Posted on 08/27/2010 6:16:52 PM PDT by SeekAndFind
Without excessive government or consumer spending - which can only create temporary jobs - we believe 9% is now close to full employment in America. Although this statement is initially somewhat shocking, we've been expecting it and only recently realized why it took so long to finally show up.
For ten years - from 1998 to 2008 - excess consumer spending, which amounted to about $400 billion a year, created millions of temporary but really nonessential jobs. This somewhat artifical job production masked for ten years the damage being done to America from the loss of 20 million jobs to overseas labor. There are only so many products and services people really need and too many of them were now made overseas. When consumer spending and savings came back to normal levels, the nonessential temporary jobs disappeared exposing the employment damage.
If we are right, it represents a major wakeup call and the consequences to both business and real estate forecasting are profound. So are the political ramifications.
The problem is Globalization. Globalization, while good for multinational companies, is known to be very damaging to employment levels in developed countries like America and Great Britain as millions of productive jobs move to developing countries like India and China.
The Process of Globalization Brings Country "Normalization"
The process of globalization helps bring about “normalization” in the world – a leveling of standards of living from country to country. For this to happen standards of living in developed countries must suffer a little while the developing countries move up rapidly. From a world view that’s good – from an individual country view it may not be.
But it doesn’t start out this way. At first globalization seems a blessing. Many essential items cost less so more money is available to spend on services and the niceties of life – life gets better, one feels “richer.“ But as the outflow of jobs to foreign countries continues this view changes. After a while it becomes hard to replace all the lost jobs with meaningful ones. Unemployment rises.
A Warning from Warren Buffet
Many people estimate that we’ve lost about 20 million jobs to foreign countries over the last twenty years. If we no longer make something we have to import it, and the 700 billion dollar trade deficit simply reflects this. In January of 2006 Warren Buffet said, “The U.S. trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to ‘political turmoil.’ Pretty soon, I think there will be a big adjustment.” At the time few cared or even noticed since unemployment remained low.
Global Forces Now Dominate
This view about American employment highlights something we firmly believe – that global conditions and factors now control the American economy more than what is happening internally. It also puts in doubt the tried and true, standard solutions the government uses. Stimulation packages no longer work because there is now little to stimulate. They are using old internal solutions to fix an economy now controlled by external conditions. Until the government faces this and begins to solve the real issue – the long term detrimental effects of globalization on the American economy – nothing significant can occur.
We think this paradigm is very close to the correct view and it carries many important forecasting consequences. Forecasting is always difficult. It must be done as honestly as possible with no bias or consideration for political correctness or whether the forecast will be accepted or believed. Many economists error here, using old, safe economic models, or they simply follow a consensus. In their eyes – and they’re probably right - its better job security; if the forecast proves wrong they can’t be criticized. But then money is lost as the forecast fails.
A Bull Market With High Unemployment
Investors must stop fixating on American employment, thinking we can’t have a recovery and bull market without it.
First, if 9% is full employment, we are pretty much at full recovery right now. Don’t expect a lot more - but don't expect a second dip either. Second, over half of the S&P 500 earnings now come from overseas operations and because of foreign growth, you could have long term earnings growth and an American bull market even if unemployment stayed right here at 9%.
Hell no. People are operating on their last nerve as it is.
Welcome to New Europe.
If we let the Baraqqis and the MSM define it, yes this is “normal”
Republicans would be well advised to take this hammer and bludgeon Dems from now to November.
Thanks again, government, for taxing and regulating our nations jobs away.
“officially” 14% in my county.
I begin to think he is right.
How many employable people are sitting on their butts and not being included in the count for various reasons?
Then 10% of all local, state and federal employees should be laid off. And lay off 10% of all media. Let’s see how “normal” they’ll feel that is.
Yes.
Along with zero to 1% GNP growth per year, increased market volatility, tight credit, the possibility of inflation, and growth limited to emerging regions.
Google “the new normal” for more info.
Sadly he’s pretty much right. You can only export away so much of your labor force before it reaches a tipping point where there aren’t enough people that can afford to buy the “cheaper” goods you shipped away the jobs to manufacture. A nation of burger flippers can’t afford the old factory wage lifestyle.
Absolute, unmitigated crap.
It isn't the cost of labor that drove manufacturing offshore. It was the government. Let me say that again....IT WAS THE GOVERNMENT. It IS the government. The government has been making it impossible to run a business profitably. And it is getting worse daily.
Yep. 9% would be bad enough it it were really only 9%. Not the 18% it is, the 18% that the government is wishing away with statistical flim flammery.
Remember when 4% unemployment under Bush was the Worst Economy EVER!
“Many people estimate that we’ve lost about 20 million jobs to foreign countries over the last twenty years. If we no longer make something we have to import it, and the 700 billion dollar trade deficit simply reflects this. In January of 2006 Warren Buffet said, “The U.S. trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to ‘political turmoil.’ Pretty soon, I think there will be a big adjustment.” At the time few cared or even noticed since unemployment remained low” Most of that was the import of oil, which the gov is doing everything in their power to destroy our ability to provide domestic energy..
Hell it is 12% here but I know that is a small number compared to reality.
Ah, no. Not to defend FedGov™ but they made no difference in this. If there had been no Unions and no Govt. regulations this STILL would have happened. Don't kid yourself, greed factor trumps patriotism every time.
None of these economists EVER mention the national security implications of this “situation” for America.
There is only 1 way out of this. It is TIME to DownSize DC!
Get the slimes there out of our lives and off our backs.
It is time to close entire departments (Education, EPA, etc)
It is time to force Congress & Senate to telecommute most of the year from their home districts. Under the thumb of the electorate and away from the lobbyists. Imagine the cost savings and how it would completely change the center-of-gravity of the Federal Government.
IT IS TIME!
Get used to 9% unemployment and a rank of number 11 in best countries in which to live. Don’t bet against 0bummer driving the numbers higher before he’s done.
How long will the Obamanites be able to spin these overwhelming negatives as proof we’re on the right track? They’re certainly trying.
RE: a rank of number 11 in best countries in which to live.
And which organization is giving us this information and based on what criteria ?
Ping
Change you can believe in!
If you kick out the illegals you then have available jobs for those 9% out of work.
No argument on that point.
But I still disagree. Yes, it would have happened, but to a much lesser degree. And now it's like putting toothpaste back in the tube. Easier not to squeeze it out in the first place.
One other variable I omitted in my first comment: the quality of US labor. Poorly educated with little work ethic. In spite of the current climate, assembling a trainable and reliable work force is very difficult.
I have a vendor that makes 100% US made Tee shirts in VA. Price is higher than the offshore Hanes and Gildan. But not that much. And the quality does justify the difference.
It can be done, a lot more would done be if the government didn't work so hard trying to put us out of business.
And we are experiencing real problems with our apparel production out of China. It is a major issue now for us wholesalers. Lead times have nearly doubled this year causing serious inventory issues with my warehouses. With the right attitude from the government now and some assurances that it would continue, I think we could start to rebuild our domestic textile production. But who wants to invest where profit is considered evil?
A polling organization who polled people around the world. I don't remember the criteria. I think it merely was based on opinion. I don't agree we necessarily deserve the number 11 ranking but have no reason to doubt that foreigners may rank us there.
[O]ne of the key factors behind our nation's great prosperity is the open trade policy that allows the American people to freely exchange goods and services with free people around the world.---
In recent years, the trade deficit led some misguided politicians to call for protectionism, warning that otherwise we would lose jobs. But they were wrong again. In fact, the United States not only didn't lose jobs, we created more jobs than all the countries of Western Europe, Canada, and Japan combined. The record is clear that when America's total trade has increased, American jobs have also increased. And when our total trade has declined, so have the number of jobs.
Part of the difficulty in accepting the good news about trade is in our words. We too often talk about trade while using the vocabulary of war. In war, for one side to win, the other must lose. But commerce is not warfare. Trade is an economic alliance that benefits both countries; there are no losers, only winners. And trade helps strengthen the free world.
Yet, today, protectionism is being used by some American politicians as a cheap form of nationalism, a fig leaf for those unwilling to maintain America's military strength and who lack the resolve to stand up to real enemies: countries that would use violence against us or our allies. Our peaceful trading partners are not our enemies, they are our allies, We should beware of the demagogues who are ready to declare a trade war against our friends, weakening our economy, our national security, and the entire free world-all while cynically waving the American flag. The expansion of the international economy is not a foreign invasion, it is an American triumph, one we worked hard to achieve and something central to our vision of a peaceful and prosperous world of freedom.
~Ronald Reagan
“Varney says we’ve exhausted all Keynesian solutions”
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We haven’t exhausted all KENYAN solutions yet though, there is still mass rioting, civil war etc.
Government “employment” doubles in 10 years and you want to lop off only 10%? Take us back to 1995 or so — cut damn government by half across the board. Everywhere. Why nibble at the edges? They can add that 10% back in one short year.
Harding cut the government budget in 1/2 and taxes in 1/2 in 1920-21 and ended a depression.
“cut damn government by half across the board. Everywhere.”
Cut the pay and benefits that the remaining ones get in half also!!!!
You’re right! How did I forget that?
It used to be that civil service was paid 15-20% lower than the private sector because of the guarntee of a job and benefits.
Today they make at least twice the private sector and it isn’t right.
It’s way past time to take an ax to not only the pay of government workers but eliminate at least half of them!
If they wind up on welfare tough shit!!
How many burger flippers over the age of 17 do you know?
Sure. You don't know much about things.
You should give me your money.
Plenty, and they all speak Spanish.
Outsourcing our means of production overseas is NOT free trade. Even Reagan would agree with that.
There seems to be no shortage of free traitors on FR....Funny how during the 19th century the Yankees crammed Morril Tariff down the countries throats and now these same demon spawn types are screaming for fair trade. Amazing hypocrisy...
Oh, and I want the government to make sure my job pays well.
He’s right. Under socialism, 9% is the best we can do in terms of employment. Once we get a real American in our White House and restore contract law, I expect to see the rate drop below 6% within two years and much lower than that over time if the new administration governs more responsibly than the current regime.
Allowing free people the right to source whatever they freely choose from wherever they damn well please is free trade, and basic liberty. Neither a leftist statist, nor a rightist statist like you, have any legitimate concern with what kind of goods or services those may be.
Reagan agreed that high tariffs must occasionally be used to combat clear cases of illegal dumping or subsidies. No other exceptions. And even these must be explicit in their limited purpose, temporary, and be removed immediately when the offense ceased.
So. Governments, which take our money by force, aren't greedy. But private corporations, which provide a good or service for which we exchange money by our own free choice, because it pleases us to do so, are greedy.
Paleocons have always puzzled me, but I'm beginning to see how it is that Pat Buchanan could run for president with a socialist in the VP slot.
I view Free Traitors as economic Benedict Arnold who threaten National security. Tanks etc. don't build themselves. The are made from steel, if we outsource all steel production how the F do we make these things in a war of attrition?
If you can sell out your country for a buck and sleep at night more power to you.
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