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Re: weekend commentary - the collapse of America's 'service economy'
In a way, I don't think it may be so bad.
I mean, Americans are pretty fat. This is hurting our hearts, our bones, our blood chemistry (diabetes and the like) - the list goes on.
Places like LA are a horrible place to live in. Smog and chemicals. Asphalt and concrete everywhere. The sea breeze that swept the place years ago is replaced by stench.
Most importantly the emotional vacuum that has swept across our society. So many people yet so much loneliness. So much stuff that we have our garages packed with shit and our closets overflowing and yet so many still feel an emptiness in their soul.
Kicking an addiction is hard. Maybe we are hitting bottom.
I don't know.
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
Deogol
This isn't a service economy - this is a debt economy.
I think that sums up soooo much of this subject. The real role of government for several years has been that of money creation. That has lead to 'cheap money' which lead to a boom in borrowing.
Though I understand the idea of tax cutting as a stimulus, it is still hard to understand how cutting taxes and interest rates can work when they are a very real and major cause of the current malaise.
In contrast, the usual role of a central bank is to limit and control inflation. In real terms, that requires increasing interest rates in many, many countries. This would suggest that it would be impossible for most nations - including the US to cut rates - but they have still been slashed.
It is hard to know if all this will help or just make the problem much worse. Well, I know what I think, but I can see several viewpoints on this issue.
BTW - whoever made the 'Star Trek Economy' joke above... That was laugh out loud, comic genius funny. Thanks. It made my morning.
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Re: weekend commentary - the collapse of America's 'service economy'
So...you're saying that we Americans are about to get a dose of the shit we've been inflicting on citizens of other countries. Well, that's exciting. That's why I study wilderness skills. Why buy MAC eyeliner when you can crush charred wood and add water?
And yeah I agree it kind of is a relief. It seems the economic pressures will force us into a more sustainable economy... in terms of locally grown, locally produced goods. Perhaps people will get it and start supporting local independent businesses. It's the case in some places already.
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
StuartL
I think that sums up soooo much of this subject. The real role of government for several years has been that of money creation. That has lead to 'cheap money' which lead to a boom in borrowing.
Though I understand the idea of tax cutting as a stimulus, it is still hard to understand how cutting taxes and interest rates can work when they are a very real and major cause of the current malaise.
In contrast, the usual role of a central bank is to limit and control inflation. In real terms, that requires increasing interest rates in many, many countries. This would suggest that it would be impossible for most nations - including the US to cut rates - but they have still been slashed.
It is hard to know if all this will help or just make the problem much worse. Well, I know what I think, but I can see several viewpoints on this issue.
BTW - whoever made the 'Star Trek Economy' joke above... That was laugh out loud, comic genius funny. Thanks. It made my morning.
Jf you are clueless about Economics, you don't understand role of interest rates and why Central Bank needs to print money
Central Banks role is to make sure that Economy operates at full capacity (with full employment) within an acceptable level of inflation
Star Trek Economy is much better than Middle Eastern Economy (which posters from here would want to go to)
If you explain the idea of an internet to a person just 30 years ago, he'll make the same 'joke' about Star Trek economy
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
BrodieLux
So...you're saying that we Americans are about to get a dose of the shit we've been inflicting on citizens of other countries. Well, that's exciting. That's why I study wilderness skills. Why buy MAC eyeliner when you can crush charred wood and add water?
And yeah I agree it kind of is a relief. It seems the economic pressures will force us into a more sustainable economy... in terms of locally grown, locally produced goods. Perhaps people will get it and start supporting local independent businesses. It's the case in some places already.
Yeah, places like Cuba and Africa
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
xanfiles1
Jf you are clueless about Economics, you don't understand role of interest rates and why Central Bank needs to print money
Central Banks role is to make sure that Economy operates at full capacity (with full employment) within an acceptable level of inflation
Star Trek Economy is much better than Middle Eastern Economy (which posters from here would want to go to)
If you explain the idea of an internet to a person just 30 years ago, he'll make the same 'joke' about Star Trek economy
Sorry to do this...
But none of those sentences actually make any sense. Ok. Only one of them, about central banks makes sense. The second sentence makes sense but is incorrect. The others just aren't coherent.
The role of a central bank, the ECB or Bank of England for example, is to keep inflation under control. They are given a target, 2% or 3% or whatever, and their job is to use interest rates as a tool to keep inflation below that target. That is it. Sounds simple, but isn't.
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
StuartL
Sorry to do this...
But none of those sentences actually make any sense. Ok. Only one of them, about central banks makes sense. The second sentence makes sense but is incorrect. The others just aren't coherent.
The role of a central bank, the ECB or Bank of England for example, is to keep inflation under control. They are given a target, 2% or 3% or whatever, and their job is to use interest rates as a tool to keep inflation below that target. That is it. Sounds simple, but isn't.
You actually run a web-site with this wrong information? God help your readers
Yes, Central Banks target inflation between 2-3%, but that is a constraint not a goal.
Here's an analogy
When you drive a car, your goal is to reach a destination while driving below 60-75mph
The driver's main goal is not to drive below 60-75mph, but to reach a destination.
Central Bank's role is to make sure the Economy operates at a full capacity with the constraint of 2-3% inflation.
If Central Bank's main role was to target inflation, they can just keep interest rates of 20% and go home
Get some basic economics education and role of feds
http://www.stripperweb.com/forum/sho...d.php?t=111950
http://www.stripperweb.com/forum/sho...d.php?t=112027
http://www.stripperweb.com/forum/sho...d.php?t=112188
If Fed's role was just to target inflation, they'd just be happy with the initial 10 coupons they printed but their main goal was to make sure the Baby Sitting GDP is at 66 with the additional constraint that 1 Baby Sit = 1 Coupon
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Re: weekend commentary - the collapse of America's 'service economy'
Fed Mission:
Mission
The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.
Today, the Federal Reserve’s duties fall into four general areas:
* conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
* supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
* maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
* providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
Deogol
Fed Mission:
* conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
Maximum Employment = Economy Operating at Full Capacity (their #1 Job)
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Re: weekend commentary - the collapse of America's 'service economy'
^^^ which is arguably very contradictory to US gov't policy .... as evidenced by the recent increase in the US minimum wage.
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
xanfiles1
Yeah, places like Cuba and Africa
Places like: Small towns in the US that have remained supportive of independent businesses and local farmers.
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
BrodieLux
Places like: Small towns in the US that have remained supportive of independent businesses and local farmers.
The result being higher prices, less choice, poorer quality and probably higher taxes.
It can work in a homogenous community, but a disaster in a diverse culture, where the minority will invariably be shut out of the good things while paying for the bad things.
What you suggest is exactly the policy many socialistic countries like India undertook. The result was wretched poverty for more than 80% of the population.
In fact India pre-90s was the dream country for all the left wing liberals in the US
i) Plenty of protectionism. Absolutely no imports. No outsourcing
ii) Savings in excess of 50% GDP
iii) High Taxes for the Rich
iv) Government Handling all public services
v) Subsidized Health, Subsidized Education
End result poverty & wretchedness for the most intelligent hard-working people. Even people who were rich had no access to buy anything of a quality product.
So, be careful what you wish for
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
xanfiles1
The result being higher prices, less choice, poorer quality and probably higher taxes.
It can work in a homogenous community, but a disaster in a diverse culture, where the minority will invariably be shut out of the good things while paying for the bad things.
What you suggest is exactly the policy many socialistic countries like India undertook. The result was wretched poverty for more than 80% of the population.
In fact India pre-90s was the dream country for all the left wing liberals in the US
i) Plenty of protectionism. Absolutely no imports. No outsourcing
ii) Savings in excess of 50% GDP
iii) High Taxes for the Rich
iv) Government Handling all public services
v) Subsidized Health, Subsidized Education
End result poverty & wretchedness for the most intelligent hard-working people. Even people who were rich had no access to buy anything of a quality product.
So, be careful what you wish for
Seems to me poverty is on the increase under your coveted globalism.
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
Deogol
Seems to me poverty is on the increase under your coveted globalism.
Ha! I didn't complete the other part of the story. i.e when India/China kicked out their protectionism, opened up to free trade, and participated in globalisation and the result has been nothing but fantastic.
There are actual examples from Soviet Union to Eastern Europe to India and China and Cuba where protectionism have failed and free trade has worked
Can there be any more stark example than
North Korea
vs
South Korea?
If anti-globalists can't see the difference between North Korea and South Korea or East Germany vs West Germany, they have to be the biggest idiots in this world. George Bush (whom these anti-globalists call stupid) gets it, but these clueless idiots don't.
Other concepts these people don't get is the difference between poverty in US vs poverty in India/Africa.
A poor US citizen led a much better life than an average or even rich Indian/Chinese in the 80's & 90's
A poor US citizen is still way ahead of an average African.
A poor US Citizen still has access to homeless shelter, soup kitchens, and free library with internet access.
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
xanfiles1
Ha! I didn't complete the other part of the story. i.e when India/China kicked out their protectionism, opened up to free trade, and participated in globalisation and the result has been nothing but fantastic.
There are actual examples from Soviet Union to Eastern Europe to India and China and Cuba where protectionism have failed and free trade has worked
Can there be any more stark example than
North Korea
vs
South Korea?
Like one is a democracy and the other is a dictatorship?
Most of the countries you mention were/are socialist. This has less to do with the success of globalism than the failure of socialism.
Quote:
If anti-globalists can't see the difference between North Korea and South Korea or East Germany vs West Germany, they have to be the biggest idiots in this world. George Bush (whom these anti-globalists call stupid) gets it, but these clueless idiots don't.
Oh well, what was I thinking? I mean George Bush has been brilliant from the podium all the way down.
Quote:
Other concepts these people don't get is the difference between poverty in US vs poverty in India/Africa.
A poor US citizen led a much better life than an average or even rich Indian/Chinese in the 80's & 90's
A poor US citizen is still way ahead of an average African.
A poor US Citizen still has access to homeless shelter, soup kitchens, and free library with internet access.
Seems to me a lot of America's benefits - from an interstate highway systems to those libraries came about when the country wasn't in the globalist economic religion.
Now that we are more accepting of these belief regardless of the evidence we are seeing bridges fall apart, 100's of thousands of people thrown out of work, and incredible debt from the individual all the way up to the national government. Yep. Working out great. These people who built America while protecting it's economic system were a bunch of dolts.
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Re: weekend commentary - the collapse of America's 'service economy'
^^^ bottom line is that if any country is going to fully participate in a global economy, then deviations from 'global average' costs and valuations come home to roost immediately. In America's case, there is a huge deviation in the value of unskilled labor i.e. $7.50 per hour minimum wage + mandatory benefits, versus $1-2 per hour with zero benefits in Asian countries. In America's case, there is also a huge deviation in regard to environmental compliance costs, in regard to product liability costs, and a host of other costs. If American society determines that the higher minimum wage, the mandatory benefits, the environmental compliance, the product liability etc. etc. are valuable enough to be preserved, then it must either insulate itself from the global economy or accept eventual bankruptcy unless some other aspect of the American economy is capable of producing enough 'value added wealth' to cover this differential. For the past decade American has been attempting to 'have it both ways', creating a massive and growing differential in the process.
Certain areas of America, for example Alaska, ARE able to generate sufficient 'value added wealth' by pumping 'free' oil out of the ground at a cost of $20 per barrel and selling that oil for $115 per barrel. However, other areas of America whose economies now primarily consist of service industry workers 'trading' services with each other are NOT able to generate 'value added wealth' at all - let alone in sufficient quantity to offset the differential. As a result, the differential has in fact been covered by those service industry workers taking on increasing amounts of debt and spending the proceeds for immediate consumption. Now that their credit has been cut off, it is US Fed / gov't that is taking on additional debt and spending the proceeds for immediate consumption on behalf of those individuals.
Where will this all end ? Good question ! My best guess is bankruptcy, followed by greatly reduced consumption / standard of living for most Americans.
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
FBR
I've said for a long time that the service economy is unsustainable because you have to actually make things in order to bring in real value and jobs including supporting those service jobs. I got laughed at by a number of members here.
I know I am right but it is a pyrrhic victory considering I am in the industrial manufacturing business.
FBR
That's not true. India has one of the fastest growing economies in the world and most of their growth has come from the service sector.
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Re: weekend commentary - the collapse of America's 'service economy'
^^^ while India has also experienced a lot of economic growth as a result of 'goods' i.e. Tata Motors, chemical industry, software development resulting in 'intellectual property' creation, etc. it is true that much of India's growth has occurred in the 'service' sector. However, those 'services' were NOT provided to customers in India's own domestic economy, they were provided to customers in the global economy - most notably to US companies.
From that standpoint, India has the same potential problem that America has with a domestic economy that is heavily skewed toward 'service' industries. India like America cannot sustain a domestic economy with existing 'service workers' providing services to each other, because all of these service workers need to 'consume' and they are not providing added value to pay for that consumption thus an economic gap is created. In India's case the economic gap is currently filled by foreign exchange dollars i.e. US companies de-facto paying the salaries of 'service workers'. However this could quickly dry up as the US economy worsens.
America has been filling a part of it's own 'service worker's economic gap by doing something similar - with the salaries of Wall St. bankers and brokers de-facto being paid by foreign investors in large measure (through commissions and percentages charged to place those foreign investments). However, this is already drying up as foreign investors increasingly discover that the USA is not the safest place to invest anymore.
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Re: weekend commentary - the collapse of America's 'service economy'
Melonie, could you explain to us in a little more detail why the US is not a safe place to invest any more? Does it have to do mostly with return on investment risks or political risks? If the US won't be an example of economic and political freedom in the future, what country (countries) will take its place?
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
Deogol
Like one is a democracy and the other is a dictatorship?
Most of the countries you mention were/are socialist. This has less to do with the success of globalism than the failure of socialism.
---> Potato Potahto
Oh well, what was I thinking? I mean George Bush has been brilliant from the podium all the way down.
---> I didn't say he is brilliant, but better than most left wing liberals who are mostly clueless with half-knowledge
Seems to me a lot of America's benefits - from an interstate highway systems to those libraries came about when the country wasn't in the globalist economic religion.
--> Thats faulty logic. Internet, HDTV, Unlimited Wireless calls came much after globalization. What do you say about that?
Anyway as a software engineer, you should understand this simple concept
i) Is free trade good for your home? Yes. Obviously you can't build/grow everything in your house. So you will trade your skill to someone outside and import stuff from Walmart. Although you run a trade deficit with Walmart, your kids are smart enough unlike anti-globalists to not worry about that
ii) Is free trade good for your street? Yes. Although you can trade lawn mowing, hair cutting and child care within your community, you still need services from other street
iii) Is free trade good for your town? Yes. Although you can sustain your life within your town, no town is sophisticated to build its own HDTV and a Toyota Camry
iv) Is Free trade good for your state (say Pennsylvania)?. Look around the things in your home. Your fridge, AC, TV, 500 Channels, Microprocessor, Memory, Graphics Card, Appliances, Operating system, Processed Food in your fridge, Paper Clips...Pennsylvania doesn't have enough man power and brain power to grow food, process it, make clothes, manufacture world class cars, GPS, Mobile Devices, Operating Systems. Unless you are a cluessless idiot, you'd agree that Pennsylvania benefits from free trade.
v) Is Free trade good for your Country? By Induction, it is true. If not you can go through the same argument. If there are more than a Billion products, it is better for people to specialize and trade rather than build each thing
The Concept is called Marginal Cost
It takes $2.5 Billion to produce 1 Microprocessor. For Intel it takes 10c
It takes $2.5 Billion to produce 1 iPod. For Apple it takes 10c.
Anti-Globalist Idiots spend $5 Billion in each country and produce 1 Microprocessor and 1 iPod.
Smart free trade capitalists spend $2.5 Billion and 10 cents to produce 2 Intel Chips and trade 1 Intel chip with an iPod
Guess who gets taxed more?
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
xanfiles1
Ha! I didn't complete the other part of the story. i.e when India/China kicked out their protectionism, opened up to free trade, and participated in globalisation and the result has been nothing but fantastic.
Oh my God!! China no longer uses protectionism! How did I miss that?? The world really has changed whilst I have been asleep...
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Re: weekend commentary - the collapse of America's 'service economy'
^^^ again this is not about anti-globalism. It is about America lacking sufficient capacity to produce new 'added value' to cover its own costs of necessary consumption. Service sector jobs do NOT produce new 'added value', they only exchange existing 'value'.
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Melonie, could you explain to us in a little more detail why the US is not a safe place to invest any more?
well from the point of view of a non-American investor, any and every investment made in America involves currency risk for starters. Add on the fact that 'auction rate bond' sales have been failing left and right, which effectively traps (foreign) investor money in a non-interest paying situation. Then add on the fact that the US congress is talking about 'subprime' mortgage bailout proposals which also involve US courts forcing (foreign) investors to accept a reduced interest rate and/or a reduction in the total amount of money they will eventually receive in return for (what was supposed to be) their guaranteed by contract investment in US mortgages & bonds. Then add on the fact that presidential candidates and the US congress are talking about instituting a 'carbon tax' or a 'windfall profits' tax on oil companies that will raise energy costs for every US business and thus reduce profitability / future stock share values. How's that for a start ?
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
StuartL
Oh my God!! China no longer uses protectionism! How did I miss that?? The world really has changed whilst I have been asleep...
It is all relative Stuart. China and India still use pleny of protectionism. You can't change a whole country on a dime. But, they have definitely opened up compared to their earlier policies.
Of course clueless idiots in the respective countries will continue to ignore the amazing growth they had due to opening up of their economies and continue to push for protectionism and anti-globalism.
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Re: weekend commentary - the collapse of America's 'service economy'
Quote:
Originally Posted by
Melonie
. Add on the fact that 'auction rate bond' sales have been failing left and right
This reasoning is as stupid as saying you shouldn't invest in USA because someone in Kansas didn't use his indicator while making a right turn.