Posted on 08/29/2015 3:04:20 AM PDT by HomerBohn
The interesting thing is that economist A. Bhide suggested that in fact R&D in companies has greatly declined, not because they are only concerned with the "here and now," but because so much of the R&D is being done for them by consumers. For example, cell phone apps. Apple and others don't have to research what the "next thing" is because their consumers are already telling them. Apple just has to focus on delivery.
China, as best I can tell, only supplys a small part overall of Amerian goods (as was the case with Japan, which was the big bogeyman of the 80s and collapsed due to government intervention in its economy). I'm not saying we don't need to take China seriously, and I'm not saying manufacturing doesn't matter---it absolutely does, especially in the national-defense related industries. I am saying don't discount the critical value added component of service. Just like energy costs, it permeates everything.
George Gilder used to give the example of a book called "Manufacturing Matters." He held it up and asked, how much the book actually cost to make? $1 maybe? But the book sold for $25. So where was the extra value? Design, print layout, marketing, sales, artwork and of course the author.
It’s that the infusions are less and less effective. It is an addiction.
[HomerBohn] Erratic market behavior is a red flag signaling something is quite wrong.
[IronJack] Fear-monger much?
The article's wrong, stock prices are a leading economic indicator and whether we like it or not historically market tops come before economic downturns. True, we've been having a pretty feisty dip here as the Dow's punched down to levels we haven't seen since Feb. '14. otoh we've had dips like this a number of times since 2010 and the economy's continued to muddle along w/o much change. Bottom line here is that (agreeing w/ Homer) we're probably at the red flag stage, but imho we're not at the train-wreck-we're-all-dead stage. Yet.
Here are a couple of wry observations. I have been reading or listening to this kind of doomsayer for nearly 50 years. The only economic analysis in that time that made sense to me was the danger ill-considered mortgage loans packaged as AAA securities represented. I read those warnings for the better part of a decade before they were borne out in the real world. The truth is no one can make precise predictions. There are general principles which apply over a very long term, assuming (ah, there’s that economist’s favorite word!) the variables stay in predictable ranges. The end will come when it is damned well ready to do so. Here is the hardest lesson: There is no safety. Anywhere.
(”Penetrating so many secrets, we cease to believe in the unknowable. But there it sits nevertheless, calmly licking its chops.” H.L. Mencken)
Settle where? 20% down? 50% down? 70% down. My guess, no better than anyone else, is 50%. The current economy today is in more precarious shape than the one in 2007...a lot more debt, more world tension, more instability/inflexibility...every recession from 1992 (2000, 2008, 2016? - every 8 years basically) has been harder than the one before...no matter what anyone says we have not repealed the business cycle.
After spending about 1,700 words in an essay about monitary policy since the revolution, I finish with these two paragraphs.
“This may seem fairly insane, until you realize that every member of the G-20 behaves in much the same way, and do understand their precarious situation. With the recent debt ceiling deal the accumulated obligations of this country exceed our GDP, allowing us to share the dilemma Greece presently faces. By 2037 the CBO reports national debt will become 200% of GDP. Since all currencies have about this same connection to reality, finding one or several of sufficient magnitude and viability to replace the dollar as a worldwide medium of exchange and store of value becomes perplexing.
An individual country might think they have a solution, but they know they must also survive during the resulting chaos as all countries seek similar solutions. They see the daunting specter of disaffected holders sending 10’s of billions of dollar denominated bonds to the marketplace when there are no buyers unless prices are severely discounted. They are also frightened by the image of a devastated U.S. economy, because feeding the insatiable desires of U.S. consumers has been a mainstay of their prosperity. I imagine something like the final scene in “The Good The Bad and The Ugly”. The members of the G-20 are standing in a circle with open graves behind them. They are all contemplating how they are going to successfully outdraw the other nineteen members and survive the resulting mayhem, which Lee Van Cleef’s character did not. The only thing needed now is a typical expression of human frailty to commence the cascade to catastrophe.”
Indeed. And if these clowns run around with their hair on fire long enough to actually precipitate a crash, they’ll say, “I told you so.”
Elmer Gantry, is that you?
Been a long time, man.
Elmer Gantry? I guess that is an attack and insult. Not sure what I said or did to you to warrant that, but.....Ok.
Born in ‘44 and a nice set of tires now can cost more than a new Ford sedan cost when I entered first grade. I recall when the daughter of a neighbor came back to South Carolina from Connecticut because she and her husband had split. She bought a used Plymouth that was over ten years old but looked good and had good tires on it, drove it to her mother’s home in SC and she and her young daughter moved back in. She drove that car for several years after that. The reason for saying all that is to say this, my wife and I just went to Western Sizzlin for the buffet and spent almost exactly what that woman paid for that used Plymouth.
$12,000 in 2015 would be $1,236 in 1950.
Yeah, I never had a car until I finished my hitch in the Navy but I had classmates in high school who worked part time jobs and drove what would now be priceless classics to school. One drove a black ‘55 Caddy that looked like Michael Corleone should be sitting in it. He paid 50 bucks for that car in ‘61. Back then “big cars” like Cadillac, Buick, Lincoln etc. sold far cheaper on the used market than Chevys and Fords. One mechanic said that a used Buick was like a wart, “You can’t get it off your hands.”
Yeah, I know. Was raised on a cattle ranch, then later my stepfather was a farmer.
LOL!
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