One nation, over a cliff...

POSTED BY: SignyM
UPDATED: Wednesday, March 23, 2005 09:20
VIEWED: 7771
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RUE

Monday, March 14, 2005 12:32 AM

I figured you as retired, or with a VERY undemanding job. For those of us still working, with families, the internet is a luxury.

PS Yes, individually, people are encouraged to hedge their investments with a combination of govt (fixed income), international (sometimes called global, world etc) funds, currencies etc. Fund managers (eg TIAA-CREF) do that with the bulk fund. The nice thing about having it done for you in a bulk fund is that you, as an individual, don't pay a fee to move money in and out of various sectors to cushion downward moves.
The fund I am required to be in took a beating in the last few years with US stocks, and they are now diversifying with European stocks, global currencies, and 'emerging markets' investments. I'm guessing a good portion of my retirement contributions is now untethered from the US.

SIGNYM

Monday, March 14, 2005 4:57 AM

I am seriously... and I mean seriously... looking at foreign CDs. (This from a muni-bond, T-bill, and MINOR stock-player person!)

RUE

Monday, March 14, 2005 6:20 AM

SignyM -

to answer your question

Quote:
What do YOU think we can/ should do?

(though it was not directed at me), I will be thinking aloud ...

But first I want to explain my assumptions. I believe that while human resources can be multiplied through increasing numbers, which must be coupled with cooperation and technology, the physical world we live in is ultimately a zero-sum place. There are only so many trees to be felled, fish to be fished, or acres to be farmed. I'd go so far as to say there is only so much air to be used. In sum, human existence vis-à-vis the physical world is Malthusian. And so, the world in general and the US along with it is facing a shortage of resources.
The capitalist model, which does not concern itself with ultimate survival but focuses on short-term profit, would not see using up the last of a resource as a problem. Or it may even be considered an opportunity ,... if I can corner the last tree, I can make, uhm, let's see .. lots. And for profit or other reason, it could be a call to arms (literally): if there is only one tree to be felled, damn it! I'm going to fight to make it MY tree!
Now this seems to me to be terribly short-sighted. Is being merely the 'last one to lose' a reasonable goal, when there is the ultimate option in sight of not losing at all?

I would consider the various US problems in that context. Here is my take on the problems ...

Production job loss: "You want fries with that?"
- In the past, when shipping actual goods was an obstacle, jobs were more or less tied to the area of consumption. Now, goods made in foreign countries take routine and cheap trips around the globe, not by the pound, but by the freighter-full. And goods made overseas are cheap enough to offset miniscule transit costs. I'm sure this isn't news to anybody. So why is there surprise that manufacturing and textile jobs migrate out of the US?
In addition to manufactured goods, intellectual jobs are also highly mobile, and college-degreed workers (called 'white-collar production') are now 1/5 of the long-term jobless. http://www.latimes.com/business/careers/work/la-fi-jobless11mar11,1,61
61800.story?coll=la-headlines-business-careers&ctrack=2&cset=true
No wonder the government looks to 'small business' as an engine of growth.
And what kinds of jobs can't be 'out-sourced'? I would guess hands-on service jobs.

Unemployment and wages
- While 'unemployment' - people receiving unemployment checks - is only (roughly) 5.4%,

Quote:
"The employment-population ratio--the proportion of the population age 16 and over with jobs--was little changed over the month at 62.3 percent." http://www.bls.gov/news.release/empsit.nr0.htm

And "The share of men aged 25 to 64 who aren't in the paid labor force has remained fairly stable at 12 percent over the past 10 to 15 years, according to the Bureau of Labor Statistics."

Also from the BLS, long-term layoffs were:
1996 - 957745
1997 - 1041907
1998 - 1232384
1999 - 972244
2000 - 1018700
2001 - 1615522 *
2002 - 1375781 *
2003 - 1404331 *
Squeezed by loss of manufacturing and high-tech jobs from above, and competition for low paying jobs from below, real wages have fallen in the US.

The US - One nation, under debt
- Around 1982 the US went from being a creditor to a debtor nation. Around 1986, it became the world's largest debtor nation. And in 2001, the US aggregate population had a negative savings rate.
State and local governments are under economic duress.
And in addition to consumer, business, and non-federal debt, there is the national debt - the debt owed by the federal government, which hit an all time high (which is an all-time low) this year.

It seems the country is, well, going over a cliff.

I have what I assume would be very unpopular notions of what could be done. Most of this stems from the problem that our economic model is not concerned with long-term consequences.
I can already hear the apologists spluttering -But, but capitalism raises the standard of living al

SIGNYM

Monday, March 14, 2005 4:53 PM

Oh wow. This was much more than I expected. And so meaty, too.

I just have time for a very quick comment, wishing I could get into this in depth. I just heard a piece on radio (Air America) from a statistical marketing analyst. He mentioned some things I had not known/ hadn't thought about, so here they are in no particular order:

Saudi Arabia is at post-peak production. Apparently they have been injecting so much water into their oil fields (advanced recovery techniques) that they are now pulling up sour and contaminated crude, and have permanently damaged their oil-bearing structures. Iran is pumping gas into THEIR oil fields, and are also post-peak.

According to this guy, foreign banks and Asian nations (which collectively hold about 1.9 billion of American debt) have been quietly moving to Euro-oil for the past year or so. Once oil is sold in Euros, the need for stable US dollar reserves evaporates. Once THAT happens, nobody will really need to stabilize the dollar anymore. He predicts a 20-40% rise in everything related to oil, including fertilizer and food, because the US is being out-competed for oil resources.

I don't think the Treasury will let its paper sink to fire-sale prices, so they might print lots and lots and lots of dollars to buy them back. OTOH, the Feds might raise interest rates to make our currency more attractive.

If interest rates rise, the housing bubble will pop. IMHO, the housing bubble has been a MAIN driver of US consumption, bc it allows ppl to borrow against (somewhat) fictitious wealth. A drop in consumption would mean a drop in employment. If that is coupled with an externally-driven rise in prices, we will see a SEVERELY decreased standard of living for the average person .... even those that have access to a lot of US dollars. I need to think this thru bc there are a lot of interrelations and I'm no economist.

Geezer, Soupcatcher, Rue or any other thoughful person... how do you see this playing out??? And now, I have to go pay some bills....

HARDWARE

Monday, March 14, 2005 11:36 PM

Quote:
Originally posted by SignyM:

Geezer, Soupcatcher, Rue or any other thoughful person... how do you see this playing out??? And now, I have to go pay some bills....

Sounds like a replay of the late '70's to me. High oil prices led to a destabilized dollar. The fed cranked up interest and the economy hit a wall. I was still pretty young, but that seems to be how I remember it.

The more I get to know people the more I like my dogs.

SIGNYM

Tuesday, March 15, 2005 5:28 PM

This doesn't belong in this thread, but I just had to post it:

"...when a candidate for public office faces the voters he does not face men of sense. He faces a mob of men who's chief distinguishing mark is the fact that they are quite incapable of weighing ideas, or even comprehending any save the most elemental-men who's whole thinking is done in terms of emotion and who's dominant emotion is a dread of things they cannot understand.
So confronted, the candidate must either bark with the pack or lose. All the odds are on the man who, intrinsically, the most devious and mediocre. The man who can most adeptly disperse the notion that, in fact, his mind is a virtual vaccum. The Presidency tends to go to, term by term, such men.
As democracy is perfected, the office represents, more and more closely, the true inner soul of the people. We move toward that lofty ideal. On some great and glorious day, the plain folks of the land will reach their hearts desire and the White House will be adorned by......... a downright moron...."

H.L. Mencken writing in the Baltimore Sun, July 26, 1920.

RUE

Tuesday, March 15, 2005 8:47 PM

SignyM -

I see that foreign countries are already moving off the dollar, and pricing oil in Euros. I have also heard (and you may have heard this as well) that foreign countries are quietly forming trade agreements and partnerships, and quietly NOT inviting the US. I see this as a way they are trying to insulate themselves from US problems and prosper in the future.
I think the future of the US is dependent on foreign decisions. And how far they will go with this is anybody's guess. They might kick the legs out from under the dollar, or not.
The balance of trade has been continuously bad since 1982 (one year was an exception when the US allowed its dollar to float). It was only under Clinton that the Federal gv't moved from losing to gaining. So the bad times have been around for a long time, and the good times have been the exception.
Foreign countries may hold back on completely steamrolling the US, in which case the US gets a lingering economic illness. Or they might move forward. In that case, I see an economic collapse, probably inflationary as the US dollar becomes worthless internationally.

PIRATEJENNY

Tuesday, March 22, 2005 8:26 AM

Quote:
What do YOU think we can/ should do?

Hi Signym,I wanted to answer this sooner but I've been extremely busy and tired!!

I agree with so much of what you and Rue said that I really don't have much to add without parroting what you've both said so I'll keep my comments short

you would think if we know that getting rid of the debt would be the easiest problem to tackle, you'd think they know this..so why aren't they doing it!!??

The wealth of a nation is determined by what it produces in terms of products and services, not by how much money it prints, distributes or holds, America being a self sustaining country rich in many natural resources,in theory could actually survive without any currency as long as we are productive, I say in theory because Our belife system and our way of thinking being what it is, its not likely to happen

maybe we should get rid of the federal reserve Bank??

Our dependence on foreign oil could end quite nicely, if we would just simply start looking into alternative and new sources of energy

PIRATEJENNY

Tuesday, March 22, 2005 8:46 AM

Quote:
It seems the country is, well, going over a cliff.

I have what I assume would be very unpopular notions of what could be done. Most of this stems from the problem that our economic model is not concerned with long-term consequences.
I can already hear the apologists spluttering -But, but capitalism raises the standard of living all around the globe! Why, just look at, at -- Argentina? India? The Philippines?
Or instead, we could look at the US.

where is has the humanity gone, this country doesn't give a damn about its citzens!!!

Quote:
A drop in consumption would mean a drop in employment. If that is coupled with an externally-driven rise in prices, we will see a SEVERELY decreased standard of living for the average person .... even those that have access to a lot of US dollars. I need to think this thru bc there are a lot of interrelations and I'm no economist

I'm no economist either, but this is what I've been harping on, intrest rates are defintely going up, that you can take to the bank, and yes its all interelated

I still believe the coming fall of the economy is one of the main reasons why Bush wants to privatize Social Security, to sort of pad or cushion the stock market for the coming economic fall!!

HARDWARE

Tuesday, March 22, 2005 2:53 PM

Here ya go!

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=5567661291

For sale on E-bay, Social Security!

The more I get to know people the more I like my dogs.

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