trotsky (Hambone) ID#377387:
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i guess defense goods are included in the statistics, but they always have been included, and the upward trend in goods production has been in force regardless of whether defense spending by the state was high or low.
note that in the aggregate, when the state wastes resources on building killing machines, these resources are missing somewhere else ( contrary to Fed confetti, REAL resources are subject to scarcity ) . thus if there were no defense spending, the overall economic picture would likely look a lot brighter, as these resources would be available for wealth creation.
Date: Wed May 05 2004 13:51
trotsky (the Vet, 13:34) ID#377387:
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"Overall it appears that productivity has risen ( and it has on average ) but the actual gains are really much less than the overall statistics appear to show..."
this is true, but for a different reason. productivity statistics are imo overstated mostly due to hedonic indexing, and the outsized effect this has on the statistics for specifically IT equipment production. otherwise, the fact that it takes less and less labor to produce more and more goods is a normal sign of progress - see the agriculture example for confirmation.
Date: Wed May 05 2004 13:44
trotsky (manufacturing, one more) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
when people argue that China is somehow 'stealing' 'our' manufacturing jobs, they should also take the time and first look at the data ( as opposed to anecdotes ) . fact: in the past decade, China has LOST over 30 MILLION manufacturing jobs. how can that be explained, if they are such proficient 'job thieves'?
the explanation is of course the very same as in every other such case: the deployment of capital has made China's manufacturing industries much more efficient. at the same time, inefficient manufacturers ( mostly the state sector ) , plus the jobs they used to provide, are rapidly disappearing.
Date: Wed May 05 2004 13:35
trotsky (Apollo) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
i still think we can't so easily ascribe causation. in a nutshell, the market is worried about a possible rise in interest rates, and everything that supports this worry is used as an excuse to sell. the UE report would certainly fall into that category.
i think however that this concern is overblown on several fronts. note e.g. the China story ( overblown as well - the mainstream media are practically tripping over each other declaring an end to China's boom. it has 'only' grown by nearly 10% in qu. 1, but what the heck - the hacks just KNOW that must mean the boom is over. or rather, they think a baby step interest rate increase in China means that ) - so which is it, are economies going too strong, or are they in danger of falling off a cliff? it HAS to be one or the other, right?
imo IF the Fed raises rates, it will do so in such small increments that it won't make no difference, EXCEPT for those sectors of the financial/economic game that are leveraged up to their eyeballs - the very sectors as Hambone has noted that have provided all the reported 'growth'. so a rate increase that goes far enough to kill those off will without a doubt be reversed in short order.
of course that still means we'll have pretty wild medium term gyrations.
Date: Wed May 05 2004 13:19
trotsky (Hambone, 12:47) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
i agree with everything you say, especially regarding the interest rate sensitivity of what there is in terms of jobs creation thus far ( those are jobs in industries that have been subject to malinvestment on a grand scale on account of the Fed's policies - they are CERTAIN to disappear again as soon as the policy is tweaked ) .
however, i take issue with one point:
"And that brings us to the crux of the economic malaise in the US to begin with - the demise of manufacturing. We're a nation producing less and less by the day and consuming more and more."
i agree with the 'consuming more and more' part, but not with the 'producing less and less'. in fact, in terms of goods produced, US manufacturing set yet another all time record high last year - iow, NEVER BEFORE HAS SO MUCH BEEN PRODUCED by US manufacturing firms as RIGHT NOW. the perceived 'decline' of US manufacturing is actually a wrong conclusion based on anecdotes, not the actual data. it does take less and less workers, and so manufacturing is perceived to be a shrinking sector of the economy.
but that is not true in terms of output - output is in fact rising without fail every year for decades now. manufacturing has simply become very efficient, and thus needs less labor. also, CERTAIN manufacturing industries like e.g. textiles, are disappearing, because these goods can be produced more efficiently in places like China. however, new, higher order industries are emerging concurrently ( like e.g. biotech, nanotech, new specializations in electronics, etc. ) .
the situation is akin to what happened in agriculture - formerly, 70% of the labor pool was employed in agriculture - now, only 2% is, however, more agricultural goods than EVER BEFORE are produced by the sector.
obviously, NO-ONE is arguing these days that we are in economic decline due to the decline in labor employed in agriculture. instead, it is obvious to everyone that agriculture has become enormously efficient.
well, THE VERY SAME is true of manufacturing.
aside from that, i do of course agree with you that the Fed is just in such a 'box' of its own making as you decribe.
Date: Wed May 05 2004 12:56
trotsky (Apollo@UE report) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
it seems to me the sector has already priced in more than one strong report. i still think it wanted to go down, and the report simply was the excuse to begin doing so.
Date: Wed May 05 2004 12:15
trotsky (frustrated@payroll number) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
unfortunately, it's useless trying to predict it. after all, BLS has a long-standing tradition of more or less making a number up. once one delves into the details of the data it becomes clear every time that the headline number is meaningless. i realize of course that the markets do not deem it meaningless, since no-one takes the time to actually analyze the data. but how can one predict the actual number? it's impossible ( btw., since economists are routinely off the mark by a wide margin, this contention is actually borne out by the predictions people DO make. it's a waste of time ) .
as an aside, whatever the number, the market will in any case do whatever it wanted to do. the data may have an impact for one trading day, but otherwise... |
