Economy is set on idle: Nation's use of capacity is nearing a modern low

Milwaukee Journal-Sentinel ^ | June 28, 2003 | JOHN SCHMID

[nathanbedford]

Thank God, the turn is at hand.

Whenever left wing political pundits despair, we can mortgage the farm and plunge because we are on the way home.

[sarcasm]

Thank God, the turn is at hand.

Is that why the Federal Reserve cut interest rates again? Seems like they're not convinced that the turn is at hand.

[varon]

Thank God, the turn is at hand.

Is that why the Federal Reserve cut interest rates again? Seems like they're not convinced that the turn is at hand.

Cutting interest rates won't cut the mustard. We need another 15 million illegals (consumers) to come pouring across our borders. (/sarcasm)

[jocon307]

"Thank God, the turn is at hand."

I like your phrase, and I hope you are right. At my own little office I currently have so many unused workstations, telephones, offices and desks, it is horrid. We've only actually cut one person, reduced another's hours, and two gone voluntarily are not being replaced. We were going gang-busters in 2000.

Many local factors contributed to our decline, not least of which was the death of one of the partners, about 2 weeks before 9/11, it was from his office that we watch the towers attacked across the Hudson River. I will never recover from that, ever. We lived off our A/R last year. Now we are really starting to feel the pinch. And others are too. I have vendors I pay regularly and timely calling for money. This is what you do when your cash flow stinks, you don't call the dead-beats (why would they pay you now, when they don't really want to pay you at all), you call your good payers, try and get the $ a little sooner.

I certainly hope the turn is at hand, because if not the cliff is dead ahead.

[garbanzo]

The Federal Reserve Bank, which cut its interest rates last week to 45-year lows, so far has been unable to revive activity even as the cost of borrowing approaches zero.

We've reached the flat part of the demand-price curve and the Federal Reserve knows it but has to look like its doing something.

There are a couple of options - increase foreign consumption (however much of the oversupply is global). Or allow for contraction. Neither will be implemented because of the political considerations.

[garbanzo]

We need another 15 million illegals (consumers) to come pouring across our borders

Actually this isn't a bad idea - we do need to sell outside of the domestic market. Whether we sell to them there or they come here it would help with the oversupply problem.

[Moonman62]

There are a couple of options - increase foreign consumption (however much of the oversupply is global). Or allow for contraction. Neither will be implemented because of the political considerations.

Or we can invest in new businesses that will either use the excess capacity as it is or convert to something that can be used.

[doosee]

Government reports reveal hopeful patches of revival, meaning that the catalysts from the White House and Fed have begun to work.

Several factors have been at work to subdue any recovery process. Energy prices are at the center of my list. Paper plants consumer huge quantities of energy in the pulping operation alone. Why are energy prices high? I think part of it relates to the Arab terrorists. Even now they are working hard to ensure that Iraqi oil doesnt hit the world market. Get gasoline back to 80 cents a gallon and we will have a recovery. People will travel, airlines make money, etc. I think the bitter pill the free world will have to endure is the elimination of terrorist cells and not in ten years. Force is the only true answer to the dilemna but do the people of the US have the courage to make it happen. I am doubtful on this just listening to the "Where are the WMD" crowd. Maybe life in America hasnt gotten painful enough yet to put a stop to those who would destroy our way of life, but we are getting there.

[garbanzo]

Or we can invest in new businesses that will either use the excess capacity as it is or convert to something that can be used.

That could be done - though I would wonder why existing concerns can't find anything to be done with their excess capacity.

[grania]

ping to the usual suspects

[alrea]

Force is the only true answer to the dilemna but do the people of the US have the courage to make it happen. I am doubtful on this just listening to the "Where are the WMD" crowd. Maybe life in America hasnt gotten painful enough yet to put a stop to those who would destroy our way of life, but we are getting there.

the peaceniks are happy to try to grow their own food, protest and vote for whichever Dimocrat sounds the most socialist to them.

[lonestar]

We need a new invention to replace the explosive tech market of the 90's.

Where's Algore when we need a new "internet?"

[meenie]

Just keep free trading, flipping hamburgers, and building more NcDonald's and everything will turn out okay. If you are a politician, make sure to keep destroying the sovereignty of the US with your many trade deals while helping yourself and your friends to the goodies. Just make sure to leave and turn out the lights before the unruly crowd in the next depression start their revolution.

[doosee]

the peaceniks are happy to try to grow their own food, protest and vote for whichever Dimocrat sounds the most socialist to them

You just defined the Dean presidential campaign agenda. The ultimate question is, will the socialist democrats have the opportunity to ruin this nation? If given the chance, they most surely will do just that.

[arete]

Ping to the (un)usual suspects.

Richard W.

[SierraWasp]

"Maybe life in America hasnt gotten painful enough yet to put a stop to those who would destroy our way of life, but we are getting there."

I noticed a reference in one scenario in the article to capacity receeding back to 1994 levels. I recall a very strong political shift in 1994 that gave rise to "The Contract With America," and a change to the entire political landscape from D.C., all the way down to local elective offices. (or maybe it was the other way around)

The excesses of the Hitlery Clinton power grab for government control one seventh of the entire economy, the excesses of the EnvironMental Communutty and the excesses of the ATF/FBI at Ruby Ridge and Waco as well as the economic slump made life in America very painful and threatening and finally woke folks up to vote a stop to 30 years of liberal excess.

Your perception and perspective are right on target and I have believed that the cyclical repetition of history is also quite similar to 1982 when the Dow was at 712, waiting for the Reagan Tax Cuts after the "Stagflation" of Jimmy Carters inept administration. Look what happened immediately after these two periods of correction in our economic/market history.

In 1994, folks said they'd had enough of the no growth nimbyism, pseudo environmentalism and manufactured fear of the media and I sense this break-out mentality is about to manifest it'self again in 2004. People are weary of the liberal drum-beat of negativity and it's about dang time!!!

[xrp]

Airlines these days fill little more than half the seats on their planes, leaving hundreds of the world's aircraft sitting idle.

I've flown on airliners over 10 times since 4/1/2003 and each time I've flown, the flight has been full or near full. The only exception was a quick hop from LAX to Las Vegas when the SouthWest airlines (not asking for bailout money) airplane was about 1/3 full.

[Iris7]

The economic situation follows the Mises-Hayek Austrian model exactly. This current situation is the result of many decades of improper government behavior.

The 1992 to present data series are adequate to show this clearly. Compare M3 growth with velocity of money and NASDAQ prices. What has happened is no suprise whatever.

Anyone interested and without a political axe to grind could not have missed it developing. (I am an amateur and saw it as obvious.)

M3 growth had to have been slowed in 1992-93. The "boom" had to be aborted. The Clinton clique would never have allowed this to happen. George Bush cannot allow the existing situation to persist, but everything he does to try to expand the economy now will cause increased long term problems.

A decrease in government spending, taxing and borrowing of over 50% would fix things. Of course, unemployment would hit 40%, and George would be impeached. Ah, dilemmas.

[grania]

You just defined the Dean presidential campaign agenda. The ultimate question is, will the socialist democrats have the opportunity to ruin this nation? If given the chance, they most surely will do just that.

When I vote in these MoveOn things, I vote for someone who could actually beat Dean. I fear Dean could be another Jimmy Carter type with a great utopian and moralistic vision, a sense of right vs. wrong, and a real contrast to GWB and his administration and global interactions. I really don't want to risk another Jimmy Carter-type President.

Would Dean win as presidential candidate? Probably not, unless he pulls in an awful lot of non-voters. It's just not worth the risk.