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Wages in US show steepest fall in rate since 1991
Financial Times ^ | 5/11/05 | Christopher Swann

Posted on 05/11/2005 2:00:03 PM PDT by ninenot

Real wages in the US are falling at their fastest rate in 14 years, according to data surveyed by the Financial Times.

Inflation rose 3.1 per cent in the year to March but salaries climbed just 2.4 per cent, according to the Employment Cost Index. In the final three months of 2004, real wages fell by 0.9 per cent.

The last time salaries fell this steeply was at the start of 1991, when real wages declined by 1.1 per cent.

Stingy pay rises mean many Americans will have to work longer hours to keep up with the cost of living, and they could ultimately undermine consumer spending and economic growth.

Many economists believe that in spite of the unexpectedly large rise in job creation of 274,000 in April, the uneven revival in the labour market since the 2001 recession has made it hard for workers to negotiate real improvements in living standards.

Even after last month's bumper gain in employment, there are 22,000 fewer private sector jobs than when the recession began in March 2001, a 0.02 per cent fall. At the same point in the recovery from the recession of the early 1990s, private sector employment was up 4.7 per cent.

"There is still little evidence that workers are gaining much traction in their negotiations," said Paul Ashworth, US analyst at Capital Economics, the consultancy. "If this does not pick up, it raises the prospect of a sharper slowdown in consumer spending than we have been expecting."

Economists are divided over the best source for measuring pay increases in the US, since the government releases three main measures.

A gauge of average hourly earnings is released with the employment report. This rose by 0.3 per cent in both March and April and 0.1 per cent in February. Even with a slight rise in the hours employees are working, from 33.7 to 33.9, this suggests wages are struggling to keep pace with inflation. The gauge covers non-supervisory workers, about 80 per cent of the workforce.

The Bureau of Economic Analysis figures for personal income showed wages rising at close to 6 per cent in 2004 but slowing down since. This measure also showed wages rising by just 0.3 per cent in each of the past 2 months. This is a broader gauge and includes small businesses and professional partnerships, but it measures total corporate wage bill rather than wages per person.

The Employment Cost Index, seen by some as the most reliable measure, excludes overtime and professional partnerships.


TOPICS: Business/Economy; Culture/Society; Front Page News; Government; News/Current Events
KEYWORDS: economy; inflation; jobs; realwages; wages
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1 posted on 05/11/2005 2:00:04 PM PDT by ninenot
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To: ninenot

Bump


2 posted on 05/11/2005 2:00:32 PM PDT by hedgetrimmer
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To: Willie Green; afraidfortherepublic; A. Pole; hedgetrimmer; XBob; Elliott Jackalope; VOA; ...

Things are Swell!! Things are Great!! We have Nothing to Hit but the Heights!!


3 posted on 05/11/2005 2:01:13 PM PDT by ninenot (Minister of Membership, Tomas Torquemada Gentlemen's Club)
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Comment #4 Removed by Moderator

To: ninenot

All that this shows is that their is a divergence between one method of calculating inflation and how wage and benefit increases are calculated.


5 posted on 05/11/2005 2:04:22 PM PDT by Libertarianize the GOP (Make all taxes truly voluntary)
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To: ninenot

Free-trade, open borders bump!!!!


6 posted on 05/11/2005 2:04:29 PM PDT by NEBUCHADNEZZAR1961
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To: ninenot

And toasters are just $5 at Wal-Mart! Everything is perfect!


7 posted on 05/11/2005 2:05:20 PM PDT by keepingtrack
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To: NEBUCHADNEZZAR1961

You hit the nail on the head.


8 posted on 05/11/2005 2:06:07 PM PDT by RSmithOpt (Liberalism: Highway to Hell)
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To: ninenot

Chill out people. This is a survey from the Financial Times, not a US Government Statistical release. Tax receipts are booming (on Monday it was announced the budget deficit for 2005 will be at least $55 billion less than projected three months ago). That is a far more accurate link to incomes.

Tax receipts can't rise that fast without income growth. Just today CNN/Money released an article talking about the return of hiring for higher paying jobs, the best numbers in their report for four years.

Financial Times is not even an American paper, take this with a grain of salt.


9 posted on 05/11/2005 2:07:02 PM PDT by LRoggy (Peter's Son's Business)
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To: ninenot

I wonder how the wages are tracking in China and India..


10 posted on 05/11/2005 2:07:16 PM PDT by AntiGuv ()
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Comment #11 Removed by Moderator

To: ninenot
The Employment Cost Index, seen by some as the most reliable measure, excludes overtime and professional partnerships.
12 posted on 05/11/2005 2:10:27 PM PDT by Diddle E. Squat
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To: AntiGuv

Don't know about India, but they are certainly rising in China. Go to Yahoo - they had a story on it yesterday.


13 posted on 05/11/2005 2:11:44 PM PDT by razoroccam (Then in the name of Allah, they will let loose the Germs of War (http://www.booksurge.com))
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To: LRoggy

Those tax receipts have NOTHING WHATSOEVER to do with the repatriation of $400 billion in earnings from PRChina.

NOTHING. Not at all.

Pay no attention to the man behind the curtain.


14 posted on 05/11/2005 2:12:30 PM PDT by ninenot (Minister of Membership, Tomas Torquemada Gentlemen's Club)
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To: LRoggy

"Financial Times is not even an American paper, take this with a grain of salt."

For a number of people here it is just a chance to bash the current administration. Doesn't matter if it's true or not. FR certainly has it's own version of DUmmies.


15 posted on 05/11/2005 2:12:43 PM PDT by L98Fiero
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To: Diddle E. Squat

The USG's stats show that, indeed, wages PAID rose slightly faster than inflation last month--but only because there were more hours WORKED.

IOW, things were OK if you slept at the factory between your double-shifts.


16 posted on 05/11/2005 2:14:24 PM PDT by ninenot (Minister of Membership, Tomas Torquemada Gentlemen's Club)
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To: Libertarianize the GOP

No what this really shows is that this damned article has been posted 3 times now.


17 posted on 05/11/2005 2:14:35 PM PDT by Waterleak (I pity the fool)
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To: L98Fiero
"Doesn't matter if it's true or not. FR certainly has it's own version of DUmmies.

FReetards?

18 posted on 05/11/2005 2:15:59 PM PDT by SouthParkRepublican
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To: L98Fiero

This article leaves out so many factors of real wages it isn't credible to be printed. It leaves out increases in insurance costs, medical and liability, the cost of energy increases etc. Actual wages aren't down, the cost to be in business has gone up. Misleading at best.


19 posted on 05/11/2005 2:22:59 PM PDT by Ron in Acreage (Democrat or Communist? Is there a difference?)
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To: LRoggy
Tax receipts can't rise that fast without income growth. Just today CNN/Money released an article talking about the return of hiring for higher paying jobs, the best numbers in their report for four years.

Tax receipts are increasing because Bush's tax cuts have stimulated the economy. This economy has nothing to do with Free trade.

20 posted on 05/11/2005 2:23:28 PM PDT by NEBUCHADNEZZAR1961
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To: LRoggy

In all fairness, given that "wages" do not typically include income from small businesses, and from various investments (including real estate) I will concede that some of the doom and gloom is probably not warranted. That said, I would also concede that wages for people who get most of their income via working for someone else probably have gone down, especially when normalized to inflation.


21 posted on 05/11/2005 2:25:25 PM PDT by GOP_1900AD (Stomping on "PC," destroying the Left, and smoking out faux "conservatives" - Take Back The GOP!)
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To: ninenot
He bases this on the Employment Cost Index and says it's, "seen by some as the most reliable measure" but that's not true.

First, the ECI lags. If you want to see employment cost trends you look at the monthly hourly earnings data in the employment report. Second, he says nothing about benefit costs (when you count benefits there's an increase). Third, the ECI is used to look at shifting employment between industries, and benefit costs.......this article shows that it can also be used to spread bullsh*t propaganda.
22 posted on 05/11/2005 2:26:01 PM PDT by Jaysun (No matter how hot she is, some man, somewhere, is tired of her sh*t)
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To: embedded_rebel
Hillary is going to win a landslide in 2008.
=======

I beg to didiffer!

Hillary is going to win a slimeslide in 2008. !!! ;-))

.

23 posted on 05/11/2005 2:27:41 PM PDT by GeekDejure ("That may be too late!" -- Laura)
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To: ninenot
Oh please. Do they never give up their mindless nattering.

The unemployment rate is at 5.2%......the lowest in memory and all we get is whine whine whine.

24 posted on 05/11/2005 2:45:15 PM PDT by OldFriend (MAJOR TAMMY DUCKWORTH.....INSPIRATIONAL)
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To: ninenot
Oh please. Do they never give up their mindless nattering.

The unemployment rate is at 5.2%......the lowest in memory and all we get is whine whine whine.

25 posted on 05/11/2005 2:45:18 PM PDT by OldFriend (MAJOR TAMMY DUCKWORTH.....INSPIRATIONAL)
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To: L98Fiero

Unfortunatley, the DUmmies are getting the upper hand on FR.


26 posted on 05/11/2005 2:46:13 PM PDT by OldFriend (MAJOR TAMMY DUCKWORTH.....INSPIRATIONAL)
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To: L98Fiero

I'm doing better than I've ever done -- about to buy a house with a cheap mortgage, BF just got a $5/hr raise in MANUFACTURING, and I don't have to lift a finger -- can stay home and grow my organic garden with my three year old. Life is good.

It would be better though, if this were actually a free market, instead of some crappy illusion of one.


27 posted on 05/11/2005 3:08:26 PM PDT by MsJefferson (Self-evident)
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To: ninenot
The last time salaries fell this steeply was at the start of 1991, when real wages declined by 1.1 per cent.

Who was the president in 1991? Someone can refresh my memory?

28 posted on 05/11/2005 3:09:58 PM PDT by A. Pole (Ukrainian proverb: "Iak buly moskali, buv khlib na stoli, a iak bude Ukraina, bude bida po kolina")
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To: A. Pole

Alan Greenspan? :-)


29 posted on 05/11/2005 3:15:08 PM PDT by auboy
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To: PhiKapMom; All
I see a topic which I realize could be infected with the latest Trojan.V and what do I find?

Common sense tells us that working people realize Social Security and Medicaid are destructing before them. Wages are lower because employees are VOLUNTARILY electing to put the difference into personal retirement programs. Everyone comes out ahead in the end.

Take a few minutes to educate yourself on HSA's and DB's.

30 posted on 05/11/2005 3:18:04 PM PDT by Tumbleweed_Connection (http://hour9.blogspot.com/)
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To: ninenot

Employment is great. Witness the FReepers stampeding to post this article.


31 posted on 05/11/2005 3:23:19 PM PDT by 1rudeboy
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32 posted on 05/11/2005 3:24:23 PM PDT by 1rudeboy
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To: Jaysun

But looking at the BLS page, you'll find that his numbers hold up.

Employment cost (overall) is not what's being discussed--only wages.


33 posted on 05/11/2005 3:25:58 PM PDT by ninenot (Minister of Membership, Tomas Torquemada Gentlemen's Club)
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To: Tumbleweed_Connection

Yeah--the massive movement of money into pre-tax shelters is grinding down national stats on wages.

Get serious. It's statistically insignificant.


34 posted on 05/11/2005 3:27:47 PM PDT by ninenot (Minister of Membership, Tomas Torquemada Gentlemen's Club)
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To: A. Pole

He lost.

Hint: a Globaloney-One-Worlder with an agenda that did not include the majority of voters--just certain segments thereof.

Familiar name, though.


35 posted on 05/11/2005 3:29:15 PM PDT by ninenot (Minister of Membership, Tomas Torquemada Gentlemen's Club)
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To: ninenot
But looking at the BLS page, you'll find that his numbers hold up. Employment cost (overall) is not what's being discussed--only wages.

It's a dirty trick if you ask me. Again, the ECI is a lousy report when you're trying to figure out trends in wages.
36 posted on 05/11/2005 3:30:26 PM PDT by Jaysun (No matter how hot she is, some man, somewhere, is tired of her sh*t)
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To: ninenot

I don't even take note of this crap anymore.

Really, it's waste of time.

According to a "study" or a "research paper" (Covering a small window in time and excluding all other time periods that don't fit into/feed the right data for the desired predetermined outcome), our real wages are sinking. OMG, I'm really nervous now!

All these "studies" and all their findings are really confusing me. I still haven't figured out if I should eat butter or Margin? Is caffeine OK or really bad? What about the pill? What did this "study" find again? Ah, yea this article was on the acid rain studies and how all our forest will be dead by 2000. Or was it the “we’ll be out of global oil reserves by 2000” study? Really, these studies confuse me. Why was there this fixation on the year 2000 by all these green groups? Did God create the Earth and say "If you're bad I'll have your oil run out on 1 JAN 2000 at 00:00:01"? Really? What is the probability that with some random number of trillion barrels of global oil reserves, 4.5 billion years of this planet being around, some un-programmed level of oil consumption over several hundred years-causing all the worlds oil to run dry by 2000 sharp? Did they get their facts form “The Hitchhikers Guide to Environmentalism?”

Anyway-back on topic,

Did you now we have a "jobless economic recovery" according to the MSM? No, really! Weird how unemployment is AT FIVE POINT TWO PERCENT and the MSM talks of a “jobless economic recovery”? Again, that’s Five (5) Point (.) Two (2) Percent (%) unemployed in these hard desperate jobless times when real wages are dropping (Only if you look between some certain dates-the fine print of the article).

So, I was told automation would replace workers and we’d all be unemployed because we’ll loose our factory jobs (1970-1985 or so) at the assembly plant. Now we have millions working in the IT industry and some are telling me that everyone will loose their job again. According to several “studies” in the past, our real wages were dropping and America was getting poorer than ever. Wait, are we recycling themes here in a round about way? No way. As Ronald Reagan once asked the American people “Are you better off today than four years ago?”, I’d like to ask- “Are we worse off than 5.4 years ago?” Truth is, even if we complain and want more and better (That’s a good thing!), our standard of living over time as gone up and up in the long run. Despite all the “jobless recoveries”, “working poor”, “decline in real wages” and and and it at least SEEMS or APPEARS to me (But I can only really remember back to about 1978) that over time things have been getting at least a little better. But that’s a personal perspective and not a conclusive, hard, indisputable, empirical, factual, “study”.

Red6


37 posted on 05/11/2005 4:13:37 PM PDT by Red6
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To: keepingtrack

And toasters are just $5 at Wal-Mart! Everything is perfect!
---

Actually, thats just it. Free trade benefits everyone.

Let's take the arguments to the extreme - at the extreme end of those who don't favor free trade are the self sufficient (and impoverished) communes that are common under communism. The other end of free trade had hardly ever been experienced because government gives itself power to block it, thus interfering with the comerical activity of its citizens. Free trade is BLOCKED by government.

Those who are against free trade are for Big Government. Just be honest with yourselves about this because many claim to be 'Conservative' in ideology. If your a Conservative against free trade you are a Conservative for big, powerful and tyranical govenment. Who is government to tell you what you can and cannot buy and sell overseas?

We saw an economic boom after NAFTA and we'll see an economic boom after any free trade agreement. The doom and gloom crowd were wrong!

The similarities between the anti-free trade crowd and liberalism are striking.


38 posted on 05/11/2005 5:14:52 PM PDT by traviskicks (http://www.neoperspectives.com/charterschoolsexplained.htm)
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To: ninenot

And things really aren't going to get better due to a demographics crunch. Of course, the preception should be worse than the reality.


39 posted on 05/11/2005 5:21:44 PM PDT by Tribune7
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To: Red6; Willie Green; Wolfie; ex-snook; Jhoffa_; FITZ; arete; FreedomPoster; Red Jones; Pyro7480; ...
So, I was told automation would replace workers and we’d all be unemployed because we’ll loose our factory jobs (1970-1985 or so) at the assembly plant. Now we have millions working in the IT industry and some are telling me that everyone will loose their job again.

There is a difference. 1970-1985 factory jobs did not get outsourced to China. If this had happened the "automation" you talk about would be much less profitable (very cheap labor can inhibit technical improvements) and the huge trade deficit would occur earlier.

High tech jobs when they move to China or India do not get "automated". And the bill for the trade deficit will come, believe me.

What is the new thing average Americans will do? Nanotechnological brain surgery? Flying to Mars? Financial services to the rest of the world? What is your prediction?

40 posted on 05/11/2005 5:57:06 PM PDT by A. Pole (Ukrainian proverb: "Iak buly moskali, buv khlib na stoli, a iak bude Ukraina, bude bida po kolina")
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To: A. Pole

There's an interesting series of articles on PRChina's "economy" running in The Daily Reckoning.

The author spent a couple of weeks there, looking at investment possibilities and learned that the PRChina banks are in effect making 'evergreen' loans to industry over there--no repayments are required.

Well, without the encumbrance of debt-reduction, one's cashflow is seriously ENHANCED, no?

The author is enamored of China as an investment opportunity, but puts up large "caution" flags as to what to look at. Needless to say, banks in China are not recommended.


41 posted on 05/11/2005 6:07:08 PM PDT by ninenot (Minister of Membership, Tomas Torquemada Gentlemen's Club)
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To: A. Pole
What is the new thing average Americans will do? Nanotechnological brain surgery? Flying to Mars? Financial services to the rest of the world? What is your prediction?

Well, we could always apply to Starfleet Academy, become Jedi Knights or become black hole engineers. /sarcasm> B-P

Nuke NAFTA, De-CAFTA-nate CAFTA, and repeal the GATT gaffe, bump!!!!
42 posted on 05/11/2005 6:13:08 PM PDT by Nowhere Man (Lutheran, Conservative, Neo-Victorian/Edwardian, Michael Savage in '08! - DeCAFTA-nate CAFTA!)
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To: Red6

Bravo.


43 posted on 05/11/2005 7:03:49 PM PDT by Jaysun (No matter how hot she is, some man, somewhere, is tired of her sh*t)
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To: A. Pole
What is the new thing average Americans will do? Nanotechnological brain surgery? Flying to Mars? Financial services to the rest of the world? What is your prediction?

You want fries with that? For here or to go?

44 posted on 05/11/2005 7:48:08 PM PDT by Sender (Team Infidel USA)
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To: Red6
Yes, humor aside, we are all pretty well off. And I say that from the perspective of someone who was laid off at the end of January and we got by on my wife's salary since then, and now I'm starting a new job for far less money.

But at least I can say that I haven't missed any meals, I'm not being shot at or beheaded, I can say whatever I darn please without worrying about some terrible punishment, and I get to drive around and eat Buffalo wings. Is this a great country, OR WHAT?

45 posted on 05/11/2005 7:53:35 PM PDT by Sender (Team Infidel USA)
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To: Sender
You want fries with that? For here or to go?

Sure and supersize me too. B-P Welcome to the new America. B-P
46 posted on 05/11/2005 7:57:40 PM PDT by Nowhere Man (Lutheran, Conservative, Neo-Victorian/Edwardian, Michael Savage in '08! - DeCAFTA-nate CAFTA!)
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To: A. Pole
What is the new thing average Americans will do? Nanotechnological brain surgery? Flying to Mars? Financial services to the rest of the world? What is your prediction?

Since research and development is also being outsourced, whatever the "new" thing is, probably won't be invented by an American nor produced by Americans. If this trend is not stopped then Americans will have an ever-increasing lower standard of life to look forward to.

47 posted on 05/11/2005 8:23:45 PM PDT by SwordofTruth (God is good all the time.)
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To: traviskicks

Big business has spent 148 million to get CAFTA passed. Think of the 7 million for NAFTA in comparison. We are heading right for a $700 billion deficit.

Fiscal responsibility is a class the Bush Administration skipped


48 posted on 05/11/2005 9:09:26 PM PDT by B4Ranch ( Report every illegal alien that you meet. Call 866-347-2423, it's a FREE CALL)
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To: A. Pole

"There is a difference. 1970-1985 factory jobs did not get outsourced to China. " You say

No, these jobs were going to Mexico, Europe in part, Japan, S. Korea and Taiwan. Even Ford started to have engines built in Europe for some of their US Mustangs......

"What is the new thing average Americans will do? Nanotechnological brain surgery? Flying to Mars? Financial services to the rest of the world? What is your prediction?" You say

Most products have a "life cycle". Introduction-growth-maturity and decline phase in life.

Interestingly- This has been going on for a LONG LONG time, yet despite all the "We are going down!" prophesies, new markets, industries etc have always popped up (Which you sarcastically note.

But we just recently DID have the first private spaceship.

Genetic engineering IS coming and growing.

Biotech is growing................

The F16 is dying the F35 is coming.

Red6


49 posted on 05/11/2005 11:37:22 PM PDT by Red6
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To: Sender
You want fries with that? For here or to go?

Some folks sure aim high.

50 posted on 05/12/2005 4:25:43 AM PDT by 1rudeboy
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