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

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

[afz400]

"Whether we sell to them (illegal immigrants)there or they come here it would help with the oversupply problem."
Not really - they don't have the money in their own countries to buy our goods (that's why they come here - duh). If they come here they are a negative drain on our economy, using more of our resources (hospitals, welfare, public schools,etc) than they produce, and don't have to contribute into our social security or tax system. IMHO illegal immigration is one of the root causes of our stagnant economy (next to global over capacity). Certainly the very wealthy benefit with cheap lawn care and nannies (nouveau planation owners) but the rest of us pay every time we go to the hospital or take our kids to school having to wade through the flood of illegals to make our way to what we paid for and they didn't.

[bimbo]

Industrial Capacity in the U.S. must be idled as that industrial capacity (and related employment) is being shipped overseas ... you mean thay didn't mention this in their "Welcome to NAFTA, GATT, WTO speech?"

[jammer]

In case you might have missed some news, Republicans control both houses of Congress, control the White House, and appointed all but 2 or 3 of the SC Injustices.

[lchoro]

"Old-line makers of durable machinery operate at only 67% of productive capacity. The figure is only 65% for producers of semiconductors and electronic components."

Chip foundry capacity has grown in Asian by 40 percent since 2000. Half of the equipment in the new Chinese factories is procured from the surplus used equipment.

Have to wonder with the interest rates cut to 1 percent this week and the US attempting to devalue the dollar, it wouldn't just be cheaper to just move the plants out of the country. If the dollar continues to sink, the effective interest rate on the loan would be negative. Didn't Japan go through this process ten years ago?

[Iris7]

Existing firms fixed costs are too high to increase production, since the increased production would have to be sold at lower prices. Firms always increase production until they are unprofitable at the margin.

[Iris7]

"The ultimate question is, will the socialist democrats have the opportunity to ruin this nation?"

The ruin was accomplished before you were born. FDR laughed at how he had made something that could not be fixed by coming generations.

[jammer]

Yes, they did. Theoretically, all free markets reach an equilibrium where there is zero real profit on any one good or unit of labor; profits are generated by increasing productivity faster than competitors for a given good or by innovation to produce demand for new products. That's just life-cycle characteristics of the market. So, with the free trade agreements, we can probably expect to reach economic equilibrium with the 3rd world countries. Those last two sentences have some large logical jumps, I know, to the non-pessimist.

Deflation seems to me to be an inevitable consequence. And, as you say, the plants will go, sooner (as you recommend) or later (in more expensive fashion).

[Iris7]

What you see is true, in the sense that energy costs dropping adequately would "return prosperity", and in the sense that this can only be done through violent means. Further, this approach is so politically attractive that the political class is pursuing it avidly. The Arabs realize this fully. So do the Russians, Chinese, and even French. Utterly common knowledge. Wars do not occur for simple reasons, nor do other aspects of politics.

[nathanbedford]

I, too have endured such times in the early 80s and can only say that I have personally experienced every doubt and ultimate loss of (self) confidence which you describe.

But every economic swing carries inchoat the very forces which will slow it and ultimately return it. We have the nimblest big economy there is and a lot of smart people have been making adjustments just like you have described you have made. Cummulatively, they will have their effect. We have a tax cut, albeit small and delayed. Oil is coming down, albiet slower than we want. Inventories are down. Productivity is improving as a new wave of technology takes effect.

Unless we get dragged down by a world wide deflationary spiral, and we will be the last to go down, our economy will revive. I think the bad news is out. Now it gets better.

[norraad]

What makes this real to me are the mountainous stacks of air conditioners at places like Best Buy not moving even though priced as low as $89.

In the fall I bet you get one free if you buy a TV.

[arete]

I think the bad news is out. Now it gets better.

Actually, the bad news isn't out. The government has stepped in to sidetrack the normal economic cycle by lowering interest rates, injecting massive amounts of liquidity into the system and encouraging further excesses especially by the consumer. Now we have a massive debt problem, a stock and bond market bubble and a real estate bubble . . . and NO pent-up demand. Where is the recovery going to come from?

Richard W.

[doosee]

In case you might have missed some news, Republicans control both houses of Congress, control the White House, and appointed all but 2 or 3 of the SC Injustices.


that is only if you believe that Snowe, Chafee, and McCain are Republicans. Remember Jim Jeffords, the Republican. The SC is doesnt too bad in my book. So what if some homos are now permitted to bugger each other inside their homes. Do I care, no.... And if Michigan lets a few blacks into law school, one of them may turn into Clarence Thomas, my favorite justice.... Anyway, it will have to get a lot worse before we change policies in this nation...

[Joe Hadenuf]

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

That's it, we we don't have enough, we need to get hundreds of thousands more, uneducated, unskilled, people that don't speak English, maybe that will pull us out...Yes, that could only help!

[nathanbedford]

The government has stepped on the economic cycle since Roosevelt, usually with precisely counter indicated nostrums. Yet the economy, with the signal exception of the tightening and free trade restrictions which led to the great depression, has alwaysw staggered back, sometimes at an astonishing rate.

Of course the fed is loosening, and this will inflate for now. Which is the time period we are talking about. Whether you are right that in the long run we ought to leave everything alone and take our medicine now, I cannot see so far ahead. I am glad you can. Please keep me informed.

I am also worried about the supposed real estate "bubble" but lower interest rates will prolong it. Recovery will come from the adjustments being made every day in every business and home which will find new markets, new products, new methods, etc.

[sarcasm]

Where is the recovery going to come from?

War? Worked for FDR.

[VOA]

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

So the response of American civil aviation to the disaster of 9-11?

1. Cooperate with nimrods like Norm Mineta and discourage MILLIONS of
paying passengers by subjecting them to meaningless searches...because
sensible profiling would offend Norm Mineta's memories of Japanese-American incarcerations
during WWII.

2. Decrease service, stop senior programs, close convenient ticket offices
at high-traffic offices and hotels throughout the country.

3. Continue to give executives big salaries (and bonuses) for flying their
companies into the ground, as long as they can get guvmint funding/subsidies.


This ain't just my opinion: "Travel Detective" Peter Greenburg of NBC's Today Show
and KABC radio (www.kabc.com) routinely profiles some of the insanity of the management
of American airline companies.
In response to an aviation airline executive's claim that "there is no room for
ego or incompetence at this company", Greenburg quipped "of course, all those positions
have been filled!"

[garbanzo]

Well yes...the problem is that credit is a cheap as it can be but it hasn't seemed to increase demand for credit in large part for the reasons you cite. The typical reason for such inflexible demand is oversupply and you either have to reach deep into foreign markets to use up that capacity or you have to allow for serious contraction (which is what I think Moonman was getting at though in different terms). If the oversupply problem is itself global then your options become politically limited.

[fightu4it]

This is the United States of America!

If we can't do it, no one can!

There is too much poor mouthing and too few visionary business leaders nowadays.

Not to mention too much government intervention in trying to micro manage every aspect of the economy. Do they really and truely believe in a free market system?

[arete]

War? Worked for FDR.

Oh, those pesky evil-doers. Problem is that in previous wars, the public made personal and financial sacrifices. Rationing coupons=pent-up demand. It was guns or butter. Now it is guns and more butter. Ought to be interesting to see them pull this rabbit out of the hat.

Richard W.

[jocon307]

"Now it gets better."

Nathan, I hope you are right!