Americans may have to get used to a slow-growth economy, WHY

Discussion in 'Business & Economics' started by Buddha12, Jul 7, 2012.

  1. Buddha12 Valued Senior Member

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    2,862
    U.S. consumers are now living in a world much like the one the Japanese have been living in for the past 20 years: a world with limited access to credit, little or no appreciation in asset values, slow growth, large government deficits, and a rickety banking system.

    Americans are not at all like Japanese, but whether or not we have it in us to adjust to a new normal of less leverage and low returns on investment, we are not going to escape the consequences of our own bubble. The U.S. economy was driven for more than two decades by an oversize financial sector leading up to the panic of 2008. The financial sector grew by increasing the availability of consumer credit and lowering its quality, especially in mortgage lending.

    Now the U.S. financial services industry is being cut down to size by regulation and litigation, with no end in sight -- a process that was probably long overdue. Banks are learning how dangerous it is to lend money to anyone who actually needs it, especially consumers. It is going to get worse, not better, for households seeking credit. The real choice is whether to live within your means with a good heart, as the Japanese do, or hope the credit bubble can be reinflated.


    http://money.msn.com/top-stocks/post.aspx?post=4f9464e7-d3a1-4011-99af-f112ea85a69f

    So this is the way the news media is slanting the "recovery" of the Obama administration by somehow comparing it to the Japanese. I just don't get it because whenever a Republican is in the Presidency the media stabs him, brow beats him, throws dirt at him to make him look like a fool and the cause of the bad economy. I remember all the bad press that Bush 2 got whenever anything went wrong he was to blame by the media.

    But low and behold it isn't the Democrats President Obama that is causing the economic woes of this situation America is suffering through nor the Democratic Congress but it is somehow like the Japanese who have made the mistakes that America did, which isn't true at all, but the media wants us to believe this slight of hand trick blaming others for the Democrats blunders and mistakes that aren't helping much to relieve our dilemma.

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  3. kmguru Staff Member

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    The real issue is, people who want to develop the economy are ignored by the masses and key entities...so what you have is the old system hanging on to it and the new Information Technology system people are using to spend the money.

    Therefore nothing happens. We want to export products and services for Steel, Power, Gas etc to provide jobs, but can not get any American entities to get interested. We get mostly European interest only, while people are playing mostly politics here.
     
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  5. Jeeves Valued Senior Member

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    Slow growth or fast growth make no difference. Growth of any kind is necessarily finite and we've done about as much of it as the planet will bear.*

    The entire current world economy is one big bubble. It doesn't change or adapt - cannot change or adapt, because the vested interests are entrenched and rigid - it can only collapse. We're lucky it's deflating relatively gradually - a sort of ten-step collapse instead of a single burst. This gives individuals, communities and perhaps a few backwater nations a chance to detach themselves from as many of the large dominoes as possible, salvaging some survival capability.


    *( Please overlook outdated nomenclature; this is a very old joke.)

    Inmates in the exercise yard of an insane asylum take turns climbing the flagpole. Upon reaching the top, each one reads a sign that's posted there, nods and descends.
    Overcome by curiosity, the staff choose one of their number, a young orderly, to find out what it's about. The orderly stands in line, gets his turn, climbs to the top of the pole. Nods and descends.
    "Well," his colleagues ask, "what does the sign say?"
    "It says: This is the top of the pole. Stop climbing."
     
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  7. elte Valued Senior Member

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    Jeeves, or the bottom of the hole, stop digging.

    I just feel like Obama has been a saint compared to Bush with the Iraq war. The reason I didn't approve of Obama's bailout of GM is we should change over to more of micro cars and velomobiles, so the car industry will need to downsize along with car sizes.

    I think the overpopulation warners from earlier centuries were right, and the finite planet is the root cause of the upcoming general austerity.
     
  8. Buddha12 Valued Senior Member

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    2,862
    The problem is the greedy people who become rich then want even more and more. Some are never satisfied with what they have and want to take what everyone else has for themselves. There are billions of people living very meager lives but are content with what they have but the few greedy people want even that happiness taken away from them and do so by deceit, corruption and fear. Those with wealth will remain wealthy for I've not seen many who possess wealth get downtrodden during hard times but just pass the time away on some foreign land until things get better. Those with little to lose are hurt the worst by those with the most.
     
  9. Jeeves Valued Senior Member

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    5,089
    That whole Detroit bailout was a fiasco. (I did enjoy the executives grovelling, but it was over too soon!)

    Obama should have laid down the law: You get saved if you agree to retool for sustainable transport production - cars, buses, trollies, trains, ultralight aircraft, whatever, and employ more people, not fewer. Hefty allowances for new research facilities that show material improvements in design. More allowances for opening or refurbishing plants in depressed areas, for innovation, for community improvements, for positive contribution to the nation's welfare. All tied to strict performance benchmarks.
     
  10. Buddha12 Valued Senior Member

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    2,862
    I guess you didn't notice that GM used most of that bailout money to build more auto plants in CHINA not the USA so that Americans aren't being helped but the CHINESE are. Nice to see taxpayers money helping the CHINESE so much when they don't need it. By the way the same management that made the auto industry at GM fail to begin with are still there with big bonuses as well.
     
  11. iceaura Valued Senior Member

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    30,994
    W didn't get half the bad press he deserved - he still isn't blamed for preventing that coalition of States from curbing the bad mortgage lending, by taking them to court when they tried, for example.

    The press treated him with kid gloves, gently and with a great deal of completely undeserved respect, in the light of what he did. Remember them fawning all over the guy after the initial Iraq invasion? "Mission Accomplished"?

    Meanwhile, whatever Obama has done, the one thing he most certainly is not to blame for is the current state of the US economy. The corporate supporters of Reagan, Bush, a very tiny bit Clinton, and then in spades W and the Republicans in Congress, did this to the US. W, especially, carrying out Reagan's agenda without a Democratic Congress to put a leash on the stupid, broke this country. It will be broken for a long time - until a massive government spending program can get rolling for some reason, probably.

    You apparently have the initial W administration bailout confused with the Obama bailout that came later. W just agreed to hand over piles of taxpayer money, no strings attached. The Obama bailout was contingent on serious changes in management, and investment in the US. Obama fired the CEO of GM, Richard Wagoner, for example.

    This did not solve the problem of bad management - but that is endemic to most of the US corporate elite.
     
  12. Jeeves Valued Senior Member

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    5,089
    Iceaura:
    The trouble is, it was contingent on firing even more people, reneging on old contracts and restructuring in ways that benefit only the few big car manufacturers. Canning one mismanager solves no endemic problems - and nothing at all was done to save Michigan, which sounds like it's floundering ever since. And it certainly doesn't help solve the problem of oil nor promote green energy, nor depart into any interesting development.

    Buddha12:
    I noticed, but i'm not sure i agree that the Chinese were helped. Opening industrial plants there simply means that even more Chinese workers became enslaved to western-style production methods and capitalist values enforced with totalitarian efficiency. The standard of living of a tiny fraction of that population rises, which will put them in thrall to the western capitalist model and turn them into collaborators - overseers - while the vast, vast majority of Chinese people have seen no improvement in their lot for centuries.
    This trend of moving all manufacturing to China also bodes ill for the future of the globe: the only major power that was marching to a different drummer has joined the parade toward that economic cliff.
     
  13. elte Valued Senior Member

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    Another reason besides the effect of the finite planet and the greed that needs to be decried is the shortfall in education in science and math. Past generations had a much better grasp of those subjects which are necessary for technological advancement that boosts the standard of living.
     
  14. Buddha12 Valued Senior Member

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    2,862
    So your one of those who thinks adding more fuel (money) to the fire (unemployment) will somehow create new jobs and new advances in industry. I somehow can't understand why anyone would think that way because we have already spent over 4 trillion dollars here in the USA to try and "fix" the economy but alas the unemployment rate is still above 8% and going higher not lower. No new industrial growth is happening and more businesses are being started overseas taking many job opportunities away from the USA and helping the economies of other countries to prosper while America lags farther and farther behind.

    It doesn't seem to me that throwing more money at a problem that is due to over spending, duplicate services, mismanagement and a host of other things can solve the crisis. Without reducing services, employees and other cost savings measures there's no end in sight for the recession America is in and it will become worse because of the massive debt and deficit America has accumulated over the past 16 years or so. With that much debt and even more debt being added it can only get worse for that money must be repaid and no one is showing how that is going to be done.

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    Greece isn't getting any better even with 3 loans it got for its bailout for it doesn't have anything to repay that loan with. Greece is just a small example as to what America will have happen to it and as you see it isn't doing very good but still gets more and more money( as you say it should help) but still has more and more debtservices to take care of.
     
  15. spidergoat pubic diorama Valued Senior Member

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    54,036
    The banking industry is most certainly NOT being properly prosecuted and regulated. But as to the overall point of economic slowing, this has been predicted for a long time, Kunstler calls it the Long Emergency.
     
  16. iceaura Valued Senior Member

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    30,994
    We haven't spent nearly that much money in the manner I referred to (you seem to be confusing tax breaks for the rich with throwing money at the economy, for starters), and what little we have spent did apparently stall the crash - 8% is not bad compared with where we were headed.
    It doesn't seem to me that your list there includes the important causes of "the problem". The Crash of 2008 was not caused by over spending, duplicate services, etc, and the current mismanagement includes (among other screwups such as tax breaks for rich people) a large scale failure to throw money where it should have been thrown.

    A slow growth economy is one thing, and would require adjustments of various kinds for sure, but our immediate problems were brought on not by the slow growth itself but by the machinations of an economic elite fixated on fast growth, and willing to wreck the place to simulate it.
     
    Last edited: Jul 8, 2012
  17. Jeeves Valued Senior Member

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    5,089
    Growth is not the solution - it's the problem.
    The top-heavy money economy must collapse. In its current form, it is incapable of adapting to new needs, responding to emergencies, or recovering from damage. Its complexity is far beyond human understanding and control.
    And it presents an insurmountable obstacle to reorganizing social relations on a human scale, for human requirements. We will die out, because we can't see past money.

    What do humans need in order to live? Food, water, shelter.
    Food, water and shelter are being destroyed all over the world, for money, and people dying. We know what's wrong, but we can't afford to fix it.

    In the US, creating more jobs, especially more manufacturing jobs, would only postpone the collapse for a little while - or maybe not even that; maybe speed it up. There is far too much crap being produced, consumed and thrown away already. If the species were to survive, we'd need to reduce our numbers, the size of our political structures and our energy dependency. We'd need to strip away altogether the power of armies, churches, corporations and banks; decentralize, innovate, simplify; deal with real things instead of symbols.
    Not possible.
     
  18. joepistole Deacon Blues Valued Senior Member

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    22,910
    Oh, please! Provide some empirical or rational support for these outrageous claims, especially your economic claims. This is the same kind of nonsense that was tried in communism. It didn't work then and it won't work now. Nice goals, but not achievable at least any time in the near future. Just who defines our needs? Is it you?

    Do humans need more knowledge? Do humans need to be able to defend ourselves and all other Earthly life forms from extra planetary threats?

    We will always need a mechanism to guide our collective efforts (i.e. government).
     
  19. Michael 歌舞伎 Valued Senior Member

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    20,285
    Well, to be fair, it was their money (the Chinese). I mean, who do you think lends to us? How do we know THEY don't attach some form of strings to their loans? You know: We'll lend you some money, you can 'bailout GM' which might get you another election or two, but most of it must be built in China. Do that and you can have the money. Don't, and you can let the free market Capitalists buy GM, fire the CEOs and downsize to a profitable company.... and probably loose the election.

    Build in China sound-n reel gud...yuck yuck.... American tax Cattle, good for one thing at least, a joke.
     
  20. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    While that may have been true until a couple of decades ago, it is very false for at least a decade.

    Chinese incomes are rising at least twice as fast as their inflation or nominally on average about 15% +/- 5%. Here is some data, given state by state, presented in recent post:
    From: http://www.sciforums.com/showpost.php?p=2791469&postcount=441
     
  21. X-Man2 We're under no illusions. Registered Senior Member

    Messages:
    403
    So in reality just how bad is this so called "This may turn into one of the largest financial scandals to date" in America?{Worldwide?} I mean those familiar with Libor and loan and interest,Banking etc is this BAD?" Is it bad for everyday Americans? Is it bad news for folks of all the Nations involved in this scam? Or just exaggerated hot air?

    Video:

    http://www.wimp.com/financialscandals/

    http://tinyurl.com/7rtoc7n
     
  22. Jeeves Valued Senior Member

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    5,089
    Look, read and reflect. I don't need to provide evidence for an opinion. If you are young, you'll find out - me, i'll probably (hopefully) never know whether i'm right or wrong.

    Nothing of the kind was tried in communism. They over-complicated, centralized, industrialized. It didn't work very well, because it was done by charlatans and bullies - as most rulers usually are. Sort of like building a skyscraper without blueprints, while half the concrete and rebars are stolen during construction. Even so, many lives were improved. Most human endeavours are neither total success nor complete failure. Maybe not even wars.

    That's what i said. We could do it, but we won't.

    Everybody, all the time.

    More than what? An awful lot of us can't read or count; they could use more. The ones that have starved to death or been blown to smithereens can't. Curiosity is fairly high in our hierarchy of needs. Pink plastic toys and $15000 handbags are somewhat lower.

    Not very likely.

    We may need governance of some kind, and we have certainly tried many kinds. The most effective, so far, seem to have been ones that exist for the people and that people can understand.
    But that's just another outrageous opinion.

    I'm outdated. Okay. Any chance of them doing it better?
     
    Last edited: Jul 9, 2012
  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    Most Americans are. The, decades old, once valid image, of poorly paid, exploited, under educated, peasants or workers in sweat shop factories is hard to remove from the western mind. I´ll give a more up to date, accurate, view and let you judge their chance of "doing it better."

    Chinese salaries are still much lower than those in the US, but so are their costs and it is hard to compare economies with different currencies when the mix of what is in their GDP is so different. In the US most of our GDP produces nothing of lasting value - for example, what is the current value of the few billions (including indirect, like in transport and hotel rooms, bars, etc.) spent on NFL, basketball, world series and its run up baseball games, etc. in 2008 now? China is building hydroelectric dams, world´s largest railroad network for world´s fastest trans, bringing a new power plant on line every 10 days, making world´s largest ports (with world´s largest thru put) and 100 new cities scaled for 100 million inhabitants (with subways, pure water plants, sewer systems, etc. cities need for the 150 million ex-farmers* moving to cities as China converts to US style large agri-industrial food production. BTW, as farm land is limited they use more fertilizer and have world´s largest yields/ per acre in wheat production.)

    If one strips out of the GDP calculation all things of no value two years later, then Chinese GDP is greater than that of the US, perhaps even twice bigger, and growing at three or more times the rate!

    It is not only fertilizer that China uses to increase its food production, but also world´s largest irrigation system (at least 10 times larger than second place in terms of gal miles moved.) Here is photo of part of it from: http://www.sciforums.com/showpost.php?p=2946273&postcount=105 Where there is text like that here, but also text telling of Chinese military capacity (With non-nuclear warhead, can sink zigzagging aircraft 1800 miles away, according to US Naval intelligence.) It will remove nearly 36 billion cubic metres of water every year from the Yangtze River Basin – which drains much of the nation’s central and western regions – and ship it to the arid North some 3,000-kilometres (1,900 miles) away!

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    Those pipes are 8.5 meters in ID – 18 wheeler trucks can easily drive thru while they are dry!

    * Most were pig farmers using a few acres at most. They did not own their farms (the government did and still does) but more than two years ago, were given right to lease them to large agri-corporations (no longer serfs tied to "their" family´s traditional plot). Pork is the favorite meat and already China raises more pigs than the rest of the world´s total, but with the rapidly rising salaries, and more meat in the diet, they soon will need twice the rest of the world´s total. (The price of port has more than doubled in last three years!) Brazil and US etc. will soon be exporting much more soy and corn etc. to China as they must import feed stocks for their pigs already.

    These ex-pig farmers will be the 100 million filling the 100 new (and expanded old) cities and with much greater incomes (Sum of their city salaries, which are increasing at least twice as fast from lower base than urban salaries PLUS the lease fees from the former farms.) Allowing unification of 100+ small farms into one with modern tractors, etc. has not only greatly increased food production at much lower cost (as in the US) but also is causing the average non-coastal factory wages to rise soon at ~30% per year like a few coastal factory wages are now in failing effort to keep inland raised workers near the cost, instead of returning to the birth areas. Allowing small farms to be leased was the smartest move the CCP has made ever. Given the strong anti-big business doctrine of the CCP, it was hard to do but the CCP leader ship is very pragmatic and has evolved an economic system more productive than that of the US. What consumer goods are in the market is determined by the invisible hand of Adam Smith, with little government interference (“regulation”) – a more “free market” than the US has!

    Also important reason why China has greater “lasting GDP” than US is the long time horizon of the infrastructure programs the government controls. They have 10, five year plans, and often fund very beneficial large projects (like the irrigation system shown above) even if the first benefit is two decades into the future! In US most large beneficial projects must produce benefits before the next election of the Congress man/woman voting for it. US could never, as China has, sign paid-up-front delivery contracts for energy and raw materials of up to 30 year duration. For example about 3 years ago, China gave PetroBrass 10 billion dollars for the promise of 200,000 barrels of oil (per day on average) for period of 20 years.

    SUMMARY: The ignorant American POV about China is large part of why Americans do not realize they have already lost WWIII, which is an economic war. If the US ever goes back to the moon, probably more than 100 years from now, they will need to clear Chinese customs at the Chinese moon base.

    OR:
    As I have posted for years the day is soon coming when China can tell the US and EU to:
    Go to Hell. We don´t need to sell anything to you. You are too broke to buy if we don´t lend you the funds. We don´t want any more of your declining in value Dollars or Euros, so will no longer accept them. - They are worthless now that oil exporters prefer the appreciating RMBs.
     
    Last edited by a moderator: Jul 9, 2012

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