by NoOneImportant » Wed Jun 25, 2014 11:52 am
CrosstimberOki wrote:
The trough is empty. They have no choice but to be productive.
The trough is certainly not empty - deficit spending (the rush to the abyss) goes on unabated.
The impoverished are not coming here for the weather. They are certainly not employed at the moment of their arrival. With 92 million Americans not in the labor force, a 36 year high, a dearth of American labor is not our current problem. Demographics are, without question, important; but demographics alone do not describe the difficulty. Productivity (unit of input vs unit of output) is one of the most crucial measures of economic activity, growth, and prosperity - and it doesn't depend upon demographics. It isn't just about that you happen to make something, it is what you make, and how much surplus cash you can generate while producing what you make - profits. Cash (profits) and demand generate growth, not the number of people making any given widget (although the more people employed usually the greater the demand, although their population didn't help them where they came from otherwise they wouldn't be here). It's called productivity - what is produced for a unit of labor. While Japan certainly has a demographic problem, Japan's problem originated initially not from demographics, but from the Japanese government, and the banks fleecing large numbers of small Japanese investors in the NIkkei decline of 1989. In that decline brokerage houses, and large banks had their equity losses protected by the Japanese central bank, while millions of small Japanese investors lost everything. Small investors have long memories, and they never came back to the equities market to generate the cash necessary to create and sustain business growth in Japan - thus the Nkkei has languished for almost 25 years, in spite of multiple failed stimulus attempts by the Japanese government to lure small investors back to the equity markets to jump-start real economic growth, so that they might inflate away their prodigious public debt - talk about criminal endeavor. The attempts to lure the small Japanese investor back to the market has been a dismal failure, as none of the stimulus cash went to those who lost everything, and it did nothing to make the "small fry" believe that they would not be fleeced again. What it has done is it has exploded Japanese debt to unsustainable levels - 245% of GDP (people who think just like Bernanke, Yellen, and Obama), and America is almost half way there. The hidden bomb in such public debt is resident in interest rate variation. Everything is all right so long as there is interest rate stability. If and when markets get skiddish and hesitate to purchase government dept, then interest rates must be raised to attract buyers. With public debt significantly over the Gross Domestic Product (GDP) very small increases in interest rates causes interest payments to skyrocket, and take a very large proportions of gross governmental revenues - a catastrophic financial event, as public debt interest rates drive private debt interest rates. It is that private debt interest rate that gets tacked on to the cost/price of each and every product produced with borrowed money. So, interest rates can't be permitted to rise. In free markets how do you stop them? The central bank buys the public debt - bonds - at the old, now artificially low, interest rate with fiat currency - newly printed currency, further increasing the already disastrous bad public debt to GDP ratio, creating even greater danger. Over time as public confidence erodes interest rates can no longer be masked and interest service on the debt crowds out all other government spending taking an ever increasing proportion of gross government revenues - that point has not yet been reached in either Japan, or America. At some point the public debt interest rates skyrocket - at that point hyper inflation becomes the probable outcome, much like Argentina.
Looking at productivity, let's take a couple of examples: Intel, and Agilent. As everyone knows Intel makes processors, and Agilent is an instrumentation manufacturer. Intel's margins are 18 - 20% over the last two years:
http://www.barchart.com/profile.php?sym ... iew=ratios, Agilent's profit margins are 10 - 16% over the same period:
http://www.barchart.com/profile.php?sym=A&view=ratios. GM over the same period has a 2.5% profit margin. Why are they so different? While these two companies compete vigorously for business in some areas, generally they enjoy monopolies in their primary business segment(s) (it is monopoly by design, as both companies put extraordinarily large amounts of money and effort into R&D to create their future products for which there will also be no competition). Their growth is limited by customer demand for their products. As there are no other sources for what is their primary product(s), additionally their growth is limited by the price (profits) they can command for their products (the threshold of pain if you will - for if you need what they offer it can't be obtained elsewhere, that is, you must buy it from them at their list price.) It is very difficult for a country with a basic heavy industrial base to radically increase productivity - although automation of a manual industry is one way, but there are fewer, and fewer of these types of industries left un-automated. What can be done is to encourage the business formation of large numbers of small intellectual property based businesses - Venture Capital. These businesses are usually businesses that had neither prior products, nor prior customers. These companies - Cisco in its steep growth years - create monopoly products, and have very large initial, and ongoing productivity numbers. Invariably these intellectual property based companies create new products, for new customers, that evolve into new entire industries. The productivities for these types of companies is very high.
Neither of the companies noted above have an excessive requirement for unskilled labor, nor do they sell, primarily, to the unskilled. These are the types of companies that will bring America back from destitution to prosperity; and these companies don't require, or use hoards of unskilled workers. These companies, and similar companies created, and gave meaning to the term intellectual property. They, and others, created the digital revolution that has taken place world wide over the last 30 years. Want the great benefits of profits and growth? Take the handcuffs off of those who will take great financial risk - cut taxes across the board, and stop crucifying them in public for the enormous benefit they provide. The tax reduction will provide, at the same time, a step increase in demand by increasing disposable income for those who will immediately spend the additional money, and promote capital formation and risk investment for those in search of "super money". Reduced taxes will permit those with money to make great wealth, and they will accept the great risks that they know will result in 9 failures out of every 10 new business equity placements - real Venture Capital isn't the hip-shoot shown on the SharkTank. Reduce taxes, make the reward worth the risk for those willing to do equity placement, while at the same time giving money to those who will immediately spend it creating an immediate step increase in economic demand - no change in population, no change in productivity, no illegals with their associated welfare costs to bleed the life's blood from American homes, and business.
These illegals bring nothing. They start the process by letting everyone know that they have no intention of obeying the law - any law.
Address the issues cited, a personal attack is the sign of the intellectually bankrupt. If you want to espouse a liberal cause, don't tell me: "...'cause it's gonna be good for you." That's not a reason, and you can't corroborate it, nor convince me of it. Both Japan, and America shot themselves in the foot, but at different times - Japan in 1989 (and with each stimulus since), and America from 2008 on. For America to once again enjoy prosperity she doesn't require hoards of non-taxpaying destitutes, each coming here in hope of freebies. If they want to come here, do it the right way, go get in line with everyone else. Don't tell me: "that's just too much trouble, I'll just bolt to the front of the line - catch me if you can.", and "besides you need it, and it's for your own good."
CrosstimberOki wrote:
[quote]The trough is empty. They have no choice but to be productive.[/quote]
The trough is certainly not empty - deficit spending (the rush to the abyss) goes on unabated.
The impoverished are not coming here for the weather. They are certainly not employed at the moment of their arrival. With 92 million Americans not in the labor force, a 36 year high, a dearth of American labor is not our current problem. Demographics are, without question, important; but demographics alone do not describe the difficulty. Productivity (unit of input vs unit of output) is one of the most crucial measures of economic activity, growth, and prosperity - and it doesn't depend upon demographics. It isn't just about that you happen to make something, it is what you make, and how much surplus cash you can generate while producing what you make - profits. Cash (profits) and demand generate growth, not the number of people making any given widget (although the more people employed usually the greater the demand, although their population didn't help them where they came from otherwise they wouldn't be here). It's called productivity - what is produced for a unit of labor. While Japan certainly has a demographic problem, Japan's problem originated initially not from demographics, but from the Japanese government, and the banks fleecing large numbers of small Japanese investors in the NIkkei decline of 1989. In that decline brokerage houses, and large banks had their equity losses protected by the Japanese central bank, while millions of small Japanese investors lost everything. Small investors have long memories, and they never came back to the equities market to generate the cash necessary to create and sustain business growth in Japan - thus the Nkkei has languished for almost 25 years, in spite of multiple failed stimulus attempts by the Japanese government to lure small investors back to the equity markets to jump-start real economic growth, so that they might inflate away their prodigious public debt - talk about criminal endeavor. The attempts to lure the small Japanese investor back to the market has been a dismal failure, as none of the stimulus cash went to those who lost everything, and it did nothing to make the "small fry" believe that they would not be fleeced again. What it has done is it has exploded Japanese debt to unsustainable levels - 245% of GDP (people who think just like Bernanke, Yellen, and Obama), and America is almost half way there. The hidden bomb in such public debt is resident in interest rate variation. Everything is all right so long as there is interest rate stability. If and when markets get skiddish and hesitate to purchase government dept, then interest rates must be raised to attract buyers. With public debt significantly over the Gross Domestic Product (GDP) very small increases in interest rates causes interest payments to skyrocket, and take a very large proportions of gross governmental revenues - a catastrophic financial event, as public debt interest rates drive private debt interest rates. It is that private debt interest rate that gets tacked on to the cost/price of each and every product produced with borrowed money. So, interest rates can't be permitted to rise. In free markets how do you stop them? The central bank buys the public debt - bonds - at the old, now artificially low, interest rate with fiat currency - newly printed currency, further increasing the already disastrous bad public debt to GDP ratio, creating even greater danger. Over time as public confidence erodes interest rates can no longer be masked and interest service on the debt crowds out all other government spending taking an ever increasing proportion of gross government revenues - that point has not yet been reached in either Japan, or America. At some point the public debt interest rates skyrocket - at that point hyper inflation becomes the probable outcome, much like Argentina.
Looking at productivity, let's take a couple of examples: Intel, and Agilent. As everyone knows Intel makes processors, and Agilent is an instrumentation manufacturer. Intel's margins are 18 - 20% over the last two years: http://www.barchart.com/profile.php?sym=INTC&view=ratios, Agilent's profit margins are 10 - 16% over the same period: http://www.barchart.com/profile.php?sym=A&view=ratios. GM over the same period has a 2.5% profit margin. Why are they so different? While these two companies compete vigorously for business in some areas, generally they enjoy monopolies in their primary business segment(s) (it is monopoly by design, as both companies put extraordinarily large amounts of money and effort into R&D to create their future products for which there will also be no competition). Their growth is limited by customer demand for their products. As there are no other sources for what is their primary product(s), additionally their growth is limited by the price (profits) they can command for their products (the threshold of pain if you will - for if you need what they offer it can't be obtained elsewhere, that is, you must buy it from them at their list price.) It is very difficult for a country with a basic heavy industrial base to radically increase productivity - although automation of a manual industry is one way, but there are fewer, and fewer of these types of industries left un-automated. What can be done is to encourage the business formation of large numbers of small intellectual property based businesses - Venture Capital. These businesses are usually businesses that had neither prior products, nor prior customers. These companies - Cisco in its steep growth years - create monopoly products, and have very large initial, and ongoing productivity numbers. Invariably these intellectual property based companies create new products, for new customers, that evolve into new entire industries. The productivities for these types of companies is very high.
Neither of the companies noted above have an excessive requirement for unskilled labor, nor do they sell, primarily, to the unskilled. These are the types of companies that will bring America back from destitution to prosperity; and these companies don't require, or use hoards of unskilled workers. These companies, and similar companies created, and gave meaning to the term intellectual property. They, and others, created the digital revolution that has taken place world wide over the last 30 years. Want the great benefits of profits and growth? Take the handcuffs off of those who will take great financial risk - cut taxes across the board, and stop crucifying them in public for the enormous benefit they provide. The tax reduction will provide, at the same time, a step increase in demand by increasing disposable income for those who will immediately spend the additional money, and promote capital formation and risk investment for those in search of "super money". Reduced taxes will permit those with money to make great wealth, and they will accept the great risks that they know will result in 9 failures out of every 10 new business equity placements - real Venture Capital isn't the hip-shoot shown on the SharkTank. Reduce taxes, make the reward worth the risk for those willing to do equity placement, while at the same time giving money to those who will immediately spend it creating an immediate step increase in economic demand - no change in population, no change in productivity, no illegals with their associated welfare costs to bleed the life's blood from American homes, and business.
These illegals bring nothing. They start the process by letting everyone know that they have no intention of obeying the law - any law.
Address the issues cited, a personal attack is the sign of the intellectually bankrupt. If you want to espouse a liberal cause, don't tell me: "...'cause it's gonna be good for you." That's not a reason, and you can't corroborate it, nor convince me of it. Both Japan, and America shot themselves in the foot, but at different times - Japan in 1989 (and with each stimulus since), and America from 2008 on. For America to once again enjoy prosperity she doesn't require hoards of non-taxpaying destitutes, each coming here in hope of freebies. If they want to come here, do it the right way, go get in line with everyone else. Don't tell me: "that's just too much trouble, I'll just bolt to the front of the line - catch me if you can.", and "besides you need it, and it's for your own good."