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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: shades who wrote (68005)8/10/2006 6:46:44 PM
From: bond_bubble  Read Replies (1) of 110194
 
You never answer me Jay when I ask you about canadian lumberer - when labor is your biggest cost - how does a paid canadian lumberer with benefits and safety standards compete with free mexican laborer who dies every so often but is OK cause 50 mexicans behind him willing to take his job? In prescott bush's day - how could a paid coal worker with safety standard compete with auschwitz worker who worked for free digging coal and if he died 50 more behind him to pick up the work? What is to stop US prisons from putting huge black or mexican prison population to work for FREE in coal mines or cutting trees? Make me understand how canadian lumberer competes with that?

Shades, this is the precise reason why recessions leads to economic depression!! As I've been saying, even if PPI falls, CPI falls even more!! i.e salaries (PPI) might not fall much but people will buy only if lumber is sold (CPI) lot cheaper. After UK filed for bankruptcy, Thatcher allowed huge immigration and this forced the salaries down in UK and hence the PPI fell large enough reviving the economy and credit cycle. Right now, US has already taken advantage of the Mexican immigrants and Chinese and this was part of the dis-inflation. I dont think there is any more trick Fed/US Govt can pull to lower the inflation. I dont think even Mexicans will lower their salaries when 1) USD falls against pesos 2)Cost of living for Mexicans soars in US 3)Cost of doing business (for employers) soars irrespective of Mexican employees. I dont think Mexican, Chinese salaries are going to fall. Another "Aushwitz" in US? It is possible though.
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