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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: regli who wrote (47825)	12/20/2005 4:26:31 PM
From: GST	Read Replies (1) \| Respond to of 110194

The only places that will be challenged by future automation will be low wage, low productivity economies. If that is us then we are indeed in trouble. If it is China then pity them. There is only one hope for our future -- continuous productivity improvement. All else is just carving up the pie.

To: regli who wrote (47825)	12/20/2005 5:09:29 PM
From: mishedlo	Respond to of 110194

Fannie Mae's 2006 Outlook globaleconomicanalysis.blogspot.com Mish

To: regli who wrote (47825)	12/20/2005 7:21:22 PM
From: arun gera	Read Replies (2) \| Respond to of 110194

Regli, Jobs just migrate from efficient steps to the bottlenecked steps of the supply chain. Steady increase in manufacturing efficiency has not decreased the overall number of jobs. Similarly, any improvement in robotics and AI is not going to change that. As manufacturing efficiency goes up, the products generated from the manufacturing process become plenty and relatively cheap. Initially, lower price increases the demand for those goods, but that demand is eventually satisfied and the market gets saturated. Then value added products are needed to satisfy finer demands. Or demands are artificially enhanced by advertizing and selling. This creates jobs in non-manufacturing areas such as product design, marketing, advertising, and sales. The world may be divided into the producers, consumers, and facilitators. For an economic transaction to take place, the supply chain includes demand creators, producers, distributors, and consumers, each getting their reward. The consumer's reward in the economic transaction is the perceived or real value from the goods or services. If an economic transaction is not happening, it is because: 1. The consumer does not value the goods/services at the current cost of producing those items. In such a case, economic activity is enhanced by increased efficiencies in any steps in the supply chain. So if manufacturing, or marketing, or shipping, or customer service gets cheaper, the probability of economic activity increases. Economy of scale, automation, and outsourcing actually help in increasing economic transactions. For example, due to the availability of cheap computing power and bandwidth, consumers are using more and more of digitized products - phone calls, software, songs, blogs, and silicon investor posts. A well oiled capitalist system works very well to correct any problems in making such transactions. If some goods are not selling, then only the most efficient or creative players in the supply chain survive. This leads to innovation, consolidation, economies of scale, and lowering of costs. All good things that one should not worry about as long as there is enough competition in the market. So there is no point in blaming automation and outsourcing. Availability of product choices also allows that some economic activity takes place, even if one product totally fails in the marketplace. If the current housing boom is happening because it has become much cheaper to deliver new houses, then it is a good thing. Someone who has studied the economics of building and selling houses in the US should chime in with their opinion. I am not an expert in this but here is my rough analysis of some factors: a. Commute costs in US have gone up per unit mile - more gridlocks, few new roads, larger less-fuel-efficient vehicles, and higher sticker prices to maintain status. So that is not a good thing. b. Building materials may have become cheaper. The China effect or depressed commodity costs? c. Illegal immigrants may have decreased the labor costs. d. Better supply chain management, standardization, and economy of scale. e. Economies of scale in managing loan transactions. 2. Another reason the transaction may not happen is that the consumer's perception or reality of his financial health does not permit expenditures. This is a more serious impediment to completion of an economic transaction. Factors include: a) Life stage b) Employment Status b) Assets in possession c) Available credit It seems that outsourcing manufacturing to China seems to be throwing up more and more easy credit in USA. The only mystery is that the US business is not using the easy credit. At least the Bush administration made a bold move (whether wise or foolish) with all the easy credit - attack Iraq. -Arun