Greenback Gloom (Not?)

Investor's Business Daily ^ | 29 Novmember 2006 | Staff

[shrinkermd]

No one, of course, wants to see the dollar in a free fall. And no question, it has retreated against some currencies. But worried? We aren’t.

The dollar isn’t weak at all. Indeed, it’s trading 19% above its level in the mid-1990s, smack in the middle of the Internet boom. True, it’s come off the highs it set in early 2002, when foreign investors still spooked after 9/11 were desperate to invest in a safe haven with sound markets, the rule of law, low interest rates and fast economic growth. That pushed the buck up sharply.

...The other is that, contrary to lots of current market reports, the U.S. currency isn’t “nearing new lows” at all. The reason is simple: Many people focus on very narrow measures of the dollar’s value — like the dollar-euro, or the dollar-yen, or even the dollar-yuan. By those gauges, yes, the dollar is hitting new lows or close to them.

...But this is an error. Far better is looking at the dollar against a broad market basket of currencies weighted for the amount of trade they do with the U.S. When you do, you see that while it’s true the greenback has slumped in recent months, over the long term it’s not down at all. And why has the dollar fallen recently?

[Toddsterpatriot]

I work in the machine tool industry. The problem is lack of skilled machinist.

What do you suggest?

[globalwhiplash]

Overwraught my good man. The end is near I fear for you. The chicken littles die in mass migrations. Lemming!

[Paul Ross]

Check this out:

Electric Boats Plans 1,000 Job Cuts
Associated Press Newswires 12/05/2006

HARTFORD, Conn. (AP) -- Submarine builder Electric Boat will likely cut about 1,000 jobs, or about 10.5 percent of its work force, next year due to a decline in work, company President John Casey said Tuesday.

The company hopes to make the reductions primarily through attrition and furloughs that would allow employees to maintain their benefits while out of work temporarily.

"If we can do that through attrition, I'll feel good about that," Casey said at the company's annual legislative breakfast. "Obviously I'd like to be hiring 1,000 people."

Last year, Casey warned that the company could cut as many as 2,400 jobs in 2006, but the company ended up only cutting 1,442 through attrition and layoffs.

The company, a division of General Dynamics Corp., now has 9,500 employees and expects to be down to 8,500 by the end of next year.

General Dynamics shares rose 33 cents to $75.63 in morning trading on the New York Stock Exchange.

Works like clockwork everytime.

[Paul Ross]

The chicken littles die in mass migrations. Lemming!

Like when they stampede for their bomb shelters after their weakness has resulted in disaster...

Neville Chamberlain.
Head Lemming.

[Paul Ross]

American production is 129% higher than Chinese production. Unless you have some data of your own?

Actually, you don't provide data for your assertions...you just baldly pull the number out of thin air.

Are you going to stick with this amusing and out-dated La-La-Land bluster?

American production is 129% higher than Chinese production.

LOL! Stated market values don't equal quantitative TONS of production as noted by the recognized experts...here:

Integrating the Chinese Steel Industry and Trade Policy into the 21st Century,
August 26, 2006

Professor Hans Mueller, TN Consulting:
"China’s steel industry has been the world’s largest for 10 years. But its growth greatly accelerated after 2000. Since then it expanded by leaps and bounds from 127 million metric tons (MT) of raw steel to an estimated 425MT in the current year. It is now about four times the size of the US steel industry.

Furthermore, steel production in China is still registering the fastest growth rate among the world’s major industries, including that of India."

China's highly-subsidized production is 425 million tons in the current year, Todd. And the production, and capacity is still increasing massively.

Let's revisit your debunked assertion:

Great, take their production and multiply by the price of steel per ton. Do the same for American steel. Then do the same for all our production. When you add it all up, American production is 129% higher than Chinese production.

Since when did you start calling Chinese production ... "our production" Todd ....h'mmmmmm? Perhaps you would be so good as to remind us again, would you, which country you purport to be a patriot for?

The median is not the average, Todd. You never did get that.

Still don't, evidently.

Your attempted deviation from apples to oranges doesn't save you...but even if it were true, would only provide general support for my points.

The U.S. industrial retreat into the specialty steels is a last gasp kind of posture. Sheer tonnage of steel produced is what more often than not what helps win wars.

[Toddsterpatriot]

Actually, you don't provide data for your assertions...you just baldly pull the number out of thin air.

Pulled right out of the thin air of this chart.

Stated market values don't equal quantitative TONS of production as noted by the recognized experts...here:

I never disputed the fact that China produces more steel than the US.

Since when did you start calling Chinese production ... "our production" Todd ....

Do the same for American steel. Then do the same for all our production.

Does that make it any clearer for you? American steel. All our (American) production. Understand? Get it?

Perhaps you would be so good as to remind us again, would you, which country you purport to be a patriot for?

That would be America, assclown.

Any luck proving that we don't produce 129% more than China? Have you realized the stupidity of bringing up China's cost of living when discussing their production compared to ours (America's, get it)? I guess not.

[Paul Ross]

I never disputed the fact that China produces more steel than the US.

Yeah. You did.

You can't hide behind your sudden claim of verbal imprecision, and trying to change the subhject of your claim of production...what you actually said "our production" where you had to properly place, for comparison...Chinese production... "All OUR production"

Spin, Todd, spin! Trying to turn your gross mistake (whether linguistic, or numerical) into a claim otherwise...

As for your purported patriotism, Todd...it looks like you impeach yourself:

That would be America, assclown.

Not very believable. I think we can see you laboriously hen-pecking the keyboard over in Beijing, where you can cast your aspersions freely against Americans. Truly patriotic Americans.

"Ass Clown"

[Toddsterpatriot]

Yeah. You did.

You understand total production includes more products than just steel? You understand that $1.79 trillion is larger than $780 billion?

what you actually said "our production" where you had to properly place, for comparison...

Sorry you're having a difficult time understanding my clear insistence that our (America's) production is higher than their's (China's). As supported by my chart. As contradicted by your lack of facts.

Trying to turn your gross mistake

LOL! I prove you wrong, so I must be a foreign agent. Any luck finding the name of the Fed official who sets T-Bill rates? Or does that make me a North Korean agent?

where you can cast your aspersions freely against Americans.

I'm not casting aspersions against Americans, just against assclowns.

[Petronski]

You must have a reading comprehension problem.

Great, take their production and multiply by the price of steel per ton. Do the same for American steel.

Todd's saying "Do the calculation for their steel and for American steel." He's obviously referring to Chinese production as "their" production.

So to answer your question:

Since when did you start calling Chinese production ... "our production" Todd ....h'mmmmmm?

The obvious answer is "not yet."

[Petronski]

You can't hide behind your sudden claim of verbal imprecision, and trying to change the subhject of your claim of production...what you actually said "our production" where you had to properly place, for comparison...Chinese production... "All OUR production"

How terribly sad for you, trying to twist the plain meaning of his words beyond all recognition.

[chimera]

The technology for all we purchase abroad exists here so gearing up rapidly would not be a big problem nor would it take long.

I'm not sure that is generally true. I was involved in a project a few years back for the utility industry that involved precision casting of a large steel component with fairly exacting purity requirements. I checked with domestic manufacturers that I knew had made such things in the past. Couldn't find one to do the job. Most didn't even know how to do it anymore. They'd sold out of the businesses and shipped much of their capabilities offshore.

The job ended up being foreign-sourced from Japan. If the sh*t hits the fan I'm not Japan will be around long as a supplier. They're right under the gun of the NK missiles. Reconstituting that capability here would be neither easy or quick.

I had an R&D program a few years back that needed some specialty nuclear materials that used to be made from a company in Oak Ridge. Called them up and found they'd shipped their production facilities to France. I called the French people and they said they could supply the materials fairly quickly, but it might take us two years to get an export license. Basically to import technology we'd developed here but sold out abroad. Since the program had a one-year timeline, the project got canceled for lack of materials. (And, please, spare me the standard FR response of "well, it's your fault you didn't plan ahead", because we did plan ahead, but you can't plan on your own companies selling out to foreign owners).

[Mind-numbed Robot]

You make excellent points and I don't dispute any of them. However, you are talking about normal peace time commerce and all the incumbent delays, red tape, indifference, etc. In a time of war, a war recognized by all the citizens and politicians, everything would be done on a crash course with all the red tape and niceties cut. No, it couldn't happen overnight and with long range missiles we would not be free from attack as we have been in the past. Also, with all the illegals in this country I would expect lots of espionage activity.

However, do we continue to turn out war materials we don't need in order to keep factories operating? In the absence of that, when we let the market operate as it should, we end up with what we have today.

What would you do?

[expat_panama]

we can see you laboriously hen-pecking the keyboard over in Beijing, where you can cast your aspersions freely against Americans. Truly patriotic Americans.

Whoa Paul, Is there a chance you might want to consider that a bit over the top?

[globalwhiplash]

Consumer goods are not crack. You can't be addicted to imports if you have no money to pay. We got plenty of money to pay. That's all the pusher wants to know. No money, no er ah crack!

[chimera]

In a war if you want to ramp up production quickly you need to have the basic infrastructure intact to do that. If you already have factories and shops and cottage industries making peacetime goods, you can switch them over to wartime production without too much downtime. That is what saved us in the wars we fought in the 20th century. Factories making automobiles could switch over to producing military trucks fairly readily. Likewise with aircraft. About the only "industry" we had to develop from infrastructure up in the last world war was the nuclear industry (production reactors, enrichment facilities, R&D, etc.), and the Manhattan Project took, what, four years to bear fruit. I'm not sure we'll have that much time come the next war. Building starting from the infrastructure up is a different color of a horse than re-tasking existing capabilities.

What would I do? First, convince people to recognize the problem as it is. Selling out our long-term industrial and R&D capabilities to make a short-term buck to enrich a very select few is probably not a good strategy from a national security and economic stability viewpoint. Second, raise up a generation of leaders in labor, business, science and technology, and politics, that understands that it is possible to maintain a healthy domestic industrial and high-tech capability and be competitive in the world markets without selling out to the highest bidder in the foreign marketplace just to make a quick buck. If we get those kind of leaders, we just might hack it, if the other side gives us time.

Thank you for your considerate post. We may have a different viewpoint on the urgency of this issue, but you are presenting an alternate viewpoint in a reasonable manner.

[Mind-numbed Robot]

What would I do?

Your suggestions require changing reality no matter how sound and logical they may be. I would suggest that eliminating obstacles to free enterprise in this country would accomplish the same thing.

What must not be overlooked is the root cause of the present situation - the growing influence and near dominance of the left (Communists) in this country. Google Communists Goals and be astounded. Destroying America and Western Culture and free enterprise has been their goal since 1848 and, with the success of the Reds in the Russian Revolution of 1917, their influence has been growing in Europe and America.

The are manifest in labor unions, teachers unions, government employee unions, our universities, the environmentalist (who do great harm to our economy), many personal injury lawyers who also limit our freedoms and cost our society lots of money, and many other things. Leftists politicians have enacted restrictive laws, always for our own good, of course, which greatly handicap our competitive position in the world. Without all that baggage we would not be losing jobs and industries to other countries no matter how cheap their labor is.

Stand up to them and their stupid deceptive ideas and these problems will be solved.

[chimera]

While I do not dispute the corrosive and pernicious influence of leftist ideology in this and other Western countries, there are other factors at work as well, some of them of our own making. I have been around a while, in private business, government, and academia, and one thing I have noticed above all in recent years is the rampant growth of rapacious, raw greed and selfishness. I understand that greed has always been an aspect of human nature, but only in recent times have we seen its destructive effects visited upon so many with devastating results.

Now, before anyone flames me, I am not speaking against efforts of individuals to improve their lot in life through hard work and achievement, building a better life for themselves and their loved ones. Lord knows that I have done that myself, and my parents before me for my and my siblings' benefit. But I do not believe that the headlong pursuit of personal wealth at the expense of one's fellow citizens and country is a healthy expression of this desire. In fact, in the end, it destroys those who practice it, thinking they are gaining material wealth for themselves while in fact they are losing everything.

Changing reality? Well, I guess I don't know what to say about that. We change reality all the time. Sometimes all it takes is a change of heart for a key individual or group. I do not believe that the destiny of our nation lies only in the unseen and sometimes capricious forces of the international marketplace. It lies within the hearts of its citizens, and in their character and moral constitution. We are a free people, free to make choices as individuals and as a nation. We can choose to control our own destiny, or sell it out in the marketplace to the highest bidder, gaining a little wealth for a few in the short term but losing something beyond price in the long run: our existence as a free and sovereign country.

[Mind-numbed Robot]

Of course morality is important to any society but the marketplace, left unfettered, is self-correcting. The corrections take longer sometimes than others but the marketplace will always prevail. The USSR and other tyrannical countries who resort to central control and planning are excellent examples.

Government regulations to mandate morality also work against their aim and distort the market. They don't defeat the market, they only distort it and bring about unintended consequences which themselves require further action.

I am not sure what horrible greed you are referring to, perhaps your academic environment is influencing your attitudes, but I would be happy to address them if you will tell me what the are.

An example that comes easily to mind is Bill Clinton's selling our missile MIRV technology to China for illegal campaign contributions. He was helped of course by Bernard Swartz, then CEO of Loral Corp, who benefited handsomely from it himself. He also kicked back a $100,000 contribution to Clinton.

If you are talking about outsourcing work and purchasing products to/from other countries I have addressed that above.

[chimera]

The "free market" works best when individuals and groups who participate in it understand what is at stake when they worship greed and money above all else, and when doing the right thing becomes subservient to making a quick buck for oneself at the expense of one's country and fellow citizens. The marketplace knows no morality. People do. If you use the marketplace to destroy your country and its citizens, and, ultimately, yourself, you're simply doing what the communists you fear have advocated over the years. Remember what Lenin about hanging the last capitalist with the rope he would sell him? The "free market" isn't so free if the people who make it up aren't.

No, I am not talking about regulations. I am not talking about taxes and tariffs. I am talking about understanding what is at stake. No, my "academic environment" isn't influencing my attitude. I am in engineering, and that is about as far removed from the social "sciences" as you can get. But, unlike many academics, I came up the hard way, being in private business and later government contracting before becoming a teacher. I help establish or was managing partner of three separate businesses, in various fields and various capacities. They were all successful (profitable). We were able to compete successfully with domestic and foreign competition without ever outsourcing or offshoring a single job. Sure, we had to go offshore for items which are no longer made here, but that's more the pity. I have seen business and industry flee these shores over nothing more than the pursuit of a final last, few lousy dollars. Bigger bonuses for CEOs and another penny or two in the dividend for shareholders, at the cost of hundreds of thousands of employees and untold billions in national wealth, as well as the overarching risk to our national security of the loss of key infrastructure, knowledge, human capital, and capability. The work of dozens of preceding generations, built with the sweat and blood of our predecessors, has been sold out to foreign ownership simply to boost the quarterly bottom line.

Sure, there is blame, and a lot to go around. I understand the destructive effects of punitive tax policies, and where those are responsible for discouraging business, government leaders are to blame for lacking the understanding of the effects of what they do. And yes, employees and their representatives in the labor "movement" are to blame for their share of greed and putting selfishness and personal ambition ahead of doing the right thing. To the extent that greed and the demand for inflated wages and reduced productivity result in competitive disadvantages for their employers, workers and unions share the blame. And to the extent that short-sighted and foolish decisions to sell out perfectly profitable and competitive businesses in this country for the sake of a few extra pennies of profit cost us national capabilities and place our security at risk, leaders of the business world share some of the responsibility for that.

We're risking the future of this country if we sell out its lifeblood today. The young people coming up through the ranks now aren't stupid. They can see what is going on. I have lost dozens of smart, capable engineering students who could have made a mark in their fields to places like law schools and business management programs. They see how companies in this country today treat their people. They throw them away like yesterday's newspaper for the flimsiest of reasons, sometimes outright lies. Why spend six or eight years getting an engineering degree if they can get a law degree quicker and make more money and have a more secure future filing lawsuits? Why sweat your butt off in the lab inventing new things if your CEO is going to offshore your job to Malaysia? Better to go to business school and be that CEO's hatchetman and make millions when you boost the quarterly bottom line by another few dollars by s-canning employees here? I'm telling you, if we don't "change reality" among the upcoming leaders of business and industry, we're going to end up like the one foreign executive who spent some time over here summed us up: Entertainment Nation.

[Mind-numbed Robot]

The "free market" works best when individuals and groups who participate in it understand what is at stake when they worship greed and money above all else, and when doing the right thing becomes subservient to making a quick buck for oneself at the expense of one's country and fellow citizens. The marketplace knows no morality. People do.

You have described the root of your complaint quite well. Why, then, are we discussing this on an economics thread? Your complaint is with morality and should be under philosophy or religion.

Free enterprise is simply an economic systems which is logically evolved from human interaction. It allows all to "do their own thing" and it is self correcting. Abuses are eventually eliminated by the distortions they cause.

Free enterprise and Christian morality are what made this country great, far outstripping all others by any measure.