Driftr
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Post by Driftr on Jul 9, 2012 13:48:42 GMT -5
My sincere congrats, dj, on your first interesting and provocative thread. i don't do a lot of thread posting, Paul. i am sure i have done less than 2 per month since joining. i am guessing it is less than 1 per month, but i might be wrong. Wow. You made it off ignore. How great must that feel?
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Phoenix84
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Post by Phoenix84 on Jul 9, 2012 13:52:15 GMT -5
Another way to increase consumer spending is for someone to come out with a product that everyone has to have. Some new "gosh gee wow, I have to have that." like an IPAD or something that no one has seen before. So innovation on the part of businesses will stimulate consumer spending.
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Driftr
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Post by Driftr on Jul 9, 2012 13:56:55 GMT -5
I guess a 1.7% yield is better than nothing. Or not. What are decent 1-year CDs going for these days? 1.15%? I did a quick google in Dallas. Looks like ally is the best at 1.02%. BBVA 0.50% Chase 0.20%. But on the plus side I'm going to be getting some sweet 10 year trasuries in a couple days that will yield me in the 1.55% range. So I've got that going for me. Which sucks!
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djAdvocate
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Post by djAdvocate on Jul 9, 2012 14:18:37 GMT -5
given the weakness of unions, i think the only way it happens is with government incentives for higher wages. i really don't see that happening, so i think we have a megatrend here. it is making me a lot more fatalistic about our outlook. I don't know how we'd incentivize higher wages without making imports more comparable. Seems the only way to dis-incentivize imports is to make them cost-prohibitive. So - Do we find a way to pull money out of companies that use cheap labor in countries without our EPA laws and give it to people sitting around because there aren't enough jobs for them, or do we somehow force those companies to build the products here and pay a wage that's high enough over subsistance that would encourage someone to get off their couch? I've got no problem forcing the repatriation of jobs via trade war. i am not sure i do, either. there are a lot of economies that have existed as local economies for centuries, with no ill effects. Japan did it for literally thousands of years. the consequences for opting into a global economy is that i think we have to resign ourselves to becoming an average nation. that is kindof where i end up anyway. the alternative is to have a more local economy, and maintain what we have. at a cost, of course.
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djAdvocate
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Post by djAdvocate on Jul 9, 2012 14:19:12 GMT -5
i don't do a lot of thread posting, Paul. i am sure i have done less than 2 per month since joining. i am guessing it is less than 1 per month, but i might be wrong. Wow. You made it off ignore. How great must that feel? that largely depends on Paul.
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djAdvocate
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Post by djAdvocate on Jul 9, 2012 14:21:16 GMT -5
The question is how do we get consumers to spend? A difficult question I'm sure pondered by people smarter than me. Job security is important for most people, if you think you might lose your job, you don't feel much like spending. Security is also important for businesses. With the direction the country is going, and the uncertain state of the economy, most people and businesses are circeling the wagons to see what happens. I realize you may not be spooked over the direction the country is going DJ, but many many people are. For me personally, job security isn't much of an issue, however I lost quite a bit of money in the housing market. Had I not lost about 36k on a underwater Condo, I might have felt more inclined to spend some of it. Now, not only did I lose that money that could have beenb spent buying a new car or something, but it also will take a few years to get back to where I was, trying to rebuild the nest egg so to speak. So losing money in the stock market or housing market makes people not want to/able to spend. Short of giving us money, nothing can change that. Another way to increase consumer spending is dropping the price of goods. However, that may cause the business not to make a profit. Really, if you want people to consume more, it all boils down to two things, either pay people more and/or reduce how much things cost. most consumers don't own stocks in large quantities. those that they do own, are kindof out of sight- buried in portfolios. and besides, the market has been really awesome since Obama took office, so if that really were a factor, we would be much better off. but most consumers DO own a home. and that is really a bad deal for them, especially if they have HELOC's, and are now underwater on them.
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Driftr
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Post by Driftr on Jul 9, 2012 14:31:50 GMT -5
Wow. You made it off ignore. How great must that feel? that largely depends on Paul. I just realized he didn't actually quote you and might just be reading all the cool people's posts while still leaving you on ignore. Apologies to you if I jumped the gun on your making it back from purgatory.
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djAdvocate
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Post by djAdvocate on Jul 9, 2012 14:41:31 GMT -5
that largely depends on Paul. I just realized he didn't actually quote you and might just be reading all the cool people's posts while still leaving you on ignore. Apologies to you if I jumped the gun on your making it back from purgatory. meh. i don't generally find our exchanges very productive, so it is just as well.
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Virgil Showlion
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Post by Virgil Showlion on Jul 9, 2012 16:41:31 GMT -5
I guess a 1.7% yield is better than nothing. Or not. What are decent 1-year CDs going for these days? 1.15%? I did a quick google in Dallas. Looks like ally is the best at 1.02%. BBVA 0.50% Chase 0.20%. But on the plus side I'm going to be getting some sweet 10 year trasuries in a couple days that will yield me in the 1.55% range. So I've got that going for me. Which sucks! Considering AAPL stock price can swing 3% in a day, I'll take the 1.55% instead of their token dividend. I refuse to believe that my fellow man craves overpriced iGizmos so desperately that Apple sales figures will ever again see growth. blocked due to malware warnings/smilies/imgs/disdain/disdain002_2.gif[/img] Rovo probably thinks otherwise, but he also thinks I'm a "technological elitist" for my belief that people can do things more complex than pushing buttons and flicking screens. Apple's "expensive but idiot-proof" paradigm won't win them industry supremacy forever.
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Deleted
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Post by Deleted on Jul 9, 2012 20:48:34 GMT -5
During the period of 1990-2011, worker productivity increased 60% while the employment cost index increased 100%. Seems as though wages have grown faster than productivity. Hopefully I haven't screwed up my math with improper treatment of inflation.... www.bls.gov/web/eci/ecicois.pdfftp.bls.gov/pub/special.requests/opt/lpr/nfbbardata.txtEdit: OK, I did screw up the inflation. Adjusted for inflation, employment cost index is up 13% and productivity is up 60%. However, keep in mind that there are a lot of other costs associated with increased productivity besides the workers. And also, there are other things that impact compensation such as globalization. In many cases, increased productivity due to automation can even make a worker LESS valuable, not more valuable.
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Virgil Showlion
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Post by Virgil Showlion on Jul 9, 2012 21:10:44 GMT -5
Averaged across all sectors, in 20 years? I've got a fine piece of Florida swamp land—pristine, really—with your name on it, Bob. At this price, I'm practically giving it away. Just sign on the dotted line...
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Deleted
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Post by Deleted on Jul 9, 2012 21:17:36 GMT -5
Do you even know what productivity is? Feel free to post your detailed refutation of the economic data.
In hindsight, I'm still not sure if I handled inflation properly or not....
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djAdvocate
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Post by djAdvocate on Jul 9, 2012 21:34:26 GMT -5
During the period of 1990-2011, worker productivity increased 60% while the employment cost index increased 100%. Seems as though wages have grown faster than productivity. Hopefully I haven't screwed up my math with improper treatment of inflation.... www.bls.gov/web/eci/ecicois.pdfftp.bls.gov/pub/special.requests/opt/lpr/nfbbardata.txtEdit: OK, I did screw up the inflation. Adjusted for inflation, employment cost index is up 13% and productivity is up 60%. However, keep in mind that there are a lot of other costs associated with increased productivity besides the workers. And also, there are other things that impact compensation such as globalization. In many cases, increased productivity due to automation can even make a worker LESS valuable, not more valuable. i actually alluded to that, bob. computerized inventories, for example, turn stock checkers into people that move stuff from the warehouse to shelves in the grocery stores. there are no judgement calls any more. the computer tracks demand, and orders stuff automatically. so ordering is a synch too. BOTH of those jobs have either gone completely away or gotten VASTLY less complex.
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djAdvocate
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Post by djAdvocate on Jul 9, 2012 21:37:16 GMT -5
Averaged across all sectors, in 20 years? I've got a fine piece of Florida swamp land—pristine, really—with your name on it, Bob. At this price, I'm practically giving it away. Just sign on the dotted line... i am not following why that seems so hard to believe. that is only 3% annualized gain in productivity for those 2 decades, if i am calculating it right. this is actually quite similar to the previous 150 years.
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Deleted
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Post by Deleted on Jul 9, 2012 21:39:00 GMT -5
"i actually alluded to that, bob."
I was just throwing info out there. Preference for solid numbers and all.... I'm a little stuck trying to figure out whether your original statment was right or wrong, though. ;D
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djAdvocate
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Post by djAdvocate on Jul 9, 2012 21:40:53 GMT -5
"i actually alluded to that, bob." I was just throwing info out there. Preference for solid numbers and all.... I'm a little stuck trying to figure out whether your original statment was right or wrong, though. ;D if it makes you feel any better, the less certain i am, the more likely i am to post about it.
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Deleted
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Post by Deleted on Jul 9, 2012 21:52:09 GMT -5
As good of a reason as any!
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djAdvocate
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Post by djAdvocate on Jul 9, 2012 21:54:50 GMT -5
As good of a reason as any! i am more interested in learning than lecturing. ;D
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handyman2
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Post by handyman2 on Jul 9, 2012 22:45:29 GMT -5
I get beat up by some when I say computers and automation is a two edged sword. the computer does create jobs but it also reduces more jobs than it creates in my opinion. I talked to a manager of a huge supply warehouse that has gone to a computer automated system. It is impressive with inventory pulled buy automatic machines and stacked on pallets ready to load on a truck. I asked him about the impact on the number of employees involved. He stated that he has reduced his employee numbers by 42 percent and as the system is expanded that number will go higher. The cost savings in salaries, benefits etc is quite a big number. As businesses continue along this line there will be fewer jobs and less tax revenue to the government. So how does a country deal with issues like this?
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djAdvocate
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Post by djAdvocate on Jul 9, 2012 23:10:43 GMT -5
I get beat up by some when I say computers and automation is a two edged sword. the computer does create jobs but it also reduces more jobs than it creates in my opinion. I talked to a manager of a huge supply warehouse that has gone to a computer automated system. It is impressive with inventory pulled buy automatic machines and stacked on pallets ready to load on a truck. I asked him about the impact on the number of employees involved. He stated that he has reduced his employee numbers by 42 percent and as the system is expanded that number will go higher. The cost savings in salaries, benefits etc is quite a big number. As businesses continue along this line there will be fewer jobs and less tax revenue to the government. So how does a country deal with issues like this? in a word, badly. people are going to get displaced by technology. that is a fact. the only question is what kind of a society do we want to have in light of that fact. i would actually like to see fewer work hours, and more leisure time. but that would mean accepting lower pay. it is not reasonable to have both higher pay and more leisure.
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Post by Deleted on Jul 9, 2012 23:24:22 GMT -5
"As businesses continue along this line there will be fewer jobs and less tax revenue to the government. So how does a country deal with issues like this? "
Same way we dealt with machines that replaced people on farms, machines that replaced people in factories, etc. We find more productive things to do with our time. At least that's how it has always worked so far. Will it continue to work that way? Hopefully, but I don't know.
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vandalshandle
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Post by vandalshandle on Jul 9, 2012 23:42:31 GMT -5
"As businesses continue along this line there will be fewer jobs and less tax revenue to the government. So how does a country deal with issues like this? " Same way we dealt with machines that replaced people on farms, machines that replaced people in factories, etc. We find more productive things to do with our time. At least that's how it has always worked so far. Will it continue to work that way? Hopefully, but I don't know. Only if we continue to initiate wars.
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Virgil Showlion
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Post by Virgil Showlion on Jul 10, 2012 0:28:14 GMT -5
Averaged across all sectors, in 20 years? I've got a fine piece of Florida swamp land—pristine, really—with your name on it, Bob. At this price, I'm practically giving it away. Just sign on the dotted line... i am not following why that seems so hard to believe. that is only 3% annualized gain in productivity for those 2 decades, if i am calculating it right. this is actually quite similar to the previous 150 years. It's roughly 2.25% annualized, and across all industries, it is an extremely hard pill to swallow. Some things are more obvious than others. Consider grain production as a "for instance". Data here suggests a 25.1% productivity gain over the past 21 years. Or consider US steel production, which has fallen by 32% over the past two decades (according to this source), even while global steel production has exploded. This site shows the very same thing. Or how about citrus production, on a lark? Index mundi has OJ production in the US basically flat unchanged between the early 1990's and now. How about US crude oil production? Down 30% over the past 20 years. 60% is a massive gain by any standard over 20 years. And as an average over everything? No ruddy way. They get these numbers the same way they fudge the CPI: "hedonic adjustments", artificially expanding the definition of "productive work" to industries such as finance that produce nothing but vapour in the real world, and exaggerating the value of intellectual property by as much as a full order of magnitude. Hedonic adjustments are the worst. Take a sampling of TVs in 1991. For each TV, find out what it would have cost you to buy the same model in 1990. Naturally, since technology depreciates rapidly, the average cost of the same technology in 1990 is going to be higher than in 1991. Hence, they tweak productivity numbers to "compensate" to "comparable products". Thus, if that plasma screen would cost you $2,000 last year and this year it's marked down to $1,700, they chalk it up as an "18% productivity gain" to the economy (a 1.18 multiplier on the number of TV's sold this year, in other words). They do this year after year, every single year. I kid you not. It doesn't matter that the only difference between the newer model of plasma screen and the year-ago one is a 0.0025" difference in screen thickness, it's chalked up as a "18% productivity gain" that adds a phantom 1.18 multiplier to the number of units produced in the latter year. With things like consumer electronics a significant part of US production, you can imagine why I'm skeptical of the accuracy of the 60% figure.
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AgeOfEnlightenmentSCP
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Post by AgeOfEnlightenmentSCP on Jul 10, 2012 6:41:34 GMT -5
The real problem is that we are going to make the painful transition from a consumer and service economy back to a saving and production economy as we default on our obligations and our currency is destroyed. We'll survive it, but we aren't going to like it.
Like a patient diagnosed with heart disease, and diabetes, who is obese, the lifestyle change will be abrupt, and unpleasant, but necessary for survival.
And it will be complicated by a political game with both sides, who are both in some ways responsible for the mess, pointing fingers at one another while each in their own way trying to convince us it's not really happening, or would not be happening if it were not for so and so.
GOOD THINGS:
1. Entitlements will reform themselves.
2. government will shrink itself.
3. We WILL explore, produce, and start exporting energy.
4. Our exports and labor market will be more competitive and attractive to foreign consumers, investors, and businesses.
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mmhmm
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Post by mmhmm on Jul 10, 2012 7:00:05 GMT -5
Hmmm. I believe we've been bitten by the top of the page missing posts bug ...
Ergo, filler post.
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billisonboard
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Post by billisonboard on Jul 10, 2012 7:30:49 GMT -5
The real problem is that we are going to make the painful transition from a consumer and service economy back to a saving and production economy as we default on our obligations and our currency is destroyed. We'll survive it, but we aren't going to like it. ... I don't disagree with you on this pbp. The trick is the use of the plural pronouns. Yes the transition will be painful, but how is that pain going to be distributed throughout the population and exactly who is it that is going to survive.
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rockon
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Post by rockon on Jul 10, 2012 8:04:13 GMT -5
PBP is correct but that is not the direction most seem to agree with. Many still live in a fantasy world where all dirty low paying production jobs are done by our low paid servants in some third world country where they can the toxins into the air and water with out us seeing it while we live in a suburb with free health care, clean environment, paid for by all of the rich people who just keep developing new technology and white collar jobs for our enjoyment. Wake up folks it ain't goin' happen.
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Value Buy
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Post by Value Buy on Jul 10, 2012 8:24:52 GMT -5
Good point! I recently heard that in 1992 we had 1 in 35 of working age on disability, now we have 1 in 15. How can we recover from a depression when so many are not working? this is again putting the cart before the horse. if the consumer spends, people will hire, and the recession will end. the question then becomes: HOW DO WE GET THE CONSUMER TO SPEND? Answer to this question........ A President and Congress who stops the gridlock, and agrees on cooperation for about 15 to 18 months. Our Government has acted like bickering parents who refuse to agree or do anything together, making the American consumer feel like a teenage child locked in a doomed parental marriage, where there is no future here, where American's might actually improve their standard of living. Just five years ago when the consumer was mortgaging their lifestyle away, economists were crying we had no savings rate being made by the consumer. Today, we still don't. The consumer is not stuffing it in the mattress, or putting it in money market accounts. The simple truth is, if you are making $100,000 a year or less, you are just treading water living paycheck to paycheck. The typical American is now looking how to get any available Government funds to live the dream, be it food stamps, or social security disability. A side note. The President's talk yesterday about 95% of the small business owners will not be affected by the "tax increase" or in actuality, taxation back to the old norm, is a falsehood, in that it is the 5% small businesses that do the vast majority of actual job hiring. The lower 95% are usually family operations with possibly just family members or a 3 to 5 person part-time job operation with no benefits.
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deziloooooo
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Post by deziloooooo on Jul 10, 2012 9:32:07 GMT -5
"if you are making $100,000 a year or less, you are just treading water living paycheck to paycheck."
I agree with you value ...IF you are living at a $200,000 life style ...
If you have the normal 2. what ever kids..you are doing fine at $100,000 as long as you are living and spending in that lifestyle which for most of us is not a bad style at all... you can have some toys..decent living conditions..good food, some entertainment and if smart also savings..
If you aren't able to get this at this type of income you are doing something wrong..IMHO.
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Deleted
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Post by Deleted on Jul 10, 2012 10:00:28 GMT -5
Holy crap! In what universe is $100,000 living paycheck to paycheck?
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