patrick.net

@Vicente

>The carrot has never worked. We’ll give you a bunch of freebies and hope you act nice. Startlingly like welfare isn’t it?

I had always wanted to know what millions of Americans saw in GW Bush. I realized last year talking to familty, that he "threw a bone" of sorts to his poorer backers (which is a very large chunk indeed), by giving the tax credit for having children. In some cases it resulted in the Federal Govt. sending them (net) money, welfare of sorts.

As wages lower so will the cost of goods...I am not too concerned with my ability to buy a house and provide food on $5/hour when the house will cost 10k and a gallon of milk will cost .50 cents.

"As wages lower so will the cost of goods…"

Wanna bet? I would be willing to bet money that you are WRONG. Will oil go down if wages go down? Heck no. Oil is traded on a global market and is not priced based on wages. If America is unwilllg to pay $150 for a barrel of oil, that is fine with OPEC. Because China is.

And healthcare has also shown itself to be complately immune from wages. Healthcare inflation is substantially higher than the CPI.

American in Japan says

I had always wanted to know what millions of Americans saw in GW Bush.

Rednecks like people who look like they may be rednecks - drives truck, talks trash, etc. Gore was a major yawn. Haven't you noticed that a good number of voters have no clue as to what the person they are voting for is going to do - Obama is "cool" (young and metrosexual looking) compared to McCain (old grumpy bastard). Kerry couldn't carry on a conversation with average people - too elite. Besides Bush II was a cowboy who wants an elite snob? Gore was too "I know better than you" while Clinton won the "he's like my freaky uncle that tells good stories". Trump will win if he gets the nomination because people think he's interesting - not because he is or isn't qualified.

It is easy to over-analyze voter patterns. Highly partisan voters are aren't going to change it is the uneducated and uninformed that decide the elections. The same stupid people that gave us Bush twice have given us Obama...

Legislature is planning to increase minimum wage in CA in January, so expect more illegals to be hired and more Americans to be laid off. Illegal will work for $3 to $4/hour, and won't be asking for benefits and other luxuries either. At some point it becomes a cost issue.

Feds are talking about cutting off farmers subsidies, at that point I can expect this nation to start starving. I think we are a little too spoiled with the fact that food is cheap and affordable. Maybe ApocalypseF is right by a coincidence... time to start planting potatoes because there might not be enough to eat later.

GS is lobbying for legalizing LiarIPO's, since LiarLoans was a very profitable gig for them, until another crash comes. Healthcare is rising in costs due to how it is structured in this country. Housing is going to tank, but thats the only positive.

A lot of interesting times to look forward to. We don't need commies from USSR to destroy our nation, we are pretty capable of doing that job ourselves.

ChrisLA says

Feds are talking about cutting off farmers subsidies, at that point I can expect this nation to start starving.

Won't a free market undistorted by government subsidies naturally seek perfection?

"Feds are talking about cutting off farmers subsidies, at that point I can expect this nation to start starving."

You do know that farm subidies go to people who are not even farmers, right? Bon Jovi. Tom Cruise. Ted Turner... all of them get farm subsidies.

>>The carrot has never worked. We’ll give you a bunch of freebies and hope you act nice. Startlingly like welfare isn’t it?

Exactly, "incentives" are just bribes to make corporations do what they should be forced to do by law. What's next, we should offer incentives to criminals if only they promise not to rob banks? Or should I say, give incentives to banks if only they promise not to lose all the depositors money, 10X over (with 10X leverage).

Oh, wait, we already tried that. How is that working for everyone?

And how about some welfare to Real Estate agents, if only they promise not to create mass housing hysteria? Yeah, that's the ticket.

According to the U.S. Department of Labor, Americans are too expensive:
Lofgren said that the average wage for computer systems analysts in her district is $92,000, but the U.S. government prevailing wage rate for H-1B workers in the same job currently stands at $52,000, or $40,000 less.
"Small wonder there's a problem here," said Lofgren. "We can't have people coming in an undercutting the American educated workforce."

Thanks for the advice...I think.

>unfunded do-gooder mandates placed upon them and ambulance-chasing lawyers to who raise uncertainty of risk in employing people.

What are some examples of these mandates?

Americans believe in only the carrot with no stick, which is why in the long run they will lose. A stick is very much needed, here you can have this tax holiday but if you don't use it to hire 10% more Americans you will forfeit it with penalties next year that would be a rational OUTCOME-BASED approach. But corporations don't want to actually deliver on their vague promises so you can forget that happening.

Chinese have no such idiotic notions, and use tariffs where needed. They are also not shy about prosecuting representative fraudsters.

Are businesses in Massachusetts afraid to hire because of the uncertainity of RomneyCare? Mass. must have double digit unemployment, right?

Are you sure you want to use the word "currently" to descirbe a law that does not go into effect for 3 years?

@Vicente

>Americans believe in only the carrot with no stick, which is why in the long run they will lose. A stick is very much needed, here you can have this tax holiday but if you don't use it to hire 10% more Americans you will forfeit it with penalties next year that would be a rational OUTCOME-BASED approach. But corporations don't want to actually deliver on their vague promises so you can forget that happening.

Well said!

@Shekgrinch

>There are plenty of them that want to hire...they are just afraid to because of the uncertainty of ObamaCare that they will have to deal with.

Once in awhile I agree with you, but you are just towing the corporate line here. Who was it that said, we don't have capitalism, but corporatism (in the USA).

Vicente says

Americans believe in only the carrot with no stick, which is why in the long run they will lose. A stick is very much needed, here you can have this tax holiday but if you don't use it to hire 10% more Americans you will forfeit it with penalties next year that would be a rational OUTCOME-BASED approach. But corporations don't want to actually deliver on their vague promises so you can forget that happening.

What would the company use the extra staff for if they have nothing to do? Making Soylant Green?

Chinese have no such idiotic notions, and use tariffs where needed. They are also not shy about prosecuting representative fraudsters.

You are deluding yourself if you believe those prosecutions (even executions) are carried out according to any conception of justice or fairness that we are familiar with. Those random take-downs are the reason why:

1. China is considered a totalitarian one-party state. Political patronage decides who gets prosecuted/executed and who goes free.

2. Almost all the bureaucrats there up and down the power structure are corrupt, enslaving their own people while stashing money for themselves in US Treasury and Swiss banks, so they can one day bribe their way out of their prison-state.

Our trade deficit is simply the result of government over-spending (both taxation and government deficit). When the government outbid American consumers in the market place for goods and labor, American consumers have to look for cheaper substitutes overseas. The military empire further unbalances the pro-con analysis for businesses: the risk in dealing with overseas despots are removed for the overseas operations whereas the cost of having that protection is transferred to the domestic operations.

The high unemployment and lack of jobs today in America is not caused by "shipping of jobs overseas" per se: the shipping of jobs overseas during the bubble years co-incided with very low unemployment rate. It was this low unemployment rate (and hence high wage price) that contributed to the relocation of jobs as massive government spending and promised spending (in the form of government guarantee on financial gambling) bid up FIRE (finance, insurance, real estate) sector wages skyward, leaving manufacturing employers unable to find workers in this country. Manufacturing sector in this country has been gaining jobs after the recent collapse in FIRE began.

The high unemployment and lack of jobs in this country are due to:

1. High taxation and regulations;

2. Existing debt service burden functioning as another form of very heavy taxation. It's like a "sin tax," except it's for sin committed several years back. If there were a $1000 tax on every one now for every pack of cigarette smoked 5 years ago or every bottle of wine or beer polished off 5 years ago, we'd be in just as much economic paralysis as it is now.

The taxation burden (both mortgage interest and tax are paid to bankers, the latter via sovereign/state/local debts) makes it hard for potential employers and employees to arrive at a price point where both find satisfactory, as a large slice has to be taken out to as a pound of flesh for the bankers (tax and interest on existing debt; tax paying for interest payment on government debt). Government taxation is just interest/tax farming for the bankers.

If a black box off shore can be found that would crank out brand new cars, big screen TV's and i-whatever even cheaper than Chinese can, that would actually help our economy: both retail margin would be higher and people would be able to come up with new business models utilizing the even cheaper substitutes . . . all assuming the government doesn't artificially mandate minimum prices via tariffs of course. Cheaper goods/service alternative improve standards of living not decreasing it; after all, coming up with less expensive alternative solutions is exact what technology progress means.

Reality says

Our trade deficit is simply the result of government over-spending (both taxation and government deficit). When the government outbid American consumers in the market place for goods and labor, American consumers have to look for cheaper substitutes overseas.

WTF are you talking about? What goods the the government outbid consumers for? All those American made appliances and electronic items? Consumers had to buy tanks and aircraft carriers from overseas? How does labor enter into the trade deficit at all?

What goods are you talking about Reality? What goods has the govt. outbid the public on? Cruise missles? Fighter jets? Are non governments buying these products?

No Reality, those are not the reasons jobs left this country. You don't need a long list to explain why jobs left this country. The answer is simply 2 words: Slave Labor. Why should I hire an engineer in the U.S. for $75,000 when I can get the same engineer in India for $12,000? Why should I hire factory workers in the U.S. for $14 an hour when I can get the same workers in China for 30 cents an hour? Answer those questions. I bet you won't because you can't.

JUst as I figured: a whole day went by and Mr. Reality did not answer my question. Except for shrek, it seems that most of our Conservative friends tout their nonsense, and then refuse to back up their claims when questioned.

So then why weren't any of them hiring before ObamaCare existed? Where were these corporations in early 2009?

bob2356 says

Reality says

Our trade deficit is simply the result of government over-spending (both taxation and government deficit). When the government outbid American consumers in the market place for goods and labor, American consumers have to look for cheaper substitutes overseas.

WTF are you talking about? What goods the the government outbid consumers for? All those American made appliances and electronic items? Consumers had to buy tanks and aircraft carriers from overseas? How does labor enter into the trade deficit at all?

The material and labor going into making the proverbial $64k toilet for the Pentagon is used up and can't go into the $64 toilet that you and I buy, so in order for you or I to get a new toilet, since both of us have better things to do (or at least had during the bubble), it had to be imported.

I literally had my workers hired away by the mortgage financing industry during the 2006-2007 time frame, and I was already paying $30-50/hr. How could any domestic manufacturer compete with that? It turned out, the mortgage financing industry could afford to pay so much because the "Greenspan-put" that everyone believed in. When the government subsidizes the financial industry like that, no other industry could really compete. The government subsidies were essentially outbidding the consumers and manufacturing employers

HousingWatcher says

What goods are you talking about Reality? What goods has the govt. outbid the public on? Cruise missles? Fighter jets? Are non governments buying these products?

Goods and services that government departments and bureaucrats buy.

Subsidies to various industries: financial, military, medical, education. As material and workers get bid into those industries, there was less available for the rest. People busy flipping houses to each other or pumping old retirees full of unnecessary meds were obviously not turning machinery on the factory floor at the same time.

So the govt. should not buy any goods and services at all? They should not buy guns for police officers? Medical equipment for wounded soldiers? Airplanes for the Air Force?

There is no such thing as being "outbid" for a good or service that is in large supply. Instead, if you don't get that good or service, it simply means your not willing to pay the fair market value.

HousingWatcher says

Why should I hire an engineer in the U.S. for $75,000 when I can get the same engineer in India for $12,000? Why should I hire factory workers in the U.S. for $14 an hour when I can get the same workers in China for 30 cents an hour? Answer those questions. I bet you won't because you can't.

1. Because they are not entirely the same. The US-based engineers would not have language barrier. You'd be able to see what they are doing more easily. They are more creative. they have better idea what the consumers in the US want.

2. You may run into more complicated red tapes and even property confiscation in India and China.

The seemingly omnipotent US military is reducing the normal risk of the latter, at the expense of the US domestic operations.

However, let's not forget the crucial point:

Even as old jobs go over seas, there should be new jobs emerging taking advantage of the newly available cheaper goods and services from India and China. When farming jobs moved from Manhattan to Ohio after the canals opened up, Manhattan did not turn into what Detroit is like today.

Actually, the Indians speak English quite well. Remember, they were a British colony.

shrekgrinch says

There are plenty of them that want to hire...they are just afraid to because of the uncertainty of ObamaCare that they will have to deal with.

This is ridiculous. Most of the law hasn't even been implemented, and businesses have plenty of years to deal with their alleged uncertainty (BS -- there's nothing uncertain about it). Nice useless talking point.

Businesses weren't hiring before Obamacare was passed and they aren't hiring that much after -- but in this post-recession era, I bet you anything that more jobs have been created since passage than before passage.

HousingWatcher says

JUst as I figured: a whole day went by and Mr. Reality did not answer my question. Except for shrek, it seems that most of our Conservative friends tout their nonsense, and then refuse to back up their claims when questioned.

What question are you referring to? I didn't get back to the thread until in the last hour.

HousingWatcher says

So the govt. should not buy any goods and services at all? They should not buy guns for police officers? Medical equipment for wounded soldiers? Airplanes for the Air Force?

There is no such thing as being "outbid" for a good or service that is in large supply. Instead, if you don't get that good or service, it simply means your not willing to pay the fair market value.

There is no "fair market value" when we are talking about how a government throw its weight around in the market place.

Most of the military spending is quite unnecessary for defense. The US is spending more than the next 20 largest military spenders in the world combined. In any case, whether that is good or bad is besides the point. When the US is devoting that much resources to producing those things like the military, finance, education, medicine, etc. etc. it should be quite obvious that the country would have to import consumer goods just to avoid a decline in standards of living.

Heck, if you really feel defensive about all the government spending the last decade, let's just say, if the Uncle Sam took everyone out for a huge series of football games or American Idol show . . . all are invited and and paid more than their wages to watch the shows . . . well, the country would simply drop whatever productive jobs they had. The imports would have to pick up the slack.

In our real life, that big bash happened to be the bubble years.

HousingWatcher says

Actually, the Indians speak English quite well. Remember, they were a British colony.

That must be why all the US consumer complaints a few year ago regarding Indian call centers customer reps having communication difficulties. Remember those in 2005-2007? When the unemployment rate in this country was around 4-6%? The call centers have been moved back to this country since 2008, yet the unemployment is in the high teens if not 20's.

"Even as old jobs go over seas, there should be new jobs emerging taking advantage of the newly available cheaper goods and services from India and China."

Ah aha haah aha ha ha. Heh.

The problem here isn't the offshoring -- that's "competitive advantage" -- the problem is the associated trade deficit, which makes the offshoring naked mercantilism with zero-sum game effects.

For 1H11 trade with China looks like:

To: 49,552.8
From: 182,965.4
Net: -133,412.6

So for every $3.60 we send to China we directly get $1 back in trade. The other $2.60 goes to KSA, Australia, or into investment.

We do get savings here at home from cheaper Chinese goods, but this is marginal and much of the COGS differential is showing up on corporate bottom lines and not lower consumer prices (cf. Apple).

It's this capital flow that has been steadily impoverishing the paycheck economy. $3.60 to China, $1 back over & over again.

Same thing with the trade imbalance with oil exporters like KSA. $3.30 to KSA, $1 back in trade with them.

Follow the money leaving the paycheck economy and entering the rentier economy.

"I agree with you that typical family should not be liable to tax payment."

I strongly, strongly disagree with this.

People need to feel the pain of their political preferences.

~50% of the public wanted to invade Iraq in March 2003. This invasion has cost us maybe a trillion dollars thus far; there should have been a tax surcharge on all Americans for this to educate people that being stupid has its costs.

For FY11 the war is about $100B, so this would be a 10% surcharge, or 200bps or so in marginal tax rates.

There should be a big fat 2.0% IRAQ WAR TAX SURCHARGE on everyone's paychecks.

There's no reason we needed to start running budget deficits again in 2001.

We were just allowing ourselves to be sold down the river by fucking idiots. Republicans are still shucking and jiving about their culpability in the rather thorough destruction of the system they inherited 1995-2001.

Like war, tax cuts are easy to get into but hard to back out.

Troy says

Same thing with the trade imbalance with oil exporters like KSA. $3.30 to KSA, $1 back in trade with them.

I agree that the two sets of trade imbalances are indeed very similar . . . but somehow think that's a bad thing in and of itself? Getting cheaper goods and cheaper oil than otherwise would be the case are actually bad?

The money flow analysis is incomplete when you do not take into account capital flow in the other direction. Take for example, Mercedes shipped millions of cars to the US, and in return they got tens of billions of dollars . . . then they used the money to buy Chrysler before essentially giving it away a few years later to an American hedge fund. When all the money flow is tracked, the net result was that Mercedes gave the US consumers millions of cars for free.

Japanese did the same thing with the Rockefeller Center and other landmark real estate.

Saudis did the same thing with Citi investment.

Chinese are parking their money in Treasury bills. When the T bills yield finally rise, and value drop, what do you think will happen to their $2T there?

That's the money side of the analysis.

Now on the goods and service side. What's happening is an influx of goods and services from other countries to the US. Why is that a bad thing? Doesn't the same thing happen to NYC everyday? Somehow the New Yorkers can still find jobs making use of the influx of cheap goods and marketing to each other and to tourists.

Manufacturing is commodidized in this world. Chinese have manufacturing for now only because they are willing to work their butts off for less than almost anyone else. Vietnamese are already undercutting their labor price, and soon Indians and Egyptians (and the entire "Middleast Spring") will join the fray taking jobs from Chinese, just like Chinese took manufacturing jobs from Koreans, Taiwanese and Japanese a decade and half ago. Why do we want Americans be forced into those jobs?

Reality says

I literally had my workers hired away by the mortgage financing industry during the 2006-2007 time frame, and I was already paying $30-50/hr. How could any domestic manufacturer compete with that?

Production workers walked away from $50.00 an hour jobs to work in mortgage financing? So they were working in manufacturing making 100k plus bennies then moved into a field that they knew nothing about and had no experience in because what?????? What a croc. This is pure BS. Go away mr troll.

How is mortgage financing a government job anyway? Last time I checked citi, boa, wells, etc. were still sort of public corporations.

That was playing rather fast & loose with the capital flows, Reality. Just because some hedge fund made a killing doesn't mean the US consumer is going to see any of this money.

This is largely why real wages are flat since Clinton and the top 1%'s share of income has risen, from 15% in 1995 to over 20% today.

Pull away the $500B federal deficit we've run YTD and where would the economy be today? That's $70B/month of deficit spending, 7 million jobs at $10,000/month per (and thanks to the velocity of money probably closer to 20 million jobs in total).

We used the housing bubble machine -- $1T+/yr at its peak -- to paper over our broken economy 2002-2007 and (when that blew up) shifted to deficit spending 2008-now. This is like Japan 1995-now, undertaxing everyone to keep the debt system from pancaking on itself.

"but somehow think that's a bad thing in and of itself? Getting cheaper goods and cheaper oil than otherwise would be the case are actually bad?"

No, like I said, that's the good part. The bad part is the money that's leaving the paycheck/J6P economy and not coming back (as wages).

These flows might come back as UST buys or 0% offers from Citibank, but not wages.

It's all unsustainable, failing to look at the paycheck economy in/out flows. The state's job is to fix these kinds of imbalances before they build up into social unrest and mass wealth destruction. It's even in our Constitution, as a mission statement at least.

People who believe in an unregulated economy have a screw loose or are deluded fools.

bob2356 says

then moved into a field that they knew nothing about and had no experience in because what?????? What a croc. This is pure BS. Go away mr troll.

Reality said $30/hr, $5000/mo. Mortgage brokers could clear that in one loan, back during the bubble.

bob2356 says

Reality says

I literally had my workers hired away by the mortgage financing industry during the 2006-2007 time frame, and I was already paying $30-50/hr. How could any domestic manufacturer compete with that?

Production workers walked away from $50.00 an hour jobs to work in mortgage financing? So they were working in manufacturing making 100k plus bennies then moved into a field that they knew nothing about and had no experience in because what?????? What a croc. This is pure BS. Go away mr troll.

Nowhere did I say it was a manufacturing job. There was no benefits either at my place or at the mortgage financing firm. Both businesses offer(ed) significant commission-based pay. The mortgage financing firm simply offered higher pay, and that was very important for a B-school student working for only 3 months out of a year.

How is mortgage financing a government job anyway? Last time I checked citi, boa, wells, etc. were still sort of public corporations.

Mortgage financing industry was heavily subsidized by government policies: from artificially low interest rate to loan securitization by government sponsored agencies. That's how the industry was able to bid workers away from other industries. Ask yourself: how many thousands of people became loan officers, realtors, home builders, renovators, home flippers, etc. etc.; the vast majority of them had some kind of job in some other industry.

"Mortgage financing industry was heavily subsidized by government policies: from artificially low interest rate to loan securitization by government sponsored agencies. "

bullshit. The government is still "subsidizing" the mortgage market via FHA and the GSEs and not crowding out private investment.

The crazy times were caused by control fraud and the effective deregulation of the system by Republicans allowing the industry to run free:

http://www.energybulletin.net/node/52530

Troy says

like I said, that's the good part. The bad part is the money that's leaving the paycheck/J6P economy and not coming back (as wages).

That's because of the pathetic ROI in government(s). The dollar is certainly coming back. Just like in petro-dollar cycling, the mfr-goods-dollar cycling also must return all the dollar to the US via asset purchases etc.. The US dollar is not a circulating currency in China just like it is not in Kuwait or Saudi Arabia. The Chinese government gets all the dollars that Chinese exports earn, then buy oil from KSA, mineral from Australia and US securities. So the dollars must always return to the US either directly in security purchases or via a detour to KSA and Australia (or similar suppliers to China).

The real problem is what happens after the dollar is repatriated after Chinese buy treasury bills. Whatever the US government is spending that money on is not reaching the paycheck economy. It's actually having a negative return; that's why the FED has to print money in order to replenish the disappearing money.

IMHO, what's happening is that the government is shoving money out to the rich connected cronies, who instead of investing and hiring shoves the money right back at Treasury to earn guaranteed treasury interest rate, short circuiting the rest of the economy, especially the J6P paycheck economy altogether!

Raising tax on the so-called riches outside that circular money shoving between the government and TBTF banks actually wouldn't benefit the economy at all: more money would just disappear from the rest of the economy and get lost in that back and forth shoving to improve the balance sheet of the TBTF banks.

Instead, the government should reduce all taxes, heck just drop all taxes to zero and print up the money to pay for existing social programs, so that there can be a substantial money flow from that circle-jerk of money shoving to the rest of the economy . . . either that or stop cracking down on alternative money so the private sector real economy can create their own money to facilitate trade and division of labor.

Troy says

"Mortgage financing industry was heavily subsidized by government policies: from artificially low interest rate to loan securitization by government sponsored agencies. "

bullshit. The government is still "subsidizing" the mortgage market via FHA and the GSEs and not crowding out private investment.

The crazy times were caused by control fraud and the effective deregulation of the system by Republicans allowing the industry to run free:

Is someone named "bullshit" around here? People keep calling his name.

The crazy times were caused by expected government bailouts, which induced frauds to abuse those guarantees/puts.