weekend commentary - As GM Goes, so goes the Nation (America)
(snip)If the U.S. chooses to pursue many or most of the above policies, the investment implications are significant, although it must be recognized that I am not speaking to “overnight” developments but instead to changes that should occur in future years. Higher inflation, higher personal and corporate taxes, and a lower dollar point U.S. and global investors away from U.S. assets and toward more competitive economies less burdened by health and pension liabilities – those personified by higher savings rates and investment as a percentage of GDP. Need I say more than to sell U.S. assets and buy Asian ones denominated in their local currencies; or if necessary to hire a global asset manager with sufficient flexibility and proper foresight to thrive in an increasing difficult investment environment?
William H. Gross
Managing Director"
Re: weekend commentary - As GM Goes, so goes the Nation (America)
We could use a little less CEO pay too. I say that as a stock holder.
I think this says worlds though:
But the U.S. economy for better or worse, now stands on service and finance, as opposed to manufacturing legs. “What’s good for Microsoft or Citigroup” would probably be a better fit for the modern day version of Charles Wilson’s metaphor
That is - the economy is based on "spreadsheet games."
We like to fool ourselves into thinking we have mustered this standard of living on american ingenuity. But the VCR what have you? Sure we invented it - but it was the Japanese that made it a part of our current lifestyle. How about electronics in general? That Playstation that is so fun - invented where? Now we are busy handing over the computer industry over to another part of the world, just as we basically have many other items seen as our current standard of living (clothing, kitchen gadgets, etc.)
We have become a colony once again - exporting raw materials and importing worked goods.
Yea, we can pat ourselves on the back about our standard of living - until the bill comes due.
Then we are all bartering at the flea market once again.
Re: weekend commentary - As GM Goes, so goes the Nation (America)
Well, this is timely, I have inherted a modest amount of stock recently, in a family firm which has very close ties to GM. The company has seen some hard times since my grandfather started it years ago, but has recently merged with another company, and for the hell of it, I decided to keep the non-voting shares instead of opting to be bought out. The stock used to be worth quite a bit, but now it's pretty iffy.
I figured it wouldn't hurt to hold onto it and see what happens...
My cousin is running the firm, which is now a kind of subsidiary of the other one, and I just talked to him today, after he went to a rather important meeting at--you guessed it--GM. According to him, they have some promising plans for the future.
Thanks for the link, Melonie.
Re: weekend commentary - As GM Goes, so goes the Nation (America)
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Now we are busy handing over the computer industry over to another part of the world, just as we basically have many other items seen as our current standard of living (clothing, kitchen gadgets, etc.)
We have become a colony once again - exporting raw materials and importing worked goods.
Agreed, with the primary raw material export being 'intellectual capital'. Americans seem to be extremely good at coming up with new ideas and developing them to the point of becoming a viable new commercial product. However, since about the 1980's, once the new commercial product stage arrives, the higher wage / tax / cost structure in America puts the American 'inventors' of the product at a big competitive disadvantage relative to global competitors. While this meant that the manufacturing of virtually every new product which has hit the market in the last 20 years wound up offshore, at least we were 'safe' in the assumption that America would continue to be the 'incubator' of future new ideas and products. However in the last few years even this is changing, as American academic standards decline while Asian academic standards increase, as China blatantly steals American 'trade secret' information etc.
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I figured it wouldn't hurt to hold onto it and see what happens...
My cousin is running the firm, which is now a kind of subsidiary of the other one, and I just talked to him today, after he went to a rather important meeting at--you guessed it--GM. According to him, they have some promising plans for the future.
Scuttlebut is that GM's stock is presently undervalued as a result of the 'fallout' from Delphi. But I agree with the writer of the article that much of GM's future depends upon the success they have in cutting their US union wage and benefit obligations. At any rate I'm absolutely certain that GM has exciting plans for the future, because much of it has been mentioned here and there in the news media i.e. GM is the best selling auto manufacturer - IN CHINA !
As to the future of any manufacturing business which is operating in a 'blue' state, that future will probably be much more dependent on state/local tax policies, state energy policies, state labor / comp rules and costs etc. than it is on the fundamentals of the business itself.
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Yea, we can pat ourselves on the back about our standard of living - until the bill comes due.
Herein lies the true risk factor to the American economy ... that we're dependent on willing foreign investors to continue loaning us an extra $3 billion a day in order to finance America's gov't and private spending spree ... and that those foreign creditors may not continue to 'play along' much longer as they see the 'home currency' value of their loans/investments in the USA decline along with the US dollar. If and when foreign investors start demanding interest rates which are commeasurate with their actual risk of 'home currency' losses, given the US gov't need to continue raising $2 billion a day just to make good on public sector salary checks, Social Security checks, medicaid/welfare checks, defaulted private industry pension checks etc. etc. - IMHO we can say hello to a replay of 1979 !
~
Re: weekend commentary - As GM Goes, so goes the Nation (America)
I remember reading somewhere that our primary present import/exports look like that of a third world country...lots of raw lumber/metal/textile/etc going out, lots of finished products coming in.
Just educate your kids as best you can, plan for the future, and keep your fingers crossed. We can expect a decreased SOL in the future.
Re: weekend commentary - As GM Goes, so goes the Nation (America)
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We can expect a decreased SOL in the future.
was that an intentional double entendre ? If so, good one ! However, I'd wager that the "Shit Out of Luck' factor will increase as the 'Standard Of Living' decreases.
Re: weekend commentary - As GM Goes, so goes the Nation (America)
No, it was not intentional. Our Shit out of Luck factor will increase in direct proportion to our rate of Stanard of Living decrease.
Not really funny...I feel sorry for the generations to come over the next 100 years. We're screwing them as a society.
Re: weekend commentary - As GM Goes, so goes the Nation (America)
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I feel sorry for the generations to come over the next 100 years. We're screwing them as a society
That's not exactly true. The future standard of living of next generation Mexican-Americans, Southeast Asian-Americans, Eastern European-Americans etc. will still be significantly higher than if their parents had stayed in their 'home' countries rather than coming to the USA. It is only the next generation of well established Americans (i.e. 3rd, 4th generation +) that haven't already managed to achieve the financial status of being 'rich' who will see their relative standard of living decline.
Re: weekend commentary - As GM Goes, so goes the Nation (America)
Well, that's pretty much what I was referring to. Not to sound heartless, but I care more about current Americans and their progeny than future ones. The ones that will be coming in are partly why the SOL will decrease.
Re: weekend commentary - As GM Goes, so goes the Nation (America)
^^^ and therein lies the 'slippery slope' behind this issue's economics. Is it fair to deny a newborn US citizen (whose family might have been in the USA for all of one day, but a citizen nonetheless) health benefits, social welfare benefits, etc. that 'current' American citizens are eligible to receive ? Is it fair to make gov't policy which results in different levels of gov't spending / benefit payouts based on whether or not that citizen's parents are also citizens (or their grandparents, or great-grandparents) ? Recent interpretations of the US constitution would tend to say 'no, you can't do that'. Thus if a finite spending level for health and social welfare benefits can be sustained by the US gov't (based on taxation of the independently wealthy and highly educated/skilled), and an ever increasing proportion of 'new' citizens meets the eligibility criteria for receiving gov't benefits, then by the same recent interpretations of the US constitution in order to adhere to 'equal treatment under the law' the benefit levels of every eligible US citizen must be reduced across the board or the tax burden on the independently wealthy and highly educated/skilled must be increased across the board.
The logical conclusion of this 'equal under the law' treatment is that all US citizens, unless they are independently wealthy or highly educated/skilled, will wind up eventually sharing the 'lowest common denominator' in terms of standard of living that the independently wealthy or highly educated/skilled are able to subsidize for them. You'll note that I said able rather than willing, because in tomorrow's democracy the 'poor' majority will be able to vote themselves a hefty share of the incomes of the independently wealthy or highly educated/skilled 'minority'. At that point, history tends to indicate that the independently wealthy start shielding their assets/income by whatever means is open to them (i.e. trusts, offshore accounts), and that the highly educated/skilled tend to either leave the country in search of better opportunities or they stop making any extra effort since the majority of the 'fruits' of that extra effort only wind up being confiscated and transferred to benefit others rather than themselves or their own families. This of course leads to the possibility that 20 years from now, America will bear much more resemblance to Mexico, Serbia or China than it will to the America of the last 100 years.
Coming back on topic, GM and other US corporations are likely to react in exactly the same way as US individual citizens to the prospect of higher taxes and/or higher costs of doing business in the USA.
!.
Re: weekend commentary - As GM Goes, so goes the Nation (America)
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Originally Posted by Melonie
^^^ and therein lies the 'slippery slope' behind this issue's economics. Is it fair to deny a newborn US citizen (whose family might have been in the USA for all of one day, but a citizen nonetheless) health benefits, social welfare benefits, etc. that 'current' American citizens are eligible to receive ?
IMO, Y-E-S. The people coming in illegally just to have their kids born here are no more entitled to have their kids benefit from citizenship than those whose kids are born outside American soil as far as I'm concerned. If the parents are illegal, then so are the kids I reckon. Kick them all out. They are a large part of the reason this country is going to hell in a handbasket.
Re: weekend commentary - As GM Goes, so goes the Nation (America)
^^^ well, that position harkens back to a much older interpretation of the US constitution, where the phrase 'born in the United States and under the jurisdiction thereof' is actually taken at face value. The recent interpretation takes the position that 'under the jurisdiction thereof' was simply meant to apply to the children of foreign diplomats stationed in the USA, and that a child born to a Mexican mother who snuck across the border the day before giving birth has equal rights of citizenship to a child born to American parents whose ancestors came over on the Mayflower.
The problem is, of course, that we aren't allowed to pick and choose between older and newer interepretations of the US constitution. If we were, then income taxes would be unconstitutional, only Americans who owned land would be allowed to vote, and social welfare programs would be considered as an unconstitutional 'taking' of private property by gov't. America keeps changing with the times ... and it would appear that those changes will continue and accelerate. Unfortunately, there's no guarantee that those changes will make America better for everyone.