“Goodbye Global Economy” is the name I am giving to a growing meme. It goes like this: the USA has exported its manufacturing jobs to China, and its service jobs to India, and the increase in world trade has not, in turn, produced enough new jobs in the USA to make up the difference.
I don’t know if this meme is true or not, but it may become a political force soon.
On the surface, it is enticing, and rings true. While exporting all of these jobs a few years ago, we suffered the great “Jobless Recovery” of 2003-2007. Our economy has had trouble creating new jobs for quite a while now.
So, what was our solution? 1% interest rates to blow up a giant housing bubble. That’s right; the bubble that destroyed our economy was not an accident or a simple policy mistake. It was an experiment in creating jobs by means other than actual domestic economic growth.
The Ponzi Scheme is America’s official national economic policy.
As far as I can tell, this crisis has not changed the Ponzi Policy, and we are attempting a second round, this time with 0% interest rates.
Good luck with that.
The stock market shrugged off the last jobs report. Maybe it will shrug off the next one a week from today. But what about the next? And the next? And the next?
Many congressmen used protectionist rhetoric to get elected in November, and it likely will not end there. The GGE meme is growing; spreading from one unemployed worker to the next. President Obama has promised to tinker with NAFTA, and some protectionist policies will probably be implemented as a reward to Democratic interest groups like the UAW.
The re-alignment of the global economy could be the big story of 2009. Will Obama still be worshiped as a god in Europe after he slaps on trade restrictions?
Matt,
The market sets the wages. Why pay people here when I can pay less overseas? Until long term planning is reflected in the stock price companies will expanded moslty in cheaper labor markets.
I think the UAW is toast. The comparison between Detroit and the southern states is just such a glaring example of why the UAW is a dinosaur.
But remember that because manufacturing autos in the southern states is a much newer enterprise, those companies do not have a huge number of retired workers because they have a much younger work force, and have not been in business there long enough to have massive numbers of retirees. It’s really comparing apples to oranges. You’re comparing a company that is saddled with high fixed costs because they have been in business longer to one that has lower fixed costs (but which will eventually catch up). The UAW is taking the blame for the mess that Detroit is in, but the fact is it’s the overpaid management which has made nothing but rotten decisions for 40 years that should be blamed. Why are those bozos getting multimillion dollar bonuses, and then they ask the workers to take pay cuts, when it’s the bozos’ fault that the business was run so poorly? If they designed and built cars that people wanted to buy, instead of poor quality fuel hog crap, it wouldn’t matter what the workers were being paid — there would be demand for the products. I haven’t bought an American car for decades, because there was literally not a car that fit my needs. It doesn’t make me happy, but I’m not going to be saddled with a piece of junk like the Chevy I had. Appropriately it was lemon yellow. :O
Sounds like a recipe for a depression
Next week we will have 3 Labor market reports, retail and vehicle sales, and Q4 forecast from Chevron and Monsanto. Good luck.
the fact is it’s the overpaid management which has made nothing but rotten decisions for 40 years…
That’s exactly why there is Chapter 11. To undo all company’s bad decisions. Instead GM gets a “bridge loan” worth multiple times the whole company. What a joke!
As to jobs reports: Bulls on WallSt. always say they are a lagging indicator. Little man on MainSt. instead is getting bloody scared and sees it actually as a forward indicator of what could happen to him.
Regarding vehicle sales: Today very bad Ford numbers were published and F rallied. F shareholders love recessions.
The only normal reaction I could see yesterday was the drop after the ISM numbers. But was shrugged off after ten minutes.
Let’s hope for next week Matt won’t have another lion dream.
Don’t spread the word!!!
I would be quite interested what Shankar Khadye has to say. Thanks to his writing in blogs which I have followed for the last 6+ months I have saved (ie. not lost) in the stock market. My concern is if I should get out of the US$ and go into another currency like Swiss Franc.
Jai
ShankarJai,I read somwehere that Switzerland is the next Iceland.
Matt
Note to bulls: Beware, I had good dreams Friday night filled with pretty girls and fast cars. That means my short positions will improve on Monday.
sorry, maybe better to post here instead of prior thread…
i took 2 mag. capsules, 150 mg each. remembered part of dream at the end. Is that always a good thing ?
do you have any other suggestions for sleep ?
thx
Matt: …filled with pretty girls…
Were they naked?
The Mc Osc is as overbought as it has ever been, so the odds of a drop next week are overwhelming.
But how steep the drop — that is the question?
Dressgurd, you’re supposed to ask “what do the cars look like?”.
George, No. dressguard is right. if they are naked that means we’re going down big. if they’re covered we’re gonna go down more conservatively (naked and covered shorts hahahaha oops)
It is always dawnest before the dark.
For the record, the girls had clothes on. And, at first, the fast cars were trying to run me over, but by the end of the dream, I was in the driver’s seat.
the girls had clothes on
Damn. That’s not a good sign.