What happened to all of the doom and gloom economic threads?

Bends_Arod said:

The US is the leading manufacturing country in the world. 150 million labor force and the US is the number 1 manufacturing country in the world.

Click to expand...

vetteman said:

Yep, but with a 36% corporate tax rate, the government has caused them to farm it all out overseas.

Click to expand...

vetteman said:

Yep, but with a 36% corporate tax rate, the government has caused them to farm it all out overseas.

Click to expand...

Ulaven_Demorte said:

With the Dow climbing near 10,000 again what's happened to all of the dire, end of the world ravings of our resident "conservative" economists?

Where is all of this inflation we were warned about? According to reports the Consumer Price Index is down 1.5% overall from last year. Despite Augusts increase in prices, gasoline is still down 30% from the high a year ago.

Despite the dire warnings of some of Lit's resident math wizards the Chinese are still very much interested in buying US Treasury securities.

I guess the sky isn't falling after all.

Click to expand...

I wonder what's next after those go to hell too.

Click to expand...

Mike_Yates said:

They went to hell. Only to be replaced by doom and gloom flu pandemic threads. I wonder what's next after those go to hell too.

Click to expand...

Bends_Arod said:

ACORN! (whatever that is)

Click to expand...

JohnnySavage said:

Are you two related by chance?

Click to expand...

Luke_Atmydik said:

Siamese idiots?

Click to expand...

vetteman said:

Maybe others, like Obama, thought there was 57 states


Exclusive: Jobs 'Saved or Created' in Congressional Districts That Don't Exist
Human Error Blamed for Crediting New Stimulus Jobs to Nonexistent Places


By JONATHAN KARL
Nov. 16, 2009

Here's a stimulus success story: In Arizona's 15th congressional district, 30 jobs have been saved or created with just $761,420 in federal stimulus spending. At least that's what the Web site set up by the Obama administration to track the $787 billion stimulus says. There's one problem, though: There is no 15th congressional district in Arizona; the state has only eight districts. And ABC News has found many more entries for projects like this in places that are incorrectly identified.

http://abcnews.go.com/Politics/jobs-saved-created-congressional-districts-exist/story?id=9097853

Click to expand...

The standard explanation for the lack of inflation is that banks are sitting on all that new cash. As soon as the economy shows signs of recovery, goes the theory, banks will make more loans, and the broader monetary aggregates will shoot up rapidly. But that expectation ignores an important factor: Beginning in October 2008, for the first time in history, the Federal Reserve started paying interest on reserves held by banks. So even when the economy starts heating up, banks will have an incentive to hold money rather than lend it.

What’s more, should inflation rear its head anytime soon, the Fed could suck the newly created money out of the banking system by selling assets, such as some of the higher-quality mortgage-backed securities it bought from banks at the depth of the financial crisis. That would decrease the amount of money in the system and choke back inflation.

On top of that, the Georgetown University economist Donald Marron has argued, if investors really thought we were on the verge of inflation, we would see the 10-year Treasury or 30-year mortgage rates go through the roof. But that hasn’t happened.

Marron’s view reflects what might be called the monetarist consensus. It is embraced by economists across the political spectrum, including Obama’s economic adviser Larry Summers and the current and former Fed chairmen. It is a position that relies on the wisdom of politically independent (and hopefully monetarist) central bankers to manage both the economy and the threat of inflation.

Besides placing undue faith in the Fed’s ability to time perfectly any necessary anti-inflationary measures, the consensus suggests that the nation’s central bank now has the heretofore undiscovered ability to increase the money supply without creating inflation. If true, this would be an important new development, since inflation has long been rightly vilified for destroying entrepreneurship and long-term economic growth. But if false, this conceit could prove dangerous indeed. And it’s probably false.

On his blog Free Advice in September, the Pacific Research Institute economist Robert Murphy argued that inflation is already here but economists are missing the signs. “From [December 2008] until August 2009, the unadjusted CPI level has increased 2.7%, which translates to an annualized increase of just over 4%,” Murphy wrote. He acknowledged that “ten-year yields [on Treasury bonds] are…low” but added that the price of gold has increased enormously. “Why do we assume that TIPS [Treasury Inflation-Protected Securities] traders are genius forecasters, but gold traders are morons?” he asked.

In an email message, Murphy adds: “I believe we are currently witnessing a bubble in Treasury debt. I consider the current yields on 10-year U.S. government bonds to be absurdly low, just like the price of housing was absurdly high in early 2006. After this bubble bursts, investors will slap themselves on the forehead and say, ‘What were we thinking? Why did we rush into Treasurys even as the government told us it was planning to double the federal debt burden in a decade?’ ”

The St. Lawrence University economist Steven Horwitz agrees both that inflation is already happening and that it is widely misunderstood. Monetarists, he says, were “too focused on aggregates like ‘the’ price level, which led economists to ignore the way inflation could distort individual prices at the microeconomic level, causing resource misallocation in the process.” Virtually all economists now agree, for example, that the Fed’s low interest rates inflated housing prices earlier in the decade. Yet as the prices of houses went up, few economists worried about inflation because the CPI looked relatively stable, due in part to a decrease in energy prices. When housing started to crash in 2007, many economists thought the Fed should inject still more funds into the system to stave off further declines. They failed to see that the Fed had distorted relative prices in the first place.

As the George Mason University economist Peter Boettke explains, “A problem with the current monetarists is that while they learned from Friedman the idea that we should fight inflation, in practice they learned from his writings on the Great Depression that central banks should fear deflation.” As a result, economists who are theoretically inflation-hating Friedmanites now want to meet every downturn by fighting deflation.

Because of this tendency, bursting government-created bubbles leads to the creation of new ones. The real lesson may be that inflation is not only a monetary phenomenon but also a political one. Which makes it that much more difficult to predict, much less control.

Click to expand...

Frisco_Slug_Esq said:

Party's over for everyone but the really rich...

Click to expand...

JohnnySavage said:

My redevelopment plan went before the county planning commission last night.


*disclaimer - My company is owns less than 1% of the project, so I can't realistically call it "my" plan.

Click to expand...

New and pending layers of regulation fall particularly hard on small businesses. In some markets such as medical devices and drugs, the development cycle in this country has stretched to 10 years or longer thereby closing the door to venture capital funding except for later stage projects. The new health care bill will hurt small businesses in several ways. First, it will add layers of cost. Businesses will have to pay penalties if it fails to insure employees and will have to pay an excise tax if it gives employees too much coverage. For many small businesses, fully paid health care is one of the few perks it can afford to give today. Many small businesses are structured as Subchapter S corporations. Successful ones might reach marginal tax rates in excess of 50% by 2011. Unless the rules of the game are modified, small businesses are not going to be hiring. And make no mistake; small business hiring is the root cause of employee growth in this country.

Some of these rule changes aren’t in place yet but the impact is already being felt. Health insurers are increasing rates 15-20% or more to small businesses and individuals trying to hike rates as fast and far as possible in front of any new health care legislation. Drug companies are trying to do the same thing. Big corporations and big hospital systems won’t stand for the increases leaving the entire burden to fall on small businesses and individuals.

Thus, even while basic wages aren’t growing, employee costs are rising rapidly. Congress talks about increasing other taxes as well that will only add to the burden including a carbon tax, higher Medicare taxes, surcharges, increased capital gains taxes, and dividend taxes. States and communities are raising sales taxes adding even more costs. Today, there is talk of a new phone tax to fund internet expansion. The list goes on. Parking fees, entertainment taxes, airport use taxes, it’s never ending. All of these taxes will lower consumption and lower employment growth.

It isn’t for me to suggest public policy. I am just the analyst. The government’s current remedy is to provide offsetting dollars via handouts. That means more stimuli. A new proposed transportation bill will add another $150 billion in infrastructure spending even before the current $787 stimulus package is spent. Cash for Clunkers, the home buyer tax credit, extended unemployment claims, etc. are other forms of spending. They provide an offset. But put everything together and it becomes an endless loop. Layers of tax and regulation force the creation of handouts. We tax, we borrow and we spend. The taxes and regulation barriers retard growth and the handouts restore it. But when all is said and done, there is little multiplier effect, the economy ultimately stagnates, and our debt burden rises. There is a scorecard to all this and it is the value of the dollar. Ultimately money is fungible and can move around the world. It will seek the safest most secure haven. Right now the verdict is that the dollar is weaker than almost any other currency in the developed world and it is losing value precipitously against gold, the ultimate store of value. It isn’t a disaster yet. We aren’t Turkey or Mexico. We aren’t Germany of the 1920s.

But the message is loud and clear. Our current economic policy is flawed and it inhibits our long term recovery prospects. To be fair, Washington hears this a bit. Congress discusses stronger rules to require all new programs are funded. But it then lacks the courage in the end. Collecting 10 years of taxes to pay for 6 years of spending isn’t exactly good business. 2010 is an election year so don’t expect much discipline in 2010. The President and Congress desperately want to create new jobs. Employment is unquestionably going to be the number one election issue.

But fiscal discipline won’t be far behind. A weak dollar means higher oil prices. It means higher import prices. It means that we will export jobs and chase capital away.

Click to expand...

Bends_Arod said:

Things manufactured overseas aren't considered manufactured in the US.

True there is a lot of stuff being produced in China and they are catching up but the US still leads the world in manufacturing.

I know, hard to believe but it is what it is.

Click to expand...

koalabear said:

US Postal Service still losing billions
The agency has cut 40,000 jobs and will propose ending Saturday delivery.

http://articles.moneycentral.msn.com/Investing/Dispatch/default.aspx?feat=1387596

Click to expand...