More Great Economic News

I don't think she understands economics. Nor does she want to understand.

But here's a simple way of understanding some issues.
For instance, the GDP is not an accurate caluclation because it doesn't take into account all transactions. For instance, transactions between drug dealers are not taken into account, because they are unknown. When "illegals" get paied, that is not counted either (and since they get less the minimum wage, the overall result would obviously be an increase in GDP).

Also, GDP per capita spreads it evenly accross the population- that is, it doesn't take into account the unequal distribution of resources. So while the GDP per capita of the US could be, let's say $800,000 per capita, a few people are getting several billions while a lot of people are getting very little, which when averaged out would give you "$800,000 per capita". In other words, the per capita measure by itself is not very useful.

One of the key factors in economic analysis is the following two words: "nominal" and "real". The nominal figure is the one that is standardly calculated. The real one is the nominal figure adjusted for all other factors.

Here's a simple example. The nominal wage is $8. Wage stays the same, but inflation causes prices to increase. Now people cannot buy as much as before, because their money is not enough to afford the stuff they were buying before. In other words, "nominal" wage was constant, while "real" wage decreased. The problem is that most people always look at the nominal figures and aren't able to analyze the information to get to the real figures.

 

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The only ones making $8 are the ones who work the really crappy jobs. Criminal alien roofers/construction guys can make $30/hr cash. Union guys get over 40, so the contractors hire the cheaper cash guys. Criminal aliens are making a lot of money in a variety of jobs: trucking, salons, landscape, house cleaning, auto service, handyman etc. I was wrong about the $25/hr cash in CA for house cleaning ladies in the nicer areas. It's up to $50/hr now in some places.

 

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The media drives a lot of problems. I blame it for the housing slowdown. They were screeching for years how the bubble was bursting. Yes the volatile areas (CA,FL,NV,NY...) go up and down with the market, but most of the rest of the country is ok. We are seeing a correction now. The last 7 years were out of control skyrocketting prices in many areas. A lot of people I know made their fortunes.

I prefer to remain optomistic.

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That was an example. E-X-A-M-P-L-E.

Criminal alien roofers/construction guys can make $30/hr cash. Union guys get over 40, so the contractors hire the cheaper cash guys. [/quote]
I take you can live with that kind of money? How much do you need to survive there? I mean... the minimum for a single person?

Also, if employers can afford paying them less, why don't they do that?

Would you like to do any of those jobs? Theya re not taking really high paying jobs. And according to you, the unemployment rate is not high. So what's up with all the complaining?

Good for them. That's what you get for cleaning rich peoples' homes!

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Yup and why are they doing that do you think? So they can foreclose and take everybody's stuff.

 

Not true. GDP is usually calculated by summing up consumption spending, adding investment, adding government spending, and then adding the difference between exports and imports. Employee compensation figures are normally not used. So, as long as the drug dealers eventually spend the money they're making (and every indication is that they consume a disproportionately high level of their income), it will show up in the consumption numbers. The only portion that goes uncounted is the stock of capital they retain for funding drug purchases. In the case of illegal workers, the vast majority are paid above-the-board using fake social security numbers. So their pay is on-record (and taxed, and they don't get below minimum wage); the only discrepancy is that the social security number in question doesn't match up to the right person. Even the small amount of under-the-table illegal workers' product shows up in the consumption spending, as they need to a place to sleep and food to eat.

A much bigger hole in GDP calculations, at least in developed countries, is that uncompensated work (i.e., charity) is not included.

 

How much money is in the drug industry then?

And you are talking about the GDP from the expenditure side?

 

We can describe it differently and still agree on the LEVEL, but I am also looking at which way the level is changing. BTW, the glass was very full a decade ago when oil sellers and China were happy to hold dollars.(Now all are trying to get out.)

Don't take my word for the fact that many Americans are also now trying to get out of dollars. Hear the chief analysist (a lady) for Charles Schwab tell you which funds are receiving the greatest inflows. (3 times more going into foreign funds and ETFs that invest outside of the US than are going into US mutual funds and ETFs.) Etc.

I warned you years ago. Told you to buy ADRs. She states the foreign markets have gained >90% while the US markets, even when stated in weaker dollars, are up only 30%, in same period. etc.

Listen to her information packed five minute presentation at:

http://q1.schwab.com/s/r?l=43480&m=10001468cf2ef00014107a

 

I wonder how many people on this site bought ADRs based on your advice.

 

me too.

I Just heard on CNN that the British pound is at a 26 year high against the dollar. I will tell you the main reason: Lawrence of Arabia.

Ever since he helped build "nations" (Job still far from complete - still more tribal monarchs, extended family clans etc. than real nations - why Iraq intervention was doomed from start, even if well done, instead of stupidly.) the Arab sellers of oil and Iran etc. have turned to London for their financial services, ususally even if the end investment was in USA, a British agent made the deal for them.

Thus, now that they do not want to get stuck holding dollars, and also understand that they will be invaded by US if they sell oil for Euros etc. (as Saddam learned the hard way when he did so) they sell oil for dollars and immediately send these dollars to London to exchange for items of more lasting value. Thus, like Brazil for other reasons, there is flood of dollars coming to London and few who really want them. - I.e. people only willing to buy dollars for relative-few, historically-low, number of pounds. That is, the Pound is very strong and getting stronger as the dollar grows weaker every year.

This slide of the dollar down is still very orderly and the bankers will keep it so as long as they can, but the "run on the dollar" is coming, probably about the same time that the US social security system pays out more than the FICA tax takes in to the SS system in 2012. As I have been predicting, in 5 + or - 3 years. Perhaps by 2010 when many will foresee what I did 5 years ago: - The new world order with only China, India (and perhaps S. Korea, Japan or even Vietnam?) and their suppliers of raw materials and energy escaping the extreme depression that will follow dollar colapse.

Some, in denial, still can not see these unpleasant facts may report me for being "off thread" as it is hardly "more good news."

 

Even more great economic news:

Employers boosted payrolls by a better-than-expected 132,000 jobs in June.
Workers saw solid gains in their wages last month.

New hiring in the areas of education, health services, leisure and hospitality and government drove overall job growth last month. Construction companies also expanded employment .

http://biz.yahoo.com/ap/070706/economy.html?.v=10

Yay. :bravo:

 

Looking at the trend of water level ("Glass half full or half empty" only looks at the level):

Euro hits all time high against the dollar today (11 July - Takes 1.37+ dollars to buy a Euro.)

China's June trade hits all time one month high (27 billion dollars* up 80% compared to July 05)

DR Horton, largest builder of homes in USA, has first quarterly loss in its entire history - sales down 40%, backlog of unsold homes near or at all time high, prices dropping. Sub prime problem growing worse - no one expects any recovery in 2007 Sears, Home Depot, etc. shares dropping approximately 5% in one day despite announcing big buy-back of shares.

Oil at ~$72/Barrel on speculation and increasing demand from China etc.

Goldman Sacks earnings now, for first time in history, come more from outside of US than from the US. (Smart money continues to flee the US. For example, Main stock market of Brazil, in Sao Paulo, is up 26%, only since the start of 2007 even though, in contrast to the dollar, the Brazilian Real is increased in value, by almost 10% in 2007 alone!)

Cost of food in US at all time high. - In part due to BUSH's stupid "corn into alcohol" program, other part due to fact the dollar buys less of anything that can be exported (and all imports).

As Sandy, et. al. will point out, US economy is still much larger than that of China, so it will take many years (I guess 15 + or - 5) before Chinese economy pushes US's into the number 2 spot, but that is what the not distant future holds with the current trends.
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*Partly this record is due to fact that the value of dollar continues to drop and thus to describe the same trade surpluss in dollars, the number of dollars becomes bigger. Same reason why DOW will continue to hit new highs as the dollar drops in value, even if the real value (purchasing power) of the DOW is dropping.

 

Billy, who knows? Maybe Barack Obama will put america back in line....! That is, if the US citizens wake up!

I think they are, though. Obama is getting a lot of support. He even has a record on campaign donations!!!

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kmguru's Economist article link contains:

"...Many homeowners are already in trouble. Figures from MacroMavens, an economic consultancy, suggest that 23% of adjustable-rate mortgages, covering loans with a value of $693 billion, are already in negative equity, where the loan is worth more than the property. But the full impact of defaults may not be felt until the low “teaser” rates on mortgages expire and push up borrowing costs. These teaser loans were done on a “two and 28” basis (with low rates applying for the first two years, and higher rates for the next 28). So the worst news from the 2006 vintage may not be felt until 2009.

Nor does default necessarily mean the end of the road. Few lenders want to foreclose, a process that takes ages, incurs massive costs and often causes the departing residents to trash the house. It is better to agree on a quick sale. But too much selling will force prices lower, weakening the rest of the portfolio.

So it may take a while for the property of struggling borrowers to trickle onto the market. Jeffrey Kirsch of American Residential Equities, a company specialising in buying delinquent loans, says foreclosing a property can take more than three years. He doubts the housing market will bottom out until the first quarter of 2009. ..."

 

Stocks Soar; Dow Up More Than 330

Stocks Soar; Dow Up More Than 330

NEW YORK (AP) - Wall Street barreled higher Wednesday for the second day in a row, giving the Dow Jones industrial average its biggest two-day point gain five years after a Federal Reserve official hinted that the central bank may lower interest rates again....

http://www.breitbart.com/article.php?id=D8T6TL781&show_article=1

:bravo:

 

thats all well and good but what about the people who cannot afford stocks?