The Economy

[Massive Lee]

One day, people will realize that the $1 saving they did by purchasing an asian-made product will cost $2 to the society. When one person buy a cheaper "foreign" product, he may save a few $$$, but he also sees a neighbour loose his job... Which starts costing the society. Does China buy US-made products? Nop. So why buy China-made ones?

[z31maniac]

But are you really willing to pay for a sock made by a US employee that costs $10 a pair if you can get the exact same thing for $1.00 and it was made in Taiwan?

I'd love to be able to not shop at Wal-Mart, I hate that place. But being in a small college town, we've got three choices for grocery shopping.

$100 buys twice as much food at wally world, than at the grocery store.

Wish I made enough money to be able to do that, most don't.

[Hallen]

Cyclicle
Cost of technology and manufacturing
Devaluizing american jobs.
Get rich quick from the average Joe to the largest american companies.

The poor and what's left of the middle class will feel it first, then when they are suferring

young people being more informed than ever..... we should be able to start a change.

What's left of the middle class??? What do you mean. The middle class is still by far the vast majority of America. Yes, we feel economic change more quickly than the rich, but what is new?

<rant>Using the stock market like a casino is a huge problem. Rampant overpopulation is a huge problem.

Paying corporate leaders with stock options is a problem.

Catering to the short term whims of the stock market is probably the single biggest problem with US companies. Dumb-ass day traders using their "systems" to bet on stocks really screw things up too. That isn't investing, that is Las Vegas in New York.

And yes, the problem lies with us. Greed and stupid business practices exercised by individuals is a big problem... usually self correcting without major problems though. But, the bigger problem is our incessant need to pay $.03 less for that widget by going to Wallmart and buying the crap from China instead of buying something of slightly better quality made somewhere closer. We drive jobs overseas, not corporations. But are you really willing to pay for a sock made by a US employee that costs $10 a pair if you can get the exact same thing for $1.00 and it was made in Taiwan? As long as there are 3rd world countries, there will always be general labor jobs moved overseas.

Our other issue is competition for oil. As China and other third world nations become more industrialized and with their stupidly high levels of population, we will have to keep paying more and more for oil because the world can't produce it fast enough. We have made huge mistakes in the past by not preparing ourselves for now by tapping our own sources and having that supply ready when what is happening now happens. Stupid, very stupid. But the Envirowhackos don't think about that, they just want to force us all back into the 1800's and eat tree bark.

There are huge opportunities for US companies overseas too, but because free trade does not exist with most of these countries, we get the short end of the stick. What we should be doing is slamming these countries with tariffs and barriers until they start dropping their barriers. But that would be bad for business in the short term and lord knows, those roulette rolling day traders in the market would never stand for that. </rant>

[e30love]

downturns like this are just like the boom times - everyone thinks it will go on for ever and ever. So expect doom and gloom for a while, and yes there are huge problems to overcome, but I wouldn't expect it to stay like this forever.

Things have always turned around and things could always be worse

[e30love]

We are all to blame

[delatlanta1281]

Cyclicle
Cost of technology and manufacturing
Devaluizing american jobs.
Get rich quick from the average Joe to the largest american companies.

The poor and what's left of the middle class will feel it first, then when they are suferring (as they have been in housing and ability to spend their salaries) the larger companies/ government will have to bail the country out and take responsability for their prior actions.
Example
Schooner Tuna
The fault lies in more than large companies. It lies in all of us as well. After all, we have an ELECTED government, and ELECTED officials in our public companies. Figure out how to stretch your dollar and buy a helmet. It's gonna get a bit worse.
For all of you who haven't voted or don't plan on it b/c you don't like your coices, vote anyway. This is the best year for the masses to be heard in a loooooooooong time. With the young people being more informed than ever..... we should be able to start a change.

[nando]

downturns like this are just like the boom times - everyone thinks it will go on for ever and ever. So expect doom and gloom for a while, and yes there are huge problems to overcome, but I wouldn't expect it to stay like this forever.

[rwh11385]

He also mentioned that the highest payed soldiers who work for Blackwater get 650 dollars a day, but the U.S. government (and therefore us taxpayers) are charged 1200 dollars for these most elite soldiers. Paying private corporations enormous sums of money to do work for the government ensures that most of the money will go to the heads of those corporations, which means it will have difficulty getting back into the economy and will be locked up.

For people on salary, typically 40% in addition is in employee benefits. Take into account higher risk and probably higher life insurance covering them, and you make assume 50% for argument's sake. Take that into consideration, and general administration and the difference between soldier pay and government expense does not seem radical at all.

And for americans and an american company... I can only guess what kind of insurance company they are going through... and where do the soldiers families consume? Back home.

Very few corporations "lock up" their money. Much of it goes into investing, in their own company or the financial market. Perhaps some of this in speculating in oil, or investing abroad, but the same investment from abroad comes to us. As long as we have good productivity and returns (considering currency exchange rates) other countries will still invest here (and help our economy).

Someone in the military who made contracts said most of the cost of items are spread evenly across all in some occasions, so maybe a hammer is labeled more expensive, but really X good is written as cheaper than it ought to be.

That, or it is just a creative way of hiding where money is really going. Considering all the top secret things the government does with defense, I don't think we would really want what they are really doing public.

[CorvallisBMW]

^True. Considering we spend more on defense than the entire rest of the world combined (over $1/2 Trillion per year, not including extra money for the wars in Iraq and Afghanistan which is another $200 billion/year), and it's all financed by gov't debt spending, no wonder we are in such a crisis. The first place we should look to streamline, cut waste and make more efficient is the defense budget. The days of the $200 toilet seat and $150 hammer are still with us, except now due to inflation and 'cost adjustments' it's more like $2000 and $1500, respectively.

[nedtheviking]

Hey guys. I have to say, this has been one of the more interesting threads I have read here. I pretty much agree with what has been said, i.e. that the U.S. has pretty efficiently screwed itself over in multiple ways. I just wanted to add something and see what people thought. Let me first concede that i am a mechanical engineering major, not economics, so this isn't really something i know a ton about.

Last night i went to a talk by the author of Blackwater, Jeremy Scahill. His main point was that one reason the U.S. is hurting so badly is because we are privatizing everything, and its costing us a great deal of money. One major cost that he focused on was the 180,000 privately contracted soldiers and workers that are currently in Iraq, which he mentioned was more than the U.S.'s actual military forces. I can't remember the exact number he mentioned, but i believe it was 2 billion a week. It may be significantly higher.

He also mentioned that the highest payed soldiers who work for Blackwater get 650 dollars a day, but the U.S. government (and therefore us taxpayers) are charged 1200 dollars for these most elite soldiers. Paying private corporations enormous sums of money to do work for the government ensures that most of the money will go to the heads of those corporations, which means it will have difficulty getting back into the economy and will be locked up.

Again, I'm just curious what everyone thinks of these ideas, i dont have enough of a background in economics to be able to determine the legitimacy of this. But what do you guys think? is the trend of privatization a large problem? and if so, does anyone know anything that can be done about it?

Jeremy's talk was pretty upsetting, especially because it left me wondering what the U.S.'s future is.

peace.

[Money$hit]

Just past the economics majors grasp lays something a bit more sinister.

?

[Money$hit]

The most entertaining or sad part of the story is that so many people believe it was sustainable in the long run.

QFT

Nothing we are doing is sustainable for a long period of time right now. Lowered rates and the stimulus plan are both short term answers. You could almost compare it to using a defibulator(sp) on the economy, try it a few times, but if it doesnt work, give it a rest, youre already dead.

To add, as Americans, we need to realize that the 1990's are over. As time moves on, we are moving from a Large open economy more toward a small open economy, in which our actions dont any longer influence the world interest rate. We arent there yet, but I think with the recent rate cuts, the Fed is realizing that their power is dwindling.
Just as the Japanese mkts had their hayday during the 80's, we had ours in the 1990s. Japan is no longer the economic super power they once had. America is going to slowly meld into this role as well. We will be price takers, not price setters. The only difference is that the Japanese have a much higher saving rate (around 5-10% is my guess), and our Marginal propensity to save is hovering around 1%.

In reference to the Solow model, our saving rate will be a huge downfall to our economy in the future, and it will certainly show in terms of reduced GDP.

[rwh11385]

Yeah, I just finished honors econ minor and shit, and money$shift is pretty $.

The most entertaining or sad part of the story is that so many people believe it was sustainable in the long run. A few years ago everyone was proud of how the US dollar remained strong against the world after our trade imbalance and lowering of interest rates.

Add into the mix the Euro gaining stability and being a preferred dollarization currency, and bam, we're hurting. Reliance on foreign oil for energy, reliance on India and China and helping them grow in appetite, and having too many stupids get bent over by adjustable rate mortgages, and what do you know? Some of us are hurting... and they're in part to blame...

[mrsleeve]

Just past the economics majors grasp lays something a bit more sinister.

This is quote worthy

[DCColegrove]

Just past the economics majors grasp lays something a bit more sinister.