Posted on 09/29/2009 5:27:17 AM PDT by Shane
“The services of our service economy are not really exportable like manufactured goods.”
But they do harm our economy when we send these jobs overseas, for these reasons:
1. Higher unemployment (anyone who still believes that those who lose these jobs in America will simply find another, BETTER job needs to put the crack pipe down).
2. It’s US dollars that are sent out to be converted into other currencies, where that money is sent to generate activities in those countries (anyone who believes that this is good for America because that money comes back to America by the purchase of our goods and services needs to go and study the TRADE DEFICIT. That money is NOT coming back to America because we do not have the manufacturing capacity combined with exports that we once had. It will, of course, if we are all willing to adopt the standard-of-living of third-world countries. Then and only then will manufacturing come back to America.)
“So how did we get to this point? A bit of history tells us. Keynes had a plan for what became the Bretton Woods system of institutions and trading rules after WW II. Both the IMF and the WTO were founded based upon Keynes’ advice, but not all of Keynes’ recommendations were adopted. One omission was crucial. The institutions and rules Keynes sought would have disallowed serious trade imbalances. There would have been very different requirements for trade surplus and trade deficit countries, not the one size fits all policies now applied by the IMF and WTO. Specifically, Keynes proposed institutions and trading rules that would have required trade surplus countries to take down their trade barriers, while it would let trade deficit countries use export subsidies and tariff barriers for a while to bring trade into balance.”
And this is why Keynes is one of the biggest Intellectual Morons of the 20th century. This would require the central control of production, its costs and its prices, as well, eventually, of wage controls. All of these, as the Austrian school has pointed out so very well for decades, leads to dismal economic failure.
Real wealth is created by production and without production a country cannot survive.
America has severely penalized production since the 1970’s.
There can be no recovery with over 10% unemployment and that unemployment is not going down until there is more demand for housing and all the things associated with that market and I think real estate hasn’t really bottomed out yet.
On a related subject, where in the heck can you find 9mm or .380 ammo? Even Cabela’s is consistently out of it.
While I agree with the author’s thesis, I question his reference to the “thinkers” whose overall theories led to this problem. He makes it sound like this crisis happened IN SPITE of their theories. That is incorrect. This crisis happened BECAUSE of their theories.
This is a credit-based recession. All other recessions between now and the Great Depressions were inventory-based recessions. Trade deficits can be caused by either type. But that is of less concern to the effect of the trade deficit. In this crisis, the trade deficit is causing an inventory recession in those nations that rely on exporting to us, and they are causing (insanely) a credit-recession in America, since we have become 70% a consumer-based economy. I say “insanely” because a large portion of the purchasing power that America and Americans have has come from BORROWING (credit) funds from those manufacturing nations that are exporting us (China). We have a snake-eating-itself scenario with massive interest rates accumulating.
And all of this is only a small portion of the overall problem of this credit-based recession, which is the suicidally high percentage of deficit-spending to GDP. A little deficit spending is not a bad thing, in and by itself. When Reagan did it, it worked well, DESPITE the massive spending of the Democrat-controlled congress. And in that regard, it’s like you and me spending more than we earn for a couple of months on a credit card because we know we are going to pay it off when our bonus comes (risky, yes). By doing so, we acquire assets that we wouldn’t ordinarily be able to. When we pay them off, we have that much more real wealth.
The problem with this credit-based recession is that we never paid it off. We kept pushing the debt forward until we are where we are. So, in short, the reason that we are at the brink of economic collapse and pitching forward (not pulling back, as Obammie the Commie praises Himself for having caused) is that the government can not afford to pay for its liabilities, it does not have the manufacturing and export base to “produce” its way out of this recession, and it has destroyed its credit rating so that we can no longer “borrow” our way out of this recession. Oh, that last phrase may come as a shock. But essentially our “AAA” rating is gone and our economic credibility is living on vapors already. We’re just waiting for the formal “vote” from other nations that the tank is empty.
Our banking institutions BECAUSE THEY ARE A PART OF THE CENTRAL-BANKING MACHINE that Keynes and his ilk thought was the best way to manage an economy, is about to collapse. The Alt-A’s and Option-ARMs about to reset. Either of these will dwarf the Sub-Prime “crisis,” but they are both due to hit later this year and throughout 2010. Commercial real estate is also imploding as we speak. The signs are most visible in vacant office space and empty retail shops in strip malls, etc. This will soon work its way in to the major malls around you, which are going to become ghost towns for the most part. If you work in a cube-farm, get used to the idea of doubling or tripling up as landlords who own multiple buildings will seek to recoup these losses and will have no choice but to raise the rent on your employer.
In short, there is only way this recession/depression is going to end, since it is a credit-based economy. We must let all the banking and financial institutions that are essentially insolvent but who are currently hiding that fact FAIL. They must fail completely, their debt must be absorbed and their healthy assets taken over by stronger, better-managed institutions (less greedy institutions that do not over-leverage). We must bring manufacturing back to this country. We must pay off our personal, corporate, and national debt. And we must end the SOCIALIST programs that are destroying us.
Any idiot who says we need healthcare reform to HELP our economy needs to put the crack pipe down and sit down with a student of the Austrian school of economics.
“Real wealth is created by production and without production a country cannot survive.”
true.
“America has severely penalized production since the 1970’s.”
true again.
However, productivity can exist in any sector - and because productivity is often combined with innovation, it might even come in a market sector that has yet to be invented. It is the current heavy hand of a centrally planned government economy and unstable business environment that are diminishing the role of the innovator/producer and limiting our chance for recovery.
You’re correct. See my other posts.
Yes, the penalization of manufacturers (through punitive taxation, union-cronyism, and eco-punishment) have destroyed the ability of US manufacturing to compete with manufacturing in other nations. It has also greatly harmed the incentive of those who may have a better business plan to get started, thus increasing inefficiency in manufacturing.
Ya, there's going to be some pain, but reality has to set in if we are to survive.
The most damaging of all are the EPA and the Endangered Species Act.
We need to get rid of them totally and replace them with a government agency that restricts itself to clean air and water on a reasonable sensible basis.
It is wrong to dump poison in our rivers and lakes. On the other hand it is worse than dumb to declare the world is ending because we create carbon dioxide.
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If the self-proclaimed financial pundits and guru’s are bearish, then now is the time to buy equities.
Ammoman.com
CAN THERE BE ANY DOUBT THAT THESE IDIOTS IN CHARGE ARE TRYING TO COLLAPSE THE US GOVT???
TREASON
But don’t forget we are a “service economy” now.
All will be well....
Ahem...(sarc) if necessary.
Bttt
Check out the latest swindle.
We had them a bit fearful a year ago, but that passed.
There was an old joke that may not be considered permittable on FR, but here it goes: "If we ____ one Congressman at dawn for a week , the rest of them would change their tune pretty quickly." Truly, I don't want violence or death, but I want a sobering assessment of where we are headed, and the political games to cease. There is no free lunch.
Unfortunately unemployment is much higher than 10%. The headline unemployment number 9.7% is what we see when we read the paper. What we typically don’t see is the real number of unemployed. For instance, if someone has not actively looked for a job in the last four weeks, even if they want a job, they are not counted as unemployed. They are classified as a “marginally attached” or “discouraged worker”.
Right now, about one-third of marginally attached workers actively want jobs but have not bothered to look because they believe there are no jobs in their area, at least not for them. If you add that extra 758,000 to the unemployment data, you get what is called U-4 unemployment, which today is 10.2%. If you count all marginally attached workers the unemployment number is 11% (U-5 unemployment).
And if you add those who are employed part-time for economic reasons (i.e., they can’t get full-time jobs) the unemployment number rises to 16.8%. (That is called U-6 unemployment.)
.380 seems to be the hardest to get.
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