's just that little of what is proposed involves savings.
There is a saying in analysis of cost of medical plans. For any particular group of people, providers will try to get savings by changing utilization. It is so deeply embedded in insurers' and governments' approaches to healthcare that they often don't realize there are alternatives. Fewer drug interactions, better specialized care, fewer smokers, fewer people overweight, better compliance with doctor recommendations, better rankings of providers, and better information systems.
In the longer term, new medical procedures, vaccines, and treatments can have a huge effect on reducing cost. One of the problems there is incentive. Without government or charitable support, some research just won't get done. New treatments that could save many lives and much suffering, but wouldn't make much money for the firm.
Historically the airline safety track record has been pretty good
Ben Sherwood: Wing and a Prayer: How Safe is My Next Regional Plane Flight?
"Historically, the safety record for piston and prop-jet aircraft has not been as good as that for pure jets," Barnett says. "US regional jet flights have a splendid safety record," he goes on. "They have suffered only one fatal crash in the past two decades. "
According to Barnett's analysis, your risk of death on your next regional jet flight in the US is 1 in 30 million. In other words, you can travel every day for the next 82,191 years - on average - before you will die on a regional jet. (For comparison, your chance of dying on your next trip on a major carrier - one of the big airlines - is 1 in 60 million).
See also Air safety - Wikipedia, the free encyclopedia, which puts air travel safety (per billion of journeys) between that of car and bike
Of course, that might be changing recently
I'll only fly in an airplane after drinking a lot of scotch.
There is a little Chinese drywall, but not much.
Tell me about it.
Liz, there's an airplane, the Beech V35. People in the business call it "The Doctor Killer."
There's nothing wrong with the airplane. I consider it a pig, but there's nothing wrong with it.
There's nothing wrong with certificated general aviation aircraft. Nothing. They're perfectly safe.
The problem, and you said it, is the "driver."
And the people who work on them.
That'll keep you flying while everyone else
makes like a brick.
Amen
That is going to change.
If I was a
I'd drink the Scotch.
as EHP said, the world was growing at a fast clip
Amen_2
RE wrote:
This has been a repeated concern as different new technologies came into place. It was originally a worry about agriculture, then manufacturing, then computers. So far, each time some other major form(s) of employment arose. In fact, this is one of the ways that large increases in productivity are possible for an economic sector.
EHP,
+1
some investor guy wrote:
Just like it is to balance the budget? I think we have to stop kidding ourselves that there are easy fixes to both these problems. Waste only gets you so far. As I keep saying to my liberal friends - if you eliminated all the profits of the insurance companies, their overhead and the pay of their CEO we would be in exactly the same position that we are in 3-5 years. We have pretty much taken care of the things that could be done on a bulk basis- from here on in medical technology is devoted to curing rarer and rarer conditions and the unit cost of each treatment goes up exponentially. At some point as a society we are going to have to say "sorry you won the misfortune lottery".
creditcriminalslovetarp wrote:
C'mon, CCLT, bite me. Oh, bad choice of words. I agree that the great whites were in the neighborhood, but the density was low. I think there are more sharks in FL.
That is going to change.
Safety Board Looks for Cause of Hole in BWI-Bound Jetliner - washingtonpost.com
And Southwest is one of the most profitable carriers
Well there were quite a few ads for a 2-2 on the water with
an garage, townhouses and condos, in your price range--
and that was asking of course. You will have to drive to
bookstores.
There was an ad for a condo overlooking the banana river
within walking distance of Merritt Square Mall and 2 bookstores--
big ones. I wouldn't swim in that river, but it's a 10 minute drive
to the Ocean. You can see launches from there. But that
building didn't do all that well with one of the measelly storms
we had in the years of the 8 hurricanes. Still, it's fixed now.
MrM wrote:
So, I would have to challenge Mr. Krugman to point us to a single example of successful stimulus in a large-scale modern economy.
mp wrote:
The neoliberal dream, from Reagan through Clinton through Bush and now Obama: take all the cream for management and capital, and let labor inject the heroin of credit cards.
It worked, for a couple decades. The present crisis has brought this pinstriped drug peddling to its end game.
Enlightened as always, mp.
mp wrote:
Ahem. If I was doing my research on paper, it would be massively slow and painful. If you cut off my internet, I would be pretty slow.
They saw a white shark in the harbor a few weeks ago
The difference this time is that we introduced hundreds of million of low wage workers into the global economy at the same time. when India and China run out of cheap labor then you will see productivity gains going towards labor. Ironically Global Crossing whom nobody will remember in 10 years is the unsung hero/ villain (depending on your perspective). The internet destroyed geographical boundaries. Thus unlike previous introduction of technology which still required using the work force within a geographical area (essentially the speed of horse) until the introduction of trains and later automobiles this time around labor could be hired anywhere.
the reason why the world growing at a good rate is necessary to keep things afloat is that the only way to maintain output/income while increasing savings to repair your balance sheet is through an increase in net exports. Once growth is scarce, the easiest and most likely result is from net importers to raise tariffs to boost their own domestic economy.
The reason why they can manage to tread water right now is that pegging-countries are absorbing the hot money and/or eating the negative carry on higher domestic interest rates vs the low US Treasury rates they earn on reserves. Their balance sheets aren't bottomless, and unlikely to tide us over until a miracle happens
reading these threads leads me to one conclusion:
eliminate insurance in all its forms -
I just don't get the shark fears.
You could worry about lightning, instead.
We have a lot of lightning. Nasa spends a lot
of time and energy worrying about lightning.
And, mp, it was only a chunk!
"The answer is that I don’t think I’ll get anywhere, at least not until or unless the slump goes on for a long time." - The Honourable Sir Professor Paul Krugman Esquire, PhD
I.e. he doesn't argue for what is right because nobody will believe him? That is sooooo disingenuous.
lawyerliz wrote:
I love that name! If you can't live at a real address that says "Banana Republic", then living on the Banana River is the next best thing. I think that fits the bill, Liz. I can bicycle to the water for my daily swim, and hang out at the bookstores and bakeries before and after. Sounds very tolerable! How do you work with the hot summer weather? Just stay indoors?
Plenty of jobs if we deport illegals. It may come to this as the work force will need to be reduced as jobs go overseas.
This is how high taxes effect business. Just apply on a world basis.
Loss of 300 Frontier jobs to Milwaukee a matter of taxes, says Republic CEO - The Denver Post
You are going to die someday, Patient. If a shark
eats you, at least you will make the newspapers.
I have occasionally thought that too.
Sorry, but you missed my point, so let me put it this way.
There is no long-term relative advantage, no competitive advantage, in the application of technology because everyone acquires it.
(and the reason why country's are likely to use their trade deficit as an asset is that for now, the labor force is growing and without economic growth, real incomes decline and that is a powerful political force easily harnessed)
lawyerliz wrote:
Liz,
you obviously don't surf
Nope. The surf here is pretty lame.
Except once when there was a hurricane offshore. It was
the one and only time in my life I was afraid of the waves.
We also have the Indian River.
There is a LOT of waterfront on the space coast.
Disempowered Paper Pusher wrote:
good luck with that
lawyerliz wrote:
be sure to walk on it first
actually, the banana River is a tidal estuary, but who's counting?
Maury the Credit Responsibility Panda wrote:
In the long run, Hoover dam was a pretty good one even if it didn't do enough to tread water. But it was an investment, and a well timed one because labor was cheap at the time. Stimulus can just be a monetary process to print and distribute money. There is also an economic side to stimulus, where you could spend to stop people from freezing/starving in the streets and take the sharp edge out of the adjustment being muddled through.
I think a Keynesian aspect is valid, but not applicable to the current adjustment -- this is more than a hiccup. However for the Keynesian aspect to be complete, you must be willing to tax the hell out of people during a boom if you want to spend like hell during a bust.
Yep, EHP, and who is gonna do that?
EHP,
You're firing on all cylinders today -- good stuff.
To reinforce your point about not having to pay our debt, I'd add that the Volcker option expired at least $4T in debt ago. There's no way out now without some form of default.
So long term it all balances out and there is no competitive advantage, like the saying "if everyone is special, then no one is special".
So to go a step further on MP's assertion. If there is no technology, no gimmick, no neato thing that will give a business the advantage in the longterm since if it is a beneficial thing soon all business will have it or die then what does ultimately and in the longterm give a business an advantage?
Answer: The people laboring for the company. hahahaha. I find it so rich that in order to fund and obtain the newest thing they are gutting the one thing that will help them in the long term.
Hmm, hence the germans focusing on the people working, labor, and institutional knowledge. Fill me in, but arent they. like, y'know the most legendary engineers and industrialists? BMW, VW etc?
some investor guy wrote:
This was easily possible while average human intelligence and ability was still dominant. That is an assumption that cannot be sustained today and even less in the future. BTW I worked all my career on "saving people" and I wasn't selling religion.
Very good.
There is a Banana River Drive, and one of my son's brief girlfriends lived
on it, on the water, in a rather crummy house. I wouldn't want to be that
close to the water, personally.
Rock Hudson as Cdr. James Ferraday in the movie "Ice Station Zebra":
"The Russians put our camera made by our German scientists and your film made by your German scientists into their satellite made by their German scientists. "
YES, YES, YES!
TJ and The Bear wrote:
Someone could try and repay the debt, but the pain -- and I use that word very consciously -- would be too much. Probably enough to support an overthrow of the government. Interest rates would have to be kept low to keep the debt affordable, which means growth would have to be kept low, which means it would take forever to pay it down, and that would cause a similar backlash. So sharp + quick or dull + long, the debt will not be repaid under any extreme
*However for the Keynesian aspect to be complete, you must be willing to tax the hell out of people during a boom if you want to spend like hell during a bust. *
or
tax the hell out of an estate once they die - this to me is the biggie in Amerika, I think estate taxes will go exponential in the next 10-15 years
mp - you might know about how Dow Chemical was a power house after WWII, yes?
Thomas Jefferson, as you're probably aware, had some thoughts on that.
Just saying.
Barley wrote:
The WIllie Sutton approach -- go where the money is. If (and I say "if") extremely high taxes are in our future, then I'd expect some form of very progressive property taxation, too. When there isn't enough income you go after assets.
Just jumping on here for a minute, but wow. Gold at 1124? Wow. Wonder when this will end. It will. Just wonder how much longer.
Barley, sorry, I don't know the Dow story.
TJ and The Bear wrote:
"The Russians put our camera made by our German scientists and your film made by your German scientists into their satellite made by their German scientists. "
like my German wife says, "We won!"
Outsider wrote:
I'm showing 1125, with a brief high over 1128. WOW, straight up when the market opened.
Barley wrote:
most retirees have zilch for savings. Those that have 'real money', probably can avoid most of it short of a communist-style grab anyone who looks rich. just playing the opposition's advocate, I don't really feel strongly on the matter. Would want to see what the US gini coefficient is post-housing bottom via the survey of consumer finances (surveyed next in 2010, every 3 years), because Brazil (and colonies throughout history really for another example) have managed highly stratified incomes/wealth -- and I don't know if/when/where that breaking point is. 5 years into the future is at the frontiers of my imagination
just because one business can get the same technology doesn't mean they can be as competitive as the other business...
Someone has to own that technology and understand how to maximize it to enhance revenue..then implement it....then keep it moving forward....
I've seen great software/technology lanquish in a pool of laziness and ineptitude...
patientrenter, I hope you buy a house soon, so we can hear your arguments as to why the Fed-Gov should be trying to maintain housing prices -
I have a few ounces. I'm waiting for it to hit $1M an ounce. Then my troubles will finally be over.
Outsider wrote:
Worx4me!
Patient might look at a short sale. Then he/she will find out
how much Patience she/he really has.
Seriously, if you are going to retire in 3-5 years, start looking
about a year before.
I've seen great software/technology lanquish in a pool of laziness and ineptitude...
Xerox PARC?
Glad I could do it for you MP, but shhhhhh! or Mrs. Mp might get a little miffed,eh?
I have another question and you seem to have a very deep knowledge of business history. If you cannot/will not answer it would you prehaps know where to send me to start findingout on my own?
I have heard through the years about the aftermath of WWII being one of the reasons for the massive growth in GDP and productivity in USA during the 50's and sixties, and it makes sense.
The rest of the world in tatters and flattened, barely able to subsistence feed the remaining population nevermind industry.
But isnt this today the flip side of that? Whole nations were flattened, infrastructure obliterated, a whole generation slaughtered so they rebuilt and during the rebuilding had to rely on manufacturing from usa but as they rebuilt they had newest buildings, newest tech, newest machines combined with the institutional knowledge and the desire of the whole people to re-acquire the ability to not only do for themselves but become leading manufacturors again.Hasnt that led to huge advantages to usa in the now? I mean even china fits that kinda, even though they werent flattened like Germany was, but they started from rural commie pigfarmers and were able to build state of the art new factories, warehouses, roads, etc instead of tired old detroits and other rustbelt holdovers.
Isnt this just part of the same thing, just benefitting the other side now?
My way of looking at it, genius in its simplicity, is this is not going to work. The economy is a firetruck and the engine won't turn over. They think they need to charge the battery. It's not the battery. Until they figure that out they just going to keep charging and jumpstarting. Eventually they will try replacing the battery. That won't work. Meanwhile half the town has burned down.
O/T:
The entire royal administration were killed and then buried along with the King in his tomb. Gives a whole new meaning to regime change
Outsider wrote:
I gave up maple syrup when it hit $1.00 ounce (for real 100% Canadian stuff). Maybe that's the next store of value?
If the government wants to create jobs, it needs to do something that will create the NEED for people to do something. War, space exploration etc. Throwing money at the problem is silly considering how indebted we are. Any job growth needs to be durable. I don't know where these guys think we'll get the money from. Our debt to GDP ratio is skyrocketing. Since the nations that are LENDING to us have skyrocketing ratios themselves - we'll need new sources of cashola. Maybe we can beg Chavez or sell the Taliban some weapons.
What rsj said.
Except that we are being flattened now, so maybe then
we will have the advantage shortly??
Things speeding up so much and all.
I gave up maple syrup when it hit $1.00 ounce (for real 100% Canadian stuff). Maybe that's the next store of value?
Not quite as fun to slide through your fingers.
mp research Dow and technology and German industry - fasinating!
I hate to buy after so much appreciation, but since I bought in the mid 700s, I
can consider it averaging up, right?
Don't forget the German space scientists.
Sure, that's part of it.
And China has a fire in its belly. That helps even more.
But the Germans are calculators, and they've learned the lessons the hard way, and they have a national identity.
But one example, you don't have preach to the Germans about the dangers of inflation. It's in their DNA.
nova
how about we're on a boat that has been hit below the waterline. no matter how fast they bail, there is always more water. so they sit up top on deck chairs while pretending the problem is under control because swimming to shore is a lot of work (the lifeboats were sold earlier to pay for more liquor) and maybe aliens on a trade mission from planet Xungor will come and save them first. Once everyone gets to land, they'll all be terrified of going out on the SS Debt again. But over a long period of time where we rebuild, and memories fade over generations, we'll go back out with a hopefully better set of captains that won't try to see how fast and far they can get from dry land to one-up the last guy at the helm.
Are you thinking of buying gold LL? I don't think I'd have the nerve to do that. I cashed in a poorly performing IRA (small) in 1999 and bought a few ounces of gold for $250/ounce. I watch gold prices go up mainly as sheudenfraude (or whatever that word is).
Not sure if it counts as flattened, but similarly the West's wired telecommunications infrastructure became an albatross cpmpared to the undeveloped world once wireless and satellite became available. US is now probably one of the lesser advanced (not sure if that's the correct choice of word) personal communications society.
Almost every time Krugman talks about more stimulus, someone mentions Hari Sheldon. However, I think of the psychologist BFSkinner and his novel written in the late 50's or 60's about the 21 century. He correctly predicted that there wouldn't be enough full time work to employ all Americans who needed to work. IIRC he thought that all jobs would be divided in two and each worker would work 4 hrs. perday for regular wages and people would have a lot more free time. I guess that's partly a make work program and maybe the government would pick up part of the cost. I don't remember if or how Skinner covered the economics of his idea.
I never bought gold to make money, but for insurance.
We bought some silver in the last go round in the 80s and
never sold it whilst it went up and down. Neither will go
to zero.
sheudenfraude. I like it.
Outsider wrote:
That's an interesting thing to say. Is the "barbarous relic" idea that deeply ingrained?
mp
inflation is over in Zimbawbe, they just renounced their currency and overnight the problem was solved.
they could even soon be the next destination for the caravan of multi-national factories now that Asia and Emerging Europe are too expensive.
inflation in Germany was absurd, it was deflation that led to the real problems of declining real incomes and unemployment (eg Hitler's first Thyssenkrup supported coup during hyperinflation failed, but his second Thyssenkrupp supported coup during deflation succeeded, and I'm the term coup loosely because the second one was technically legitimate)
EHP,
I think they know the SS Debt needs to be rebuilt but the owners won't pay for it. Plus how can they make money while its in the yard? They just tell the captain "Hey! You survived one heck of a storm. Get back out there. We got goods to sell to the natives." So the captain does a couple shots, sighs, and puts out to sea again.
"and forget about the flimsy flip-flopping foundations"
such as the dollar itself, which is a purely political entity which changes in relative 'value' literally every second and is generally unfit for any manner of mathematical enterprise which involves anything beyond referencing itself (and even quite poor at that).
economics is really just the marketing branch of political science.
TJ - you'd buy gold at 1125 an ounce? You have more nerve than me.
Yes, works fine except for those damn "externalities" like cheap transportation and even cheaper offshore labor.
Outsider wrote:
Why? What would make you so hesitant?
"...and each worker would work 4 hrs. perday "
that's all most people are good for, anyway -
My quickie contribution on world doom.
First: if you don't know where you are going (a mid-long term goal), then any road will take you there.
Do we really want a one-world capital/labor market (with clearly more mouths to feed than jobs/income to supply them)?
Or do we want an acceptable economy for US (or US/Canada/Mexico)?
Very different goals.
Do we know where our leaders think we should go?
Do our leaders know where our people want to go (given a choice that is informed?
One world vs one continent? A big choice. Will the other continents let us get away with a US choice of going mostly alone, even with say a decade or two of transition? Will mother nature allow us to ignore the rest of the world? (global climate change).
I don't see how we as ciitizens can define what to do this year and within 5 years with our domestic economic and monetary policies without knowing where we are going. The default seems to be one world. Can our people and system accept the costs (personal and financial) of a least common denominator economic world?
In the meantime, we need jobs, or we won't have the social structure to decide for ourselves.
I
Seriously TJ? Get in at this price point?
You won't find me in Las Vegas, and you won't find me at the coin shop right now either.
Yeah, I'm very much aware that all of the bottom feeders now consider Zimbabwe their destination of choice.
I can't wait to see how that works out.
/snark off
Plus the owners of the SS Debt think "So what if it sinks. We habe insurance!"
"I'll only fly in an airplane after drinking a lot of scotch."
That's fly in, right?
Well it seemed high in the mid 700s. Not.
Outsider wrote:
That's your problem, you consider it a gamble. You won't accept that you've been programmed by TPTB to voluntarily relinquish your wealth.
What makes cash, stocks or bonds safer? Is it too much of a paradigm shift for you to adjust to the new reality?
crazyv wrote:
Well, I see that you have some of the same problems with assumptions which plague Congress and the insurers. Don't feel bad. They have concentrated so much on certain topics that others don't even get aired.
There are a number of conditions or treatments which cost 5-10x as much in the US as in other countries with very good healthcare systems. There are also a number of conditions much more prevalent here, like obesity and diabetes.
lawyerliz wrote:
and their leather overcoats and iron cross award draped by Hitler personally
And a cold, too!!
But that is exactly what MP means. It aint the tech. The tech is just a tool.
It is the people and the knowledge they hold that will make or break a business in the long run.
Many times the new toy, the tech, the neato spiffy new way of doing things are needed and necessary, if only to stay in business against those that do have it but it always and forever comes down to the people working within that business.
Ha from the ceo to the toilet scrubber. It be the people and the gray stuff between their ears. the smart and able business organism has the poeple within itself to utilize the neato new stuff correctly. and in thelong run they will be the business that lives, vs a business with all the neato spiffy bells and whistles without the gray matter to use it right. *not that Mp uses neato, spiffy, or silly words like that. that is alllll me.
I'm calling a bubble. We'll see.
Thing is, just think how much money you waste.
Insurance.
Won't go to zero.
but, where in the hell does this ... "guy"... think we're going to get another $300B in gubmint money to create jobs?!??!?
TJ, we're headed cashless. Electronic credits will be the wave of the future. Gold will be worthless.
That's my story and I'm sticking to it.
(I'm not giving up my few ounces tho)
lawyerliz wrote:
I have it on good authority this was so
Nuke wrote:
ok. Nuke out did me. his point is better, too. pretty much sums up what i feel.
The bubble hasn't even started yet. It'll happen, but we're a long ways from that.
p.s.: I've had people telling me it's a bubble for years now. I expect I'll keep hearing it. Want me to dig up some old blog posts?
"but, where in the hell does this ... "guy"... think we're going to get another $300B in gubmint money to create jobs?!??!? "
we're gonna sell Texas back to the Mexicans -
mp
I think the what will be the lead problem that needs to be addressed is jobs. Having something everyone can do indefinitely that lets them put food on the table for their household. That at such time savings is already meaningless, regardless of monetary -flations. We have some monetary delays that are expensively keeping the status quo ante going forward, after that it is burning through people's pride (and shame of not being able to support their household), then it's possibly the sum of all fears. I'm not supporting any authoritarian rule when I say this, but it is important that we have a real leader by then. A doctor ready to operate instead of a nurse just trying to stem the bleeding. A captain instead of a gilligan. A leader instead of a manager. There are no maps for where we're going
"and their leather overcoats and iron cross award draped by Hitler personally"
I met someone once who'd received a decoration from Hitler, pinned on him personally by the dictator. He was a Balt (ethnic German) from Estonia. He wore a leather overcoat - in winter in northern Virginia - and walked a large Alsatian dog. Central casting? No, reality.
He wasn't wearing the decoration on his leather coat, though.
That's easy, look at the U.S. from 1870-1920. Government taxes, interventions, size, regulation, everything easily less than 1/10th of the present.
In 1921 President Harding cut the peacetime budget by 40%, a reduction contemporaneous with overcoming the quickest recession (they called it a depression) in American history.
Perhaps you don't realize just how small the government used to be, and how big it is now. Thomas Jefferson was THE Department of State, by himself. He asked Hamilton what the Treasury Department was going to do; he could think of no useful purposes.
Now, I defy you to read all the bills passed in Congress in any single day. They come out faster than an Evelyn Wood graduate can read. The Federal Register spews thousands of pages every week. It's night and day.
If I had the money, I would set up a call center in Mexico
Well, you said something with which I can completely agree.
Poor Paul K. Double fucked and he didn't even know it.
:
Forget the last 30 years. What do we do from here on?
If creating jobs through gov't spending isn't the answer, what IS the answer?
This commentariet seems better at criticizing than proposing a comprehensive plan. Who will lead us to the promised land?
"ok. Nuke out did me. his point is better, too. pretty much sums up what i feel."
Has it occurred to any of us that perhaps no one knows precisely what to do - not the experts, nor anyone here? Where is it written in bronze that there are obvious solutions to this predicament?
For that declining oil field, what was it's name again?
Began with C.
Posting really slowing down for me as we approach
the 300 mark.
TJ and The Bear wrote:
I think in some sectors it has
Cantarell
PR & LL:
Spent my boyhood in Florida so here are my 2 cents.
If someone likes to live near water, then the first question is what type: fresh or salt.
If fresh water, then explore living on one of the many rivers in north or central Florida: St John's River or Crystal River.
If salt water, then decide between on or near the beach or else, on or near the intercoastal waterways. If your choice is near the beach, then concentrate on property on one of the barrier islands.
Since you are moving from California, rent (don't buy) until you are certain that you can handle the climate. First, it is a wet, soggy heat, not at all like the dry heat in much of California. Second, there are swarms of mosquitoes at dusk so plan on screening in your outdoor space or staying inside. Third, Florida is flat, so don't plan on wonderful landscape views. Fourth, the sunsets are spectacular.
If you have young grandsons (8-14), consider inviting them to spend the summer with you, if they know how to swim. Buy a dingy with oarlocks, spend a couple of days teaching them to sail and row the boat, and then, let them loose upon the water to explore.
NW
Jim, I didn't know what you were going to post - but perhaps we might be thinking alike.
JimPortlandOR wrote:
you can't handle the truth
volker the viking wrote:
FTR, we were specifically discussing
volker the viking wrote:
omg: I'm getting a code red!
barfly wrote:
you're going to start THIS again?
barfly wrote:
Barfly, I will put all my arguments for that in my post-purchase book, titled "Triumph of Self-Interest"
LL, I am still mulling which continent to choose as my retirement home, so I probably won't be pulling the trigger within the year. Florida is intriguing, I must say. I like warm weather, and the water.
"If creating jobs through gov't spending isn't the answer, what IS the answer?"
much more progressive taxation than we currently have -
and a four hour work day -