Page 1 of 3 123 LastLast
Results 1 to 25 of 57

Thread: Want a REAL View of the US Economy ? Talk to a CEO !

  1. #1
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Want a REAL View of the US Economy ? Talk to a CEO !

    (snip)<!--StartFragment-->

    Well, we’ve reached the point at which the mainstream media is finally beginning to understand that the US recovery of 2009 was actually an accounting fiction and that the “green shoots” were just a stupid metaphor.

    Indeed, just this morning, Fed Chairman Ben Bernanke all but guaranteed he will introduce a large QE 2 program sometime in the near future… which essentially proves not only that QE 1 failed, but that the US economy is on the ropes (why else would we need more emergency policies?).


    Let’s put this in perspective…

    The US Fed is already buying between $8-12 billion in US debt per week as courtesy of its QE lite program. Moreover, the Fed has been juicing the market on 12 of the last 13 options expiration weeks. So QE 1, for all intensive purposes, NEVER ended.

    And now, our illustrious Fed Chairman is talking about introducing even MORE QE? Just how awful have things gotten that we’ve got ONE QE program occurring and they’re already talking about introducing a second LARGER one at the same time?

    Well, according to US CEOs things are flat out awful… as in May 2009 BAD. According to Bloomberg:


    Confidence among chief executive officers in the U.S. sank in October to the lowest level since May 2009, when the world’s largest economy was still in a recession, according to a survey from the Business Council... The group’s gauge of expectations for the economy six months from now fell to 51.7, the lowest since February 2009.


    If you’ll recall, February 2009 was when everyone thought the whole world was ending. The US economy was literally falling off a cliff with initial jobless claims clearing 600,000 (a 26 year high) while the S&P 500 was collapsing on its way to the March lows of 666.

    And US CEOs’ expectations for the next six months are as BLEAK as they were back then… BEFORE the Fed even introduced QE 1?

    Lest you think this is merely idle talk, consider that insiders have been unloading their shares by the truckload in the last few weeks.

    For the week of October 4 2010, the insider selling to buying ratio was 2,341 to 1 with insiders DROPPING $400+ million in stock and only buying a measly $170,000. This comes on the heels of September 27’s equally insanely bearish ratio of 1,411 to 1 (which by the way was preceded by weeks with ratios of 250 to 1 and 650 to 1).

    In plain terms, corporate insiders, the folks who know their business and its prospects better than anyone are dumping shares as fast as humanly possible. They are literally putting their money where their mouths are when they say the US economy is AWFUL and business prospects are on par with those of February 2009 (before Bernanke even thought up that stupid “green shoots” nonsense).

    All of this is going to end horribly when the rest of the world realizes what corporate CEOs have already figured out: that the US economy is a full-scale disaster and nothing the Fed has done has improved the situation.

    This is very much akin to what happened in 2008 when everyone thought that the “worst was over” and kept banking that the Fed would stave off any collapse (just as it did for the Bear Stearns Crisis)… right up until the entire system imploded in late September.

    Sometime, and I cannot tell you when, the financial markets will have a similar “wake up call” as they did in 2008. We’ve already got the same set up in place: US banks are being hit from losses related to garbage mortgage securities, commodities are soaring, and the US Dollar is collapsing with everyone shouting that it’s doomed.

    This is almost identical to where we were in the summer of 2008. And we all know how that turned out.

    In plain terms, you should take this rally for what it is: a gift from the market Gods to cash out some profits and prepare for what's to come."(snip)

    from

  2. #2
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    There is plenty of money sloshing around behind the dams of the loan department at banks. That is unless of course you want to borrow it out at 20%+ on a credit card for some shit made in China.

    QE isn't gonna do shit in a global market. Tariffs - that will solve the problem.

  3. #3
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    well, from the standpoint of the CEO of a US company that conducts a significant amount of business overseas, QE / US dollar devaluation immediately results in an increase in 'apparent' corporate profits on every tube of toothpaste / Big Mac / bulldozer that is sold priced in Euros or Yen but booked in US dollars !

    As to the question of tariffs, a number like 27% has been kicked around Washington DC as the level of tariff 'tax' being necessary to equalize the Chinese manufacturer cost savings on environmental compliance costs, on worker safety compliance costs, on 'minimum wage' labor costs, on mandated employee benefit costs etc. versus manufacturing in the USA. So yes the imposition of a 27% tariff 'tax' on all items imported from China would indeed shield US manufacturers from the currently insurmountable manufacturing cost advantage enjoyed by Chinee competitors. But there are two other aspects that need to be considered carefully ...

    A. imposing a 27% 'selective tax' on Chinese imports will directly result in the US store shelf price of those Chinese imports increasing by something close to the same 27%. In a scenario where a large percentage of Americans are now living on 'fixed income' Social Security / welfare / unemployment checks, a 27% price increase with no 'income' increase is going to result in a ton of 'restless natives'. So what's next, raising taxes to increase the size of these checks in order to 'cancel out' the tariff based cost of living increase ( at the expense of middle class Americans who also have no 'income' increase and who also see the tariff based price increases ) ?

    B. at this stage of the game, many nominal US companies are already outsourcing a significant percentage of their 'components' from China. If those components become subject to tariff, this will result in those US companies increasing store shelf prices of their own finished products to reflect their increased input costs. Again this leads back to a situation of US consumers facing risng prices versus non-rising incomes.

    In both cases, at least from the viewpoint of a US company CEO, the imposition of tariffs also does nothing to increase US consumer demand ( which will arguably be lowered ), and also does nothing to affect their ability to sell toothpaste / Big Macs / bulldozers in foreign countries.

    The 'gold foil hat' crowd would tell you that, in general, the two major beneficiaries of tariffs are the US Treasury and US union workers - and the major 'victims' of tariffs are low income / retired Americans who are disproportionately affected by rising prices for 'low end' goods imported from China.

  4. #4
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    It costs money to live in the society we wish to live in. If people are unwilling, then the slide will continue.

  5. #5
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    It costs money to live in the society we wish to live in
    Absolutely true ... every environmental law, every worker safety law, every minimum wage law, every mandated employee benefit law etc. imposes a compliance cost. And every supporting voter thinks that all of these laws are a good idea ... as long as 'somebody else' winds up paying for these costs. In other words, nobody is really willing to voluntarily sacrifice a 25% ( or whatever ) decline in their own standard of living in order to cover these costs.

    So you then wind up with a host of problems. The first of course is that, short of closing the borders to imports, the US lacks jurisdiction to impose similar costs on foreign suppliers - which immediately renders US industries less competitive and creates a strong incentive for US industries to outsource jobs / production to foreign countries where these costs are much lower.

  6. #6
    God/dess threlayer's Avatar
    Joined
    Aug 2003
    Location
    Syracuse
    Posts
    5,921
    Thanks
    369
    Thanked 419 Times in 290 Posts
    My Mood
    Fine

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Just don't talk to a CEO who should really be in jail or at least on the street.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

  7. The Following 2 Users Say Thank You to threlayer For This Useful Post:


  8. #7
    God/dess threlayer's Avatar
    Joined
    Aug 2003
    Location
    Syracuse
    Posts
    5,921
    Thanks
    369
    Thanked 419 Times in 290 Posts
    My Mood
    Fine

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Quote Originally Posted by Melonie View Post
    Absolutely true ... every environmental law, every worker safety law, every minimum wage law, every mandated employee benefit law etc. imposes a compliance cost. And every supporting voter thinks that all of these laws are a good idea ... as long as 'somebody else' winds up paying for these costs. In other words, nobody is really willing to voluntarily sacrifice a 25% ( or whatever ) decline in their own standard of living in order to cover these costs.

    Well, I wouldn't exactly say that!
    That in total is what makes the USA the best country in the world! That is our quality of life, not a $500,000 house, 48" LED tv and a BMW. (That can all be lost in a lawsuit or a neighborhood fire.) Maybe some social misers don't believe this, but obviously the majority do, even though the direct association is not slapped in their face daily.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

  9. #8
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Quote Originally Posted by Melonie View Post
    Absolutely true ... every environmental law, every worker safety law, every minimum wage law, every mandated employee benefit law etc. imposes a compliance cost. And every supporting voter thinks that all of these laws are a good idea ... as long as 'somebody else' winds up paying for these costs. In other words, nobody is really willing to voluntarily sacrifice a 25% ( or whatever ) decline in their own standard of living in order to cover these costs.

    So you then wind up with a host of problems. The first of course is that, short of closing the borders to imports, the US lacks jurisdiction to impose similar costs on foreign suppliers - which immediately renders US industries less competitive and creates a strong incentive for US industries to outsource jobs / production to foreign countries where these costs are much lower.
    Again, you're making stuff up and pulling numbers out of thin air. We significantly cleaned up the environment during the 1980's and 90's and our standard of living rose. Cleaning up the environment actually benefited the economy. Building more fuel-efficient cars benefited Americans greatly. During the 1990's the minimum wage was increased multiple times and the economy continued to expand.

  10. #9
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    and you're attempting to cite events that occurred in a similar time frame as if some direct cause and effect relationship existed between these events.

    The MAJOR reasons for economic expansion in the 1990's were the expansion of debt and a forced reduction in gov't spending, pure and simple. The major reason that the minimum wage could be increased multiple times in the 90's without adverse effects was the decline in US dollar purchasing power and the difficulty / risks then associated with outsourcing making US businesses more dependent on the domestic unskilled labor market. Building more fuel efficient cars, while laudible on principles, only became important to the US marketplace when gasoline prices rose above $2 per gallon in US dollar terms and / or gasoline was rationed due to foreign imposed oil embargos ( as evidenced by the continuing high popularity of gas guzzling trucks and SUV's right up to the point where gasoline exceeded $3 per gallon in the early 00's).

    Circling back on topic, the CEO's would tell you that they sought to lower US production costs in the 1980's and 1990's, but from a corporate / banker paradigm standpoint their options were essentially limited to Mexican maquiladoras under direct management by US corporate personnel. It wasn't until the 'full bloom' of globalism plus the maturation of the internet ( where CAD, streaming video etc. became globally and instantaneously accessible ) after 2001 that 'remote' management made dirt cheap asian outsourcing / offshoring a realistic option in the eyes of corporate / banking decision makers.

    As to my supposed pulling of numbers out of the air, the 27% figure is straight out of a Democratic committee bill to impose a 27% tariff on Chinese imports ... with THEIR comparative cost analysis resulting in the 27% cost advantage figure. The 'gold foil hat' crowd would undoubtedy tell you that the 27% figure is actually too low, since it does not consider indirect factors such as relative product liability costs, relative legal and accounting costs etc.

    ~
    Last edited by Melonie; 10-21-2010 at 03:38 AM.

  11. #10
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    here's more commentary from CEO's ...

    (snip)"Recently, CNBC interviewed 81-year-old Bernie Marcus, one of the founding partners of Home Depot. (He was CEO between 1979 and 1997.) Marcus, who is a self-made man and completely level-headed and without arrogance of any sort, described how he and Arthur Blank (the other co- founder) struggled when they opened their first store in 1979, in Atlanta.

    For example, at 10 pm on his 50th birthday, he said, he was still in the store, moving boxes around without air-conditioning, because they needed to save money. He then said that he doesn’t mix with “important people”, such as Jeff Immelt of GE, and smooth-talking bankers and academics; instead, he talks daily with small businessmen, which is what he was when he started his business. He then cited several examples of people who run small businesses and who had told him how difficult business conditions were. He suggested that, like the king in a fairytale, Mr. Obama should dress up at night like a pauper and go out and talk to business people. According to Marcus, King Obama would then realize how unpopular he is and how destructive his economic policies have been for small businesses. He also suggested that the academics at the Fed and in the administration should, for once in their lives, go out and work, instead of sitting in big glass office towers and having no clue about what is ailing the economy.


    Marcus then emphasized that none of the small businessmen he talked to had any plans to hire staff, because they felt there was far too much uncertainty about what kinds of regulations and laws Congress and the administration would come up with next. All his business friends and customers had told him that Obamacare would be a complete disaster for them. (It imposes on small businesses enormous non-medical tax compliance. It will require them to mail IRS 1099 tax forms to every vendor from whom they make purchases of more than US$600 in a year, with duplicate forms going to the IRS. Obamacare will also fund 16,000 new IRS agents…) Asked what he would suggest as a solution, Marcus, who looks much younger than his age and is still very alert, responded that the US would be greatly helped if Congress went on a holiday for two years, as this would prevent the government from doing even more economic damage.

    I have mentioned on previous occasions the critical views of other businessmen, such as Lee Iacocca (formerly of Chrysler) and Paul Otellini (CEO of Intel). Like Marcus, their view is that regulation is stifling capital spending and any employment gains in the US. But, whereas the “Otellinis” of this world are more in touch with large corporations, Marcus – whose philosophy is: “Whatever it takes” – is cultivating relationships with a vast number of ordinary people who run their privately owned businesses and have sales of from half a million to 100 million dollars.

    Marcus was also very critical of the various financial bailouts (unlike the self-serving and hypocritical Charles Munger). But one point he made was particularly interesting. He said that the business people he talked to had access to credit; that banks were willing to lend them money! But they had no interest in borrowing funds given the current regulatory uncertainties. I should mention that Marcus is the antithesis of economic policy decision makers and academics who imagine themselves to be of infinite delicacy and refinement and suffer from “a narrowing of the mind” – not because they travel, but because they have never in their lives worked in a real business. But, obviously, he knows what he is talking about. (Home Depot now employs over 300,000 people.)

    Now, does anyone really think that, under the conditions Marcus has described, the Fed’s increase in the quantity of money will flow into US employment and real wage gains? As Marcus likes to say, “You must be kidding!”

    The money flows will continue to boost employment in emerging economies, along with their wages and asset prices.

    The best way to visualize this process is to think of a huge money-printing machine in the US that produces an unlimited quantity of dollars. Most of these dollars flow to the corporate sector, financial institutions, and wealthy individuals. A large proportion of these dollars is then transferred to emerging economies through the US trade deficit and investment flows, and boosts economic activity and increases wealth in emerging economies relative to the US.

    Some of these dollars then find their way back to the US and support Treasury bond prices. But since fewer dollars find their way back to the US than exit the country, the dollar has a weakening tendency against emerging market currencies and, especially, against hard assets whose supply is extremely limited compared to the money that the money machine keeps spitting out."(snip)

  12. #11
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Quote Originally Posted by Melonie View Post
    and you're attempting to cite events that occurred in a similar time frame as if some direct cause and effect relationship existed between these events.
    No. You claimed improving the environment decreases living standards. It didn't. As for improving the economy, it's common sense that if Americans are spending less money on gasoline because of more fuel-efficient vehicles, they have more money to spend on other things.

    Quote Originally Posted by Melonie View Post
    The MAJOR reasons for economic expansion in the 1990's were the expansion of debt and a forced reduction in gov't spending, pure and simple. The major reason that the minimum wage could be increased multiple times in the 90's without adverse effects was the decline in US dollar purchasing power and the difficulty / risks then associated with outsourcing making US businesses more dependent on the domestic unskilled labor market.
    Again you're making things up. There was little to no inflation during the 1990's. From what I remember, the dollar grew in strength during the 1990's. A major factor in economic growth during the 1990's was innovation and new products and businesses related to the internet.

    You seem to have this problem where you cannot say anything positive about the US economy. Even during the 1990's when we were having unprecedented economic growth, you can't simply say the economy was strong. You need to come up with some type of negative reasons to explain it.

    Quote Originally Posted by Melonie View Post
    Building more fuel efficient cars, while laudible on principles, only became important to the US marketplace when gasoline prices rose above $2 per gallon in US dollar terms and / or gasoline was rationed due to foreign imposed oil embargos ( as evidenced by the continuing high popularity of gas guzzling trucks and SUV's right up to the point where gasoline exceeded $3 per gallon in the early 00's).
    The reason gasoline didn't exceed $3 per gallon in the 1990's was because during the 1980's, Americans were buying fuel-efficient vehicles. It was as a result of the popularity of trucks and SUV's in the late 1990's that we ended up with $3 and $4 dollar a gallon gasoline in the 2000's.


    Quote Originally Posted by Melonie View Post
    Circling back on topic, the CEO's would tell you that they sought to lower US production costs in the 1980's and 1990's, but from a corporate / banker paradigm standpoint their options were essentially limited to Mexican maquiladoras under direct management by US corporate personnel. It wasn't until the 'full bloom' of globalism plus the maturation of the internet ( where CAD, streaming video etc. became globally and instantaneously accessible ) after 2001 that 'remote' management made dirt cheap asian outsourcing / offshoring a realistic option in the eyes of corporate / banking decision makers.

    As to my supposed pulling of numbers out of the air, the 27% figure is straight out of a Democratic committee bill to impose a 27% tariff on Chinese imports ... with THEIR comparative cost analysis resulting in the 27% cost advantage figure. The 'gold foil hat' crowd would undoubtedy tell you that the 27% figure is actually too low, since it does not consider indirect factors such as relative product liability costs, relative legal and accounting costs etc.

    ~
    You said all of these laws/regulations resulted in a 25% decline in our standard of living, not that China had a 25 or 27% cost advantage. Having a cleaner environment and high wages increases our standard of living, not causes our standard of living to decline.

  13. The Following User Says Thank You to eagle2 For This Useful Post:

    djd

  14. #12
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    You claimed improving the environment decreases living standards. It didn't. As for improving the economy, it's common sense that if Americans are spending less money on gasoline because of more fuel-efficient vehicles, they have more money to spend on other things.
    Well for a fact improving environmental standards decreases living standards ... but this may be realized as an improvement in US / western European environmental standards decreasing living standards in Asia or Africa or eastern Europe with no apparent change in the US / Europe.

    As to fuel economy, who says that people are spending less money on gasoline even though they may be buying fewer gallons of gasoline. In case you haven't noticed, as overall fuel efficiency of automobiles has increased over the past 10 years so has the unit price of gasoline. Based on historical trends in full sized truck and SUV sales, what actually appears to actually matter is the percentage of weekly family budget that must be spent on gasoline.

    Even during the 1990's when we were having unprecedented economic growth, you can't simply say the economy was strong. You need to come up with some type of negative reasons to explain it.
    One person's negative is another person's positive. For example, by far the single most important contributor to US economic growth in the 90's was a major reduction in gov't spending levels ... both via vastly reduced defense spending after the fall of the Soviet Union i.e. the 'peace dividend', and by reduced domestic spending under the 'contract with America'.

    The reason gasoline didn't exceed $3 per gallon in the 1990's was because during the 1980's, Americans were buying fuel-efficient vehicles
    Another glaring example of attempting to imply that two events occurring in the same time frame must have some sort of cause and effect relationship when they do not. Gasoline is a world market priced commodity ( with certain additional local factors ) related to the price of oil. Oil / gasoline price increases have increased due to devaluation of the US dollar ( glaring example Carter years ), due to disruptions of traditional oil supplies ( glaring example both mideast wars ) etc. The bulk of the 1990's was an unusual time of relative dollar stability as well as relative mideast calm. The 1990's also saw a significant increase in north american oil supplies via increased production in Mexico and Canada.


    Having a cleaner environment and high wages increases our standard of living, not causes our standard of living to decline.
    First, it simply isn't possible to have a cleaner environment and high wages without SOMEONE's standard of living declining ... because sooner or later SOMEONE must pay the costs of environmental compliance and uncompetitively high wages. Right now it is finally beginning to dawn on most Americans that high unemployment is one of the ways that this is finally being paid for ( which certainly reduces the standard of living of those who are unemployed). It will soon dawn on most Americans that a devalued US dollar ( thus higher prices for everything, with a resulting direct decline in standard of living) is another way that this is finally being paid for.

  15. #13
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Quote Originally Posted by Melonie View Post
    One person's negative is another person's positive. For example, by far the single most important contributor to US economic growth in the 90's was a major reduction in gov't spending levels ... both via vastly reduced defense spending after the fall of the Soviet Union i.e. the 'peace dividend', and by reduced domestic spending under the 'contract with America'.
    As always, you're making things up based completely on your ideology rather than facts. So what's your explanation for the unprecedented economic growth during World War II, when defense spending was greatly increased? According to your ideology, there should have been a major drop in economic growth since government spending was greatly increased. Do you think it's possible that your ideology is wrong?

  16. #14
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    ^^^ no your facts are incomplete. The unprecedented private sector economic growth during World War 2 was, in large part, the result of unprecedented 'export sales' of weapons and other essential commodities by the US to Britain, to Russia, etc.


    (snip)"The loans were granted to help Britain buy oil, food, weapons and other military equipment to continue the war effort, and were essential to post-war reconstruction following the 1939-1945 conflict.

    "This week [ 2006 - sic ] we finally honour in full our commitments to the US and Canada for the support they gave us 60 years ago," said economic secretary to the treasury Ed Balls.

    "It was vital support which helped Britain defeat Nazi Germany and secure peace and prosperity in the post-war period.

    "We honour our commitments to them now as they honoured their commitments to us all those years ago."

    In 1950, Britain' s national debt stood at about 200% of Gross Domestic Product (GDP). (snip)


    In other words, high US economic growth during WW2 was the direct result of the US 'bankrupting' the UK via an extremely lopsided ( vendor financed ) balance of trade. Essentially the same thing is occurring today ( absent a hot war ) with China - India - Saudi Arabia 'bankrupting' the US with similarly lopsided ( vendor financed ) balance of trade.


    Before the advent of wartime exports to allied countries, here's what FDR's Treasury Secretary Henry Morgenthau had to say about the effectiveness of high levels of domestic gov't spending ...

    (snip)" He is quoted in doubting the huge spending schemes in The New Deal that haven't reduced unemployment and only added debt:[5]

    "We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot."(snip) - May 9, 1939

    see

    ~
    Last edited by Melonie; 10-23-2010 at 06:22 AM.

  17. #15
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    As usual, you are making things up without having the slightest idea of how true or false it is. The bulk of war equipment produced in the United States went to American forces. The Soviet Union and Great Britain produced most of their own weapons. It seems your ideology is always going to take precedence over facts.
    Last edited by eagle2; 10-23-2010 at 01:48 PM.

  18. #16
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Quote Originally Posted by eagle2 View Post
    As usual, you are making things up without having the slightest of how true or false it is. The bulk of war equipment produced in the United States went to American forces. The Soviet Union and Great Britain produced most of their own weapons. It seems your ideology is always going to take precedence over facts.
    True the bulk of war equipment produced in the United States went to US forces, but it is also true the bulk of war supplies for Britain came from the US. These are not mutually exclusive truths.

  19. #17
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Britain and the Soviet Union manufactured most of their own weapons. We mostly provided other items such as trucks.

    http://militaryhistory.about.com/od/...-lease-act.htm

    --snip--
    As the war progressed, most of the Allied nations proved capable of manufacturing sufficient frontline weapons for their troops, however this led to a drastic reduction in the production other needed items. Materials from Lend-Lease filled this void in the form of munitions, food, transport aircraft, trucks, and rolling stock. The Red Army in particular took advantage of the program and by war's end approximately two-thirds of its trucks were American-built Dodges and Studebakers. Also, the Soviets received around 2,000 locomotives for supplying its forces at the front.
    --snip--

    The British even supplied the US with weapons in some cases.

    from the same article
    --snip--
    While Lend-Lease generally saw goods being provided to the Allies, a Reverse Lend-Lease scheme also existed where goods and services were given to the US. As American forces began arriving in Europe, Britain provided material assistance such as the use of Supermarine Spitfire fighters. Additionally, Commonwealth nations often provided food, bases, and other logistical support. Other Lead-Lease items included patrol boats and De Havilland Mosquito aircraft. Through the course of the war, the US received around $7.8 billion in Reverse Lend-Lease aid with $6.8 of it coming from Britain and the Commonwealth nations.
    --snip--

    Most of the material sent to Britain was paid for by the US. Britain purchased the lend lease equipment for about 10 cents on the dollar. This makes Melonie even more wrong. Supplying Britain with war material actually increased our government debt even more.

  20. #18
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Supplying Britain with war material actually increased our government debt even more
    vendor financing as I said ! The US gov't temporarily assumed additional debt in order to finance production of war materials that were 'lent' to the UK and USSR. That debt was ( for the most part ) repaid with interest.

    On the subject of US spending for its own ( and unreimbursed allied ) war materiel during WW2, remember 'War Bonds' ? Those gov't expenditures were paid for via the 'savings' of US citizens. This is a far different story than today, where US gov't expenditures are being paid for via the 'savings' of Japanese and Chinese citizens since most US citizens do not have any 'savings' for the gov't to borrow. The obvious difference of course is that during WW2 the majority of US gov't spending did not involve a declining ( or negative ) balance of fund flows, whereas today the balance of fund flows is HIGHLY negative. There is a huge difference between future US tax revenues being used to put money back into the hands of US citizens ( i.e. paying off WW2 'War Bonds'), versus the current situation of future US tax revenues being used to put money back into the hands of the Chinese and Japanese ( i.e. paying off US Treasury bonds purchased by the Chinese and Japanese).

    Trying to circle back on topic, CEO's and gov't officials during WW2 were absolutely aware that one of the major collateral effects of that war would be to decimate the production capacity of former competitors from Europe and Asia - thus leaving the US ( and to some degree the UK and USSR ) as the only countries with surplus production capacity in a post-war economy. Additionally, CEO's and gov't officials during WW2 knew that 'spoils of war' would also result in the transfer of certain technologies / assets from defeated enemy countries that they could exploit 'for free'. Again today holds a far different situation, where US developed technology / assets are being transferred offshore, and where US capital is being used to build production capacity in China while existing US production capacity is being shut down / allowed to rot away.

    ~
    Last edited by Melonie; 10-24-2010 at 05:12 AM.

  21. #19
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Quote Originally Posted by Melonie View Post
    vendor financing as I said ! The US gov't temporarily assumed additional debt in order to finance production of war materials that were 'lent' to the UK and USSR. That debt was ( for the most part ) repaid with interest.
    No it wasn't. Britain paid about 10 cents on the dollar for the equipment they received.

    From:
    http://militaryhistory.about.com/od/...-lease-act.htm

    As Britain needed to retain much of the Lend-Lease equipment for postwar use, the Anglo-American Loan was signed through which the British agreed to purchase the items for approximately ten cents on the dollar.

    Quote Originally Posted by Melonie View Post
    On the subject of US spending for its own ( and unreimbursed allied ) war materiel during WW2, remember 'War Bonds' ? Those gov't expenditures were paid for via the 'savings' of US citizens. This is a far different story than today, where US gov't expenditures are being paid for via the 'savings' of Japanese and Chinese citizens since most US citizens do not have any 'savings' for the gov't to borrow.
    No, Americans do have enough to finance our government debt. Just most Americans choose other investments, rather than T-Bills, to place their money. T-Bills are sold on the open market, where anyone can buy them. It just so happens that the Chinese and Japanese choose to buy a significant amount of T-Bills.

    Quote Originally Posted by Melonie View Post
    The obvious difference of course is that during WW2 the majority of US gov't spending did not involve a declining ( or negative ) balance of fund flows, whereas today the balance of fund flows is HIGHLY negative. There is a huge difference between future US tax revenues being used to put money back into the hands of US citizens ( i.e. paying off WW2 'War Bonds'), versus the current situation of future US tax revenues being used to put money back into the hands of the Chinese and Japanese ( i.e. paying off US Treasury bonds purchased by the Chinese and Japanese).
    During World War II, there was no other major country that could lend us money, since all of the major countries were at war. There was also a lot more incentive for Americans to buy war bonds, since we were trying to win a war. The main difference between now and then, is Americans were willing to pay the necessary taxes to fund our government and pay down the debt. Today we're not. Without Bush's tax cuts, our debt wouldn't be nearly as high as it is.

  22. #20
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Quote Originally Posted by eagle2 View Post

    No, Americans do have enough to finance our government debt. Just most Americans choose other investments, rather than T-Bills, to place their money. T-Bills are sold on the open market, where anyone can buy them. It just so happens that the Chinese and Japanese choose to buy a significant amount of T-Bills.
    Seems to me not long ago the statistics had US savings at a negative rate.

  23. #21
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    America's net worth is approximately $53.5 trillion, which is more than enough to finance our national debt of around $13 trillion.

    http://chicagobreakingbusiness.com/2...arly-2009.html

  24. #22
    Banned Eric Stoner's Avatar
    Joined
    Oct 2006
    Location
    NYC
    Posts
    5,150
    Thanks
    1,261
    Thanked 1,430 Times in 888 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Quote Originally Posted by eagle2 View Post
    America's net worth is approximately $53.5 trillion, which is more than enough to finance our national debt of around $13 trillion.

    http://chicagobreakingbusiness.com/2...arly-2009.html
    I'm sorry but just HOW is THAT supposed to work ? Net worth is a LONG way from CASH. That is the stuff that is needed to buy up our debt.
    What exactly are you suggesting ? That Americans borrow against their houses to buy government debt ? Redirect their IRA's and 401K's from stocks to government debt ?

    The Fed has done it and will continue doing so. Guess how ? They PRINT as many dollars as they need to buy government debt.

  25. #23
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Redirect their IRA's and 401K's from stocks to government debt ?
    Actually, this option is already being talked about in Washington i.e. mandating that 50% ( or whatever ) of IRA / 401k assets MUST be held in the form of US Treasury bonds, based on the argument that stock / commodity investments are too volatile for a 'retirement' investment.


    Seems to me not long ago the statistics had US savings at a negative rate
    US 'official' savings rate was averaging NEGATIVE 6% prior to the 2008 crash - or put another way Americans were spending 6% more than they were earning via assuming an ever increasing amount of debt. Since then, the 'official' savings rate has turned ever so slightly positive. However, the 'official' savings rate counts pay-downs of outstanding debt ( i.e. credit card balances ) the same as actually depositing the money in a bank account or purchasing an investment instrument.

    While the distinction doesn't seem to be recognized by many these days, decreasing 'debt' does not equal increasing earnings / savings. And especially so when that decreasing private 'debt' is partly due to reduced balance 'settlements' or bankruptcy filings ( which merely transfers the loss to a different party ).


    America's net worth is approximately $53.5 trillion, which is more than enough to finance our national debt of around $13 trillion

    just HOW is THAT supposed to work ? Net worth is a LONG way from CASH. That is the stuff that is needed to buy up our debt
    the 'gold foil hat' crowd would tell you that the Chinese will at some point gladly accept selected US 'assets' in payment for the trillion+ in US treasury bonds they hold. Farmland ... mineral land ... the ANWR ... interstate highways ...


    Without Bush's tax cuts, our debt wouldn't be nearly as high as it is.
    Obviously the point being made by all of these CEO's has escaped you, or you simply think that they are wrong and you are right. Of course, you're in good company i.e. Paul Krugman



    but, on the other hand ...



    (snip)"Perhaps we should turn the question around: if stimulus were to be the solution, what would be the problem? The problem would be that too many of us wanted to save money or pay off debts; that is, we wanted others to pay for our services but weren’t so keen on paying for theirs right now. Simple arithmetic suggests this would leave slack in the economy. In addition, the problem would be that businesses, pessimistic about prospects for recovery, didn’t harness all the spare savings floating around and plough them into new investment projects. The slack would stay slack, possibly for a long time. If that was the problem then government stimulus would be the solution.

    And the above paragraph doesn’t seem to be a bad description of the US or UK economy, which suggests the case for stimulus is strong. True, the patience of the bond markets is surely not boundless (and say what you like about kowtowing to the markets, if we’d like them to lend us money we have good reason to care whether they are willing to lend it). And there already is an awful lot of stimulus spending going on right now, so it’s not absurd to suggest we could get by with less as the economy bounces back. I realise that I am sitting on the fence here, but it’s part of my new maxim, which is never to stand in the middle of a fight between Paul Krugman and Niall Ferguson.(snip)

    (snip)"So while the debate of the day is rightly about how quickly and how severely governments should tighten their belts, I hope that when the crisis is over we will remember to come back to Keynes’s long-run forecast. Keynesianism may be about trying to maintain full employment, but Keynes understood that full employment could mean everybody who wanted a job working up to three hours a day"(snip)

    ~
    Last edited by Melonie; 10-25-2010 at 12:52 PM.

  26. #24
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    Quote Originally Posted by Eric Stoner View Post
    I'm sorry but just HOW is THAT supposed to work ? Net worth is a LONG way from CASH. That is the stuff that is needed to buy up our debt.
    What exactly are you suggesting ? That Americans borrow against their houses to buy government debt ? Redirect their IRA's and 401K's from stocks to government debt ?
    I never suggested anything. All I did was say that Americans HAVE ENOUGH to finance our debt. That is a FACT. The national debt is less than 1/4 of net worth. Nobody would need to mortgage their house to buy government debt.

  27. #25
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: Want a REAL View of the US Economy ? Talk to a CEO !

    But somebody would need to do a lot of liquidating. 15/53 is 24% of assets. Who could buy though? Oh.

Page 1 of 3 123 LastLast

Similar Threads

  1. US economy in real trouble ( money supply )
    By Melonie in forum Dollar Den
    Replies: 0
    Last Post: 05-25-2010, 03:29 AM
  2. A real view of the war in iraq
    By krchab99 in forum The Lounge
    Replies: 15
    Last Post: 03-29-2008, 05:08 PM
  3. Replies: 0
    Last Post: 09-27-2007, 11:40 AM
  4. Replies: 1
    Last Post: 07-02-2007, 05:32 PM
  5. weekend commentary - real state of the US economy
    By Melonie in forum Dollar Den
    Replies: 9
    Last Post: 05-03-2007, 02:56 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •