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Bush's National Economic Policies (pg. 3)
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| rupert |
Ah the wonderful rosy USA economy. The tax cuts are only forstalling the inevitable crunch caused by the fact the US spends too much and its assets are overvalued. Eventually the Chinese and Japanese central banks are going to get sick and tired of buying the US Treasuries which pay for the tax cuts and when that day comes, a lot of people are going to seriously suffer, not just in the USA.
I wont reiterate why the US, and probably global economy is headed for a crash because either 1) you dont believe it or 2) you dont care.
I am willing however to make a serious bet that in a years time the US economy will be worse than it is today. To measure whether the economy is better or worse I suggest using the S and P 500.
Of course a bet isnt interesting unless there are stakes |
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| MisterOpus1 |
Just a little sidenote from our discussion:
Here in Kansas City is the headquarters of Sprint. Now as you may or may not know, Sprint has let go quite a number of workers worldwide, and at least some 7,000 or so workers here in KC in the last 2.5 years alone (I'm guestimating). Some of those folks happen to be friends of ours. One particular friend has been fortunate enough to keep his job through it all (primarily because he's one smart mother****** in anti-hacking security). Two weeks ago there was an announcement of more cuts to come, primarily in the IT Depts. And as you may have guessed, it will be due to outsourcing to India. And at one of the meetings he recently, their new CIO had this to say about their outsourcing plan:
"I don't want to hear any talk about patriotism. This is business, and we're here to protect our interests. And if those interests lie in India or elsewhere, then to hell with patriotism."
I wish I was kidding, and I wish he was lying. That quote was also confirmed by another aquaitence of ours in the meeting. Aside of this, he also mentions an extreme low morale in the company as a whole. He's not happy to be at work anymore, and the job he once loved is now completely sour. The money he makes, which is substantial, is no longer a factor.
I'm not sure one can infer from this example onto others in the corporate world who still have jobs, and I don't think it would be accurate for me to try right now. I just talked to my buddy this morning and he passed on this story to me, which was why I brought it up. I just thought it was interesting and somewhat relevant to the discussion at hand. |
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| Izzy |
this isnt about bush's policies or anything more along the lines of what the thread evolved into, the job market
| quote: |
Forbes
Intel chief: U.S. losing tech lead, jobs
It's not just that hundreds of thousands of technology jobs have been shipped overseas, Andrew Grove says -- it's that technical leadership seems headed that way, too.
By Lisa DiCarlo, Forbes.com
Andrew Grove is depressed. The chairman of Intel (INTC, news, msgs) says that the United States is facing a competitive crisis that puts the country is danger of losing its lead as the world's most innovative technology provider.
"I'm here to be the skunk at your garden party," Grove told a group of about 150 beltway types gathered in Washington, D.C., this week for the Global Tech Forum, hosted by lobbying group Business Software Alliance.
Why is the United States waning? Grove says it's because of offshore outsourcing, lack of federal support of sciences education and a "ho-hum" telecommunications infrastructure. "We've lost more than 500,000 tech jobs in the last two years to foreign competitors."
Indeed, many U.S.-based companies are either thinking about or have already sent white-collar jobs outside the country. Companies can often cut costs and boost productivity dramatically by hiring skilled labor in India and other countries. Much of that work lately has involved software development and professional services. Money 2004.
Smarter, faster and easier
than ever.
It is this area where Grove fears the United States will lose technical leadership and market share. As proof, he said that the U.S. market share for steel and semiconductors has dropped precipitously over the years.
"Is software and services next? It's a very valid question, and it would be a miracle if it didn't happen," Grove said.
A call to arms
To pull off the miracle Grove is going to need help, and he knows it. "We must fight protectionism here and abroad, double our productivity and raise the hurdles for intellectual property litigation. We must rally around this goal."
That might be tough, given that companies aren't ignoring the cost benefits of going offshore. In a morning session at the conference, the chief executive of Internet Security Systems (ISSX, news, msgs), Thomas Noonan, expressed what could be a widely held belief: "(Offshore outsourcing) is a train we've got to get on and drive or it's going to run over us."
How can the industry rally against offshore outsourcing of jobs when there is such a difference of opinion?
Grove says he's been there before, particularly in the 1980s when American semiconductor companies were getting the tar kicked out of them by the Japanese. "This is a democracy. Debate is good."
Grove also is depressed about the state of sciences education in the United States, which could eventually put the country in the position of relying on others for innovation.
"More than 50% of graduate students are foreign nationals," says Grove, who says the United States needs to attract foreign talent "with appropriate immigration policies." Grove himself emigrated from Hungary in the 1930s and went on to co-found Intel in the late 1960s.
Where will outsourcing stop?
Grove says that the U.S. government should invest more to attract and retain talented students. After all, the United States, he points out, has committed more than $60 billion in subsidies and aid to farmers, oil and steel companies and airlines. "One billion a year (to promote science education) would help us reach this goal."
Phillip Bond, undersecretary for technology at the U.S. Department of Commerce, in a brief interview, disagreed with Grove's gloomy outlook. "Education is one of the administration's top priorities (and) we are committed to bringing talent here."
That may be true, but it's worth noting that one of the tasks of the Commerce Department's technology group is to study foreign competitors. That includes warning against advancing or surpassing U.S. capabilities, which could prompt some federal funding to relevel the playing field. One example: the U.S.-funded development of Cray (CRAY, news, msgs) supercomputers several years ago, after Japanese companies built what was then the fastest, most advanced computer in the world.
Grove says it's wrong to assume that low-skilled jobs being outsourced now won't eventually work their way upstream to more critical tasks. When that happens, the United States could lose its edge. The People's Republic of China, he said, had stated a goal in 2001 to produce more world-class engineers.
"Do we have the national will to take productive action? When the problem becomes obvious, it will be too late -- and the outcome will be too depressing, even for me."
http://money.msn.com/content/invest/forbes/P63142.asp
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| Izzy |
Economic Growth Strongest Since 1984
By Tim Ahmann
WASHINGTON (Reuters) - The U.S. economy rocketed ahead at its fastest pace in more than 19 years in the third quarter of 2003 as consumers, their wallets fattened by tax cuts, went on a buying spree, an unexpectedly strong government report showed on Thursday.
...
http://story.news.yahoo.com/news?tm...s_nm/economy_dc
reactinos? Does Bush finally deserve praise for helping out the economy in the past three years? |
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| occrider |
I was actually going to post this but I got caught up in a certain other thread :rolleyes:. At any rate, a GDP growth of 7.2% is AMAZING. It's making me giddy as we speak ... expectations were at 6%. Consumer spending gained at 6.6% and I can almost assure you that a large part of that was due to the tax cuts. I posted before that the stagnancy of the labor market could have potentially been as a result of productivity gains, however, if a GDP growth of this magnititude does not stimulate the labor market, I don't know what will.
However, like I stated before this growth will be unsustainable without correlation with the labor markets. Hmmmm I wonder if it is no coincidence that these are the highest gains since Reagan ... |
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| Izzy |
| quote: | Originally posted by occrider
However, like I stated before this growth will be unsustainable without correlation with the labor markets. Hmmmm I wonder if it is no coincidence that these are the highest gains since Reagan ... |
i hope the job market picks up soon for my sake, i'm graduating in may, and i'll need a job :nervous:
amayzing, i'm still in shock:
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| LiquidX |
| LoL!! I knew this was going to get brought up. Yeah I heard it on the news, and was very surprised. Higher growth then expected, but then again, this hasent reflected on the Jobs situation. Lets see what the diagnostics on the upcoming months will be, and if this will be the start of a trend, or just one of those few very welcomed unexpected growths. And yeah, Im glad to see that at least on some part is starting to affect. |
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| occrider |
| quote: | Originally posted by LiquidX
LoL!! I knew this was going to get brought up. Yeah I heard it on the news, and was very surprised. Higher growth then expected, but then again, this hasent reflected on the Jobs situation. Lets see what the diagnostics on the upcoming months will be, and if this will be the start of a trend, or just one of those few very welcomed unexpected growths. And yeah, Im glad to see that at least on some part is starting to affect. |
Well, Izzy and myself have been posting the gains in chain sales, consumer confidence, durable goods orders, ism indexes, etc., for the past 3 or 4 months ... I mentioned a few months ago that the economy was on the mend, but I'm not sure very many believed me :). At any rate, it's nice to see the growth finally translate into GDP. With respects to labor markets, they always lag behind growth by a month or two, but ideally we SHOULD see changes in the next few weeks. Already, jobless claims have been below 400,000 (past that figure denotes an expansion) for the past several weeks. Tomorrow we should see figures on personal income, personal spending, and the chicago PMI come out. One item of important note with relation to labor markets is the trend in business spending this past quarter ... business spending increased 11.1 percent!!! And of course when businesses spend more to build up capital they add jobs to their payrolls. However temporary Sec Tresurer Snow's weak dollar policy is, it certainly came at the right time to give a boost to the manufacturing sector. |
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| occrider |
| Well, the Chicago PMI rose from 51.2 to 55. It looks like the manufacturing sector is healthily rebounding. Furthermore personal income was up .3%. I look forward to seeing how factory orders and the unemployment rate do next week ... |
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| Mikado |
JUST BECAUSE HIS FINANCE LOOKSLIKE THIS ..
DOESNT MEAN WE SHOULDNT HAVE FAITH IN !!!!
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| rupert |
Why the US economy is growing. This is a bit of an oversimplification but it will have to do given their are very complicated and interrelated issues.
1) The Federal Reserve is printing more money than ever, creating liquidity in the economy. The US has the capacity (and willingness) to print money far more than its competitors because the US dollar is the global reserve currency. The ECB on the other hand focuses foremost on fighting inflation and other countries lack the ability or willingness to print more money.
In a country like Australia printing more money would quickly lead to inflation, but the USA can get away with it more easier because their are 6 billion people in the world who could potentially use US dollars as opposed to 20 Australians. Ie there is a greater demand for US dollars - for now.
If you live in a third world country with a weak country and a suspect banking system you would be safer having your money in US dollars because the US dollar is a stable currency and during the 90's its value increased, so for instance the Russian factory worker who changes their Roubles to dollars preserves their capital and also makes money because the US dollar went up against the Rouble. A free form of investment if you will. Go to any third world country and people exchange their currency for Dollars but now increasingly Euros.
Other countries buy up US dollars and US assets (China and Japan principally) to keep the value of the US dollar high. So when the government issues treasuries to pay for the government debt it is bought by foreigners, approximately 30% of US debt is bought by the Chinese and Japanese central banks (the last time I checked) and they also have vast stores of US dollars.
2) The Tax Cuts. They put massive amounts of BORROWED money into the economy which it otherwise wont have, meaning people can spend money now they otherwise wont have. Paid for by foreigners.
3) An increasing population. Unlike other OECD countries, the USA has an increasing population compared to its competitors who have falling birthrates or declining populations. Increasing populations means more consumers and also more workers which keeps the cost of labour down. Contrast this to Japan with an ageing population which unless it is addressed its long term economic decline is absolutely inevitable.
Economic growth is in essence population growth and productivity growth added together. So the USA has the population growth in its favour.
4) Productivity growth. This is the killer. Put cynically if the company has two employees and it fires 1 and gets that 1 to do the job of two employees you have an instant doubling in productivity.
As US corporations seek to repair their balance sheets which are enormously indebted from the 90's they need to improve profitability. They cant increase prices because it is too competitive so they need to reduce costs which means looking for productivity gains, improved efficiencies etc but the biggest cost for most businesses is labour so companies reduce staff. Or even better shift the labour component altogether to a cheaper labour source. This process has been going on for a long time but now people are really complaining because now it is the middle class jobs that are going.
Thus you have economic growth but not labour growth, because the productivity gains are directly caused by the actions of companies to improve profitability by cutting costs. It also looks good to the market when a company cuts staff, the stock analysts almost always look favourably on job cuts and the stock price goes up.
The companies can still be profitable when there are less consumers because people can borrow. They have their tax cut money and they have low interest rates, this has led to a boom in household spending, home refinancing etc. All on borrowed money.
The global economy has an infinite capacity to loan the US money in the belief that the US consumer will pull the global economy out of stagnation.
In other words US growth is subsidised by other countries but this cant go on forever for reasons I have mentioned previously |
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| occrider |
2 points:
| quote: | Originally posted by rupert
3) An increasing population. Unlike other OECD countries, the USA has an increasing population compared to its competitors who have falling birthrates or declining populations. Increasing populations means more consumers and also more workers which keeps the cost of labour down. Contrast this to Japan with an ageing population which unless it is addressed its long term economic decline is absolutely inevitable.
Economic growth is in essence population growth and productivity growth added together. So the USA has the population growth in its favour.
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That's ludicrous rupert and you know it. You cannot state that economic growth is due to population growth because growth is a relative measure with other measures acting against it. If you have a population increase of a million people yet you only add 100 jobs to the market, your absolute output may increase, however, your relative measures of growth will not. Furthermore, growth of the economy is not sustainable without growth in labor markets. Therefore, if the US economic growth were merely indicative of increased population and increased productivity (what benefit would population growth even HAVE on the economy if that increased population were not contributing to the output of the economy???) one would see a corresponding trend in upwards rising unemployment.
| quote: |
4) Productivity growth. This is the killer. Put cynically if the company has two employees and it fires 1 and gets that 1 to do the job of two employees you have an instant doubling in productivity.
As US corporations seek to repair their balance sheets which are enormously indebted from the 90's they need to improve profitability. They cant increase prices because it is too competitive so they need to reduce costs which means looking for productivity gains, improved efficiencies etc but the biggest cost for most businesses is labour so companies reduce staff. Or even better shift the labour component altogether to a cheaper labour source. This process has been going on for a long time but now people are really complaining because now it is the middle class jobs that are going.
Thus you have economic growth but not labour growth, because the productivity gains are directly caused by the actions of companies to improve profitability by cutting costs. It also looks good to the market when a company cuts staff, the stock analysts almost always look favourably on job cuts and the stock price goes up.
The companies can still be profitable when there are less consumers because people can borrow. They have their tax cut money and they have low interest rates, this has led to a boom in household spending, home refinancing etc. All on borrowed money.
The global economy has an infinite capacity to loan the US money in the belief that the US consumer will pull the global economy out of stagnation.
In other words US growth is subsidised by other countries but this cant go on forever for reasons I have mentioned previously |
Yes, productivity can limit growth in the labor markets however, in the long run, they add to the welfare and growth of the economy which then results in an expansion of payrolls. There are limits to the effects productivity can have on labor markets. Eventually, productivity growth stimulates economic growth which stimulates labor markets as business expands.
That's the first I've ever heard of productivity being spoken of in a negative light. |
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