Too Much Supply, Too Little Demand

Washington (Com)Post ^ | August 25, 2002 | Steven Pearlstein

[Gritty]

To understand why the U.S. economy can't seem to muster a stronger recovery, it helps to look for clues in Victorville, Calif., where 500 unused and unwanted passenger jets -- some of them brand new -- sit wingtip to wingtip in the desert.

Or in Detroit, where the Big Three continue to churn out large numbers of passenger cars that they sell at little or no profit, just to keep their factories busy.

[Ernest_at_the_Beach]

Victorville?

There use to be way more over North of Lancaster at Mojave!

[dtel]

Having just been through the 'telecom corridor' in Dallas, the vacancy rate of 25% seems a bit low. We are talking virtual ghost town.
Haven't been down town in a while, but it must be pretty full to make up the difference.

[Dog Gone]

Sounds like deflation to me. Unfortunately, it's something that's hard to stop. Why buy today, when things will be cheaper tomorrow?

[edger]

Isn't it about time for the Democrats to suggest farmers pour out milk and slaughter little pigs, again, to keep prices up?

Yeah, didn't work in 1933 either.

[VOA]

To understand why the U.S. economy can't seem to muster a stronger recovery, it helps
to look for clues in Victorville, Calif., where 500 unused and unwanted passenger jets --
some of them brand new -- sit wingtip to wingtip in the desert.

Someone should buy the writer a clue...it's spelled "Norm Mineta".

For a few months after 9-11, people cut back on flying due to fear and safety concerns.

Since about Christmas time, people still are staying out of the sky...now because
Norm Mineta can't move past the injustice done to him, his family and other Japanese-Americans
more than a half-century ago.
Thus, our air travel security is based on a moronic model that makes Israelis
feel sorry for us only because they have the good manners to not laugh at us.

OK, I blame Dubya for keeping Mineta in place...what I don't understand is why
the heads of the airlines and the airline unions haven't been saying it's time
for Norm to go.

But I won't be suprised if they do start b-tching in a month or two. Once United
files for bankruptcy...but things continue to go down hill.

I know this isn't the whole picture of our current economic problems...
but it sure is part of it.
And it's something that could be fixed.

[SAJ]

Just FYI, 2 weeks ago, the IBP division of Tyson Foods announced the liquidation of 30,000 sows. Short term, this is a negative for hog/pork prices, too much supply. Longer term, say by next June, this is hugely bullish for prices. To confirm this, check the differential between December 02 and June 03 futures on CME, now at $23.95/cwt, a level not seen in decades.

CRB index has been higher, fapp, all year. Deflation? Only in the asset bubble, with real estate coming up next, I think.

FRegards!

[Procyon]

Norm Mineta can't move past the injustice done to him, his family and other Japanese-Americans more than a half-century ago.

Mineta's parents were not Japanese-Americans. They were Japanese citizens: enemy aliens. Ten-year-old Norman accompanied them to the camp. I thought Congress had voted reparations to this group. Are they whining now that it wasn't enough compensation? Why did we bother trying?

[philman_36]

Or in Detroit, where the Big Three continue to churn out large numbers of passenger cars that they sell at little or no profit, just to keep their factories busy.
It's strange that they would spend so much time and money making taxis. Did they stop making automobiles to make passenger cars?
That is what a passenger car is isn't it? A taxi...a car that is used to transport people who have paid for passage (passengers) to a particular, specific destination.

[BuddhaBoy]

One reason it hasn't happened already can be found in the labor agreement between the United Auto Workers and General Motors Corp., Ford Motor Co. and Chrysler Corp. that requires companies to pay the workers their full salaries through the end of the contract, whether they are working or not.

Why not just move the auto plants to the old USSR? If this isnt socialism, I dont know what is. Unions were an important part of building this country, but lately, I havent seen much good coming from them.

[Gritty]

If this isnt socialism, I dont know what is.

I think their reckoning is coming soon, at least in the auto industry - and even the airline industry. When the old contracts expire or they restructure for bankruptcy, there will have to be major changes in the way they do business and that means the unions will take major hits.

It's too bad so many unions have been involved in eating the goose that lays the golden egg. With a little more forethought and a bit less greed, they could be doing wonders for the American worker.

Now, if we could just figure out some way to get rid of the NEA and other featherbedding teachers unions, we might get back to decent production in government schools, too! Unfortunately, there is almost no way to make them respond to actual market forces.

[VOA]

Mineta's parents were not Japanese-Americans. They were Japanese citizens: enemy aliens.

Thanks for the factoid. Never heard that on the evening news (and not suprised either).

I admit to ambiguous feelings about the Japanese/Japanese-American detainments.
On the positives, I see the detainments as a good idea when a foreign power has attacked...
AND as protective detention as a full-bore "pogrom" against the community could have
easily broken out if the general public had seen/know more about the depradations of
the Japanese Imperial Navy and their land forces.
(Having seen a grainy newsreel of a riotous crowd attacking a German-based business
in England at the outbreak of WWI, this is not an idle thought.)

At the same time, I can see the guvmint (e.g., we, the people) making the detainees
financially "whole" after the war, even if it took some years. (OK, there goes my
compassionate feelings...blame that on my parents...).

But the thing that totally ticks me about Mineta is that he feels he's some sort of avenging saint.
His whole approach is that since he and others suffered some about a half-century ago...
you and I should have to put up with a bunch of B.S. whenever we want to fly.

In fairnes to Mineta, he may just be perpetuating some bureaucratic B.S. that was
around before he arrived.
For about 2 years before 9-11, I was already being subjected to the "I need to further
search your bag" just about every single friggin' time I went through a security checkpoint.

All I know is that if I was "of color" I probably would have the basis for a lawsuit.
But being a nice middle-aged white guy, I go along with the B.S.
To do otherwise would be a conviction and jail term.

[BuddhaBoy]

I think their reckoning is coming soon, at least in the auto industry - and even the airline industry. When the old contracts expire or they restructure for bankruptcy, there will have to be major changes in the way they do business and that means the unions will take major hits.

Yes, I agree.

However, the economy will take another hit right along with them, due to what I think will be a massive increase in unemployment in the coming few years.

It will serve them (and us) right, because collective greed always results in anti-capitolism. The NEA is nothing but a socialist shell organization, who protects the stupid and incompetent at the expense of children.

[Moonman62]

The reason there isn't enough demand is there isn't enough investment creating new markets and new jobs. Stagnant markets need to be stimulated and in some cases replaced by new ones. The liquidationist argument being trumpeted in this article is what got us into so much trouble at the start of the Great Depression.

[hinckley buzzard]

The article is not "making an argument" so much as it is simply describing present reality, and what is pretty much in the cards for the future; whether one likes it or not being totally irrelevant.

[hinckley buzzard]

The article is not "making an argument" so much as it is simply describing present reality, and what is pretty much in the cards for the future; whether one likes it or not being totally irrelevant.

[dirtydanusa]

There was an article in our local newspaper that the U.S. is losing approx 100,000 manufacturing jobs a month as companies move their manufacturing to China or Mexico. For a while, these people moved into service industries. Now, this too is dying as the manufacturing foundation crumbles and people now have to watch where they spend their money.
It's also amazing how the unemployment rate is reported to be steady as more and more people lose their jobs.

[Moonman62]

The article is not "making an argument" so much as it is simply describing present reality,

Sure they are. They are saying the problem is too much supply caused by overinvestment, and in particular they are blaming Bush's tax cuts. That's a leftist interpretation. I'm saying the opposite is the problem. It's much more than an observation.

[Looking4Truth]

It's also amazing how the unemployment rate is reported to be steady as more and more people lose their jobs.

Factor in 'under-employment' and it's a whole new ballgame. How many former IT or manufacturing people are working sh*t jobs just to keep food on the table since those jobs evaporated? Some people I know are working more than one of those sh*t jobs just to feed the family and keep a roof over their heads. We're not talking about non-qualified people with out of date skills, either.