Job Growth Stalls in February, Surprising Forecasters

[zimv20]

link (http://nytimes.com/2004/03/05/business/05CND-ECON.html?hp)


Job creation all but stalled in February, surprising Wall Street forecasters and making life difficult for President Bush as he begins his re-election campaign.

The economy added just 21,000 jobs last month, the Labor Department reported today, down sharply from January's gain and far below the type of increase that was common in the 1980's and 1990's. The unemployment rate held steady at 5.6 percent, mostly because many people have stopped looking for work since late last year, removing them from the governments official count of the unemployed.

"This is a disappointment," said Richard D. Rippe, chief economist of the Prudential Equity Group. "It shows very sluggish job creation in an economy which by almost all other measures is really doing very well."

The problems cut across much of the labor market. Manufacturers eliminated jobs for the 43rd consecutive month. Weekly wages for most of the workforce have risen less than 2 percent over the last year, roughly the rate of inflation. The average length of unemployment increased to 20.3 weeks, its highest level since 1984.


Despite the meager job growth, the unemployment rate remained at 5.6 percent last month, down from 6.3 percent in June of last year. The decline is partly a mirage, many economists say, reflecting the large number of people who are not looking for work and thus not counted as unemployed. If the same portion of Americans were in the labor force last month as had been in June, the jobless rate would have been 6.4 percent last month.

[mactastic]

Ouch. January's job numbers were also revised down from 112,000 to 97,000. Not a good time to be looking for work. Lots of people giving up it looks like. Bush is going to look sillier the more he goes out campaigning on the basis of economic strength. No wonder his new ads focus on the 9/11 attacks. Anything to keep from talking about the economy.

[Thomas Veil]

I'm sorry, I have to laugh. Wall Street forecasters are surprised? Don't they ever look around??

[zimv20]

January's job numbers were also revised down from 112,000 to 97,000.

damn is it getting difficult to keep track of all these downward revisions. wasn't december also downwardly revised?

[TimDaddy]

Wasn't Bush saying that the economy would create, like, 300 Trillion jobs or something this year? Ten months to go...

And I remember when I used to get steaming mad on here when you damned people bashed Bush. :D I apologize.

[mactastic]

wasn't december also downwardly revised?

Yes, December's numbers were revised from an initial report of 16,000 down to 8,000.

As Kerry's team pointed out today, at this rate the Bush economic engine will have created it's first net new job 10 years from now.

[Sayhey]

If this number doesn't turn around in a big way by the time of the Dem's convention, then, barring any last minute foreign surprises, Bush is likely done. Why then? because that is when many folks will start to focus on the race and their opinions on Bush's handling of the economy will be formed.

[numediaman]

Likely Bush response:
"The decline in the workforce is caused by the rise in same-sex marriages. Obviously, the wife has decided to stay home with the kids."

Likely Rumsfeld response:
"There are no "discouraged" workers leaving the workforce, they are all new recruits in the armed forces."

The Commerce Department response:
"We have reclassified employed workers, they are now Very, Very Light Manufacturing."

Like Rice response:
"In preparation for the Rapture, several thousand jobs have been taken up to heaven. The people will soon follow."

I'm running out of ideas.

[pseudobrit]

And I remember when I used to get steaming mad on here when you damned people bashed Bush. :D I apologize.

Told you so.

[mactastic]

Told you so.

Now now, let's not go there.

TimDaddy, thanks for putting that out there. I think you are only one of many people who supported the idea of a compassionate (and by extension, moderate) conservative who feels betrayed now. Just do me a favor and don't vote for Bush this time around ok? Just leave that part blank if you can't bring yourself to vote for Kerry.

[zimv20]

I'm running out of ideas.

i've got one!

Dept. of Labor response:
"Everyone searching for a job has been reclassified as a Resume Manufacturer. Unemployment is now under 1% and we have a net gain in manufacturing jobs under Bush."

[pseudobrit]

I can't help but feel utter frustration at all those who now see the light but dismissed the dissent just a year or so ago.

Howard Stern is one of them. He was GWB's biggest supporter up to just a few weeks ago. He loved the "War on Terror."

Now the religious right-wing nutter conservative chicken has come home to roost, as the FCC is beginning to levy massive fines on Stern for the first time since the Clinton administration.

ClearChannel, the conservative Bush-buddy-owned monopolistic monster radio conglomerate, has dumped Stern and publicly (and in front of the FCC) trash-talked their loyal employee after happily and quietly profiting from his show for years...

I can't help but feel frustration at the fact that I knew this crap was coming but very few people believed it would.

This administration DOES NOT CARE about anything or anyone that does not directly aid it in pursuit of its own extremeist, theological and ideological agenda.

Now we have Bush running ads talking about his plans and his vision for the future. Despite four years of miserable failure, he'd like you to think he's a leader that'll suddenly go to bat for the American people instead of his following his own horse**** plans in spite of the rest of America.

This administration does have big plans for success. You're not included in them.

[pseudobrit]

i've got one!

Dept. of Labor response:
"Everyone searching for a job has been reclassified as a Resume Manufacturer. Unemployment is now under 1% and we have a net gain in manufacturing jobs under Bush."

Dept of Homeland Security response: Everyone maintains some level of alert during a class "yellow" or higher terror alert. The higher the alert level, the more people who are alarmed enough to put an effort into their level of alarm.

This effort will now be classified as a job.

In an unrelated story, the terror alert was raised to red for the first time.

[mactastic]

I hear that the sector with the most jobs created has been government employees. Way to go Dubya!

[mactastic]

I can't help but feel utter frustration at all those who now see the light but dismissed the dissent just a year or so ago.


Just be thankful they are seeing the light now, and not in December.

[Neserk]

My dad's company did some sever downsizing this week. He was laid off permanently. He is 59 years old. Now he has to look for a new job.

[Thomas Veil]

My dad's company did some sever downsizing this week. He was laid off permanently. He is 59 years old. Now he has to look for a new job.
Jesus Christ, that's rough. Hope he finds something.

[TimDaddy]

My dad's company did some sever downsizing this week. He was laid off permanently. He is 59 years old. Now he has to look for a new job.

Man, I'm sorry to hear that. I wish him good luck in his job search. My company has been downsizing for a couple of years now. Luckily, the Japanese corporations aren't quite as greedy as the Americans, yet. They haven't laid anyone off, they just won't hire anyone else until attrition runs its course. And, at the same time, it is one of, if not the, most profitable auto companies right now. Maybe someone needs to make that method of downsizing into law. Japan used to have it, if they still don't. And I believe India has a system like that. If you are going to get welfare from the taxpayers for opening a business, then maybe you can keep the people you hire and if you don't need them, find them something to do until someone retires. I don't know, sounds a little restrictive, but I say don't hire hundreds of new employees based on one good quarter, only to lay them off a few months down the road.

[Desertrat]

Hokay: What would any of you do in order to "create jobs"? What would you have Bush or Kerry do? What action could government--Congress or the Agencies--take that would restore the millions of $20+/hr jobs that no longer exist here?

En passant, I note that several Japanese car manufacturers wil open assembly plants here to take advantage of the relative values of the currencies. Sales have dropped enough over the last few years to justify the investment costs. Toyota in San Antonio, for one. Estimated, some 70,000 new jobs, overall.

Separately but allied: Toyota of Japan (TJ) sells its vehicles to Toyota of North America (TNA)--which TJ owns--at a price closer to retail than is common for Ford's or GM's sales to their dealers. The profit margin for TNA is much, much less than for TJ. Ergo, TNA pays a relatively small amount of taxes. TJ's profitability is thus much higher than for Ford or GM, and it can afford more R&D, etc., as well as the "corporate benevolence" implied above.

A non-exact example: For two $15,000 retail-sticker cars, GM might sell to a dealer for $10,000; TJ sells to TNA for $14,000. That $4,000 difference is profit to TJ, and is not taxed in the US. US dealers pay taxes on their profits. (The aggregate of profits of its US dealers is higher than that of GM itself, when one talks of corporate taxes on profits. Sorry; just another aside.)

:), 'Rat

[mactastic]

Hokay: What would any of you do in order to "create jobs"?

How about we expand the hell out of the federal government? Oh wait, Dubya's done that already. We could say "Bring 'em on!" to a few more countries and expand the military. Oh yeah, that's still the government.

If we're not looking for the government to force anything on us, how about that old 'Buy American' campaign? Could that not be revived in a 'Hire American' redux? I do as much as I can to find high quality stuff made by Americans making a decent wage. Sure it's a little more expensive, but I do get a nice product out of it. I don't see our current administration showing any interest or leadership in this area, and in fact they seem to be encouraging the job movement. Probably because that is good for their big supporters.

[Desertrat]

"...how about that old 'Buy American' campaign? Could that not be revived in a 'Hire American' redux?"

Buy American? Fine. What do you do about the comparative prices available from "Not American" stuff? We sell cotton to Taiwan and China; they sell us $5 shirts--some of which are marked $25 :). Is that all bad? (The deal is, I'm compassionate about the buying power of poor folks; they shouldn't have to rely on Goodwill. Just a little sarcasm, there. :) )

Comparative value? A lathe from Taiwan or Japan is as good as a lathe from South Bend. I have a lot of Snap-On tools. I can buy a full set of box/open-end wrenches from 3/8" to 1-1/4" from Sam's for $25--which is the cost of one 1/4"-drive universal socket from Snap-On. What's the average home mechanic gonna choose?

Buy American? I have. A 1978 580C Case backhoe and a 1980 GMC 7000 dumptruck. No metric nuts or bolts. Quality? I have no complaints. But my primary Terlingua vehicle is a 1985 Toyota 4WD PU, because no other brand of vehicle--even other Japanese--will survive this country down here nearly so well.

Once upon a time, the US Had It All. But, how successful is your hamburger joint gonna be, comparatively, if six other guys open hamburger joints on your street? Seems to me a wise fella oughta think up a more competitive line of bidness. Finger out sumpn nobody else is making and selling. Historically, ain't that the American way?

:), 'Rat

[mactastic]

"...how about that old 'Buy American' campaign? Could that not be revived in a 'Hire American' redux?"

Buy American? Fine. What do you do about the comparative prices available from "Not American" stuff? We sell cotton to Taiwan and China; they sell us $5 shirts--some of which are marked $25 :). Is that all bad? (The deal is, I'm compassionate about the buying power of poor folks; they shouldn't have to rely on Goodwill. Just a little sarcasm, there. :) )

Well 'Rat, you do the same thing you do when you are offended by a company's actions/values etc. You don't buy from them. Just as an example I'll use my Tom Bihn briefcase. I paid a little more for it than the cheapest bag I could find, but I met Tom many years ago, and he's a decent guy, likes to design quality bags, has a shop in Washington that employs American workers who he pays enough to be able to afford to buy a house and afford health care etc. I got an excellent bag with excellent protection for my laptop. I know that my money went to a businessman who is interested in the well-being of his workers and that he's not filing taxes in the Cayman Islands, nor locking his workers in for a 12-hour shift.

Comparative value? A lathe from Taiwan or Japan is as good as a lathe from South Bend. I have a lot of Snap-On tools. I can buy a full set of box/open-end wrenches from 3/8" to 1-1/4" from Sam's for $25--which is the cost of one 1/4"-drive universal socket from Snap-On. What's the average home mechanic gonna choose?

Well, I dunno about the average home mechanic. Personally I drive my tools pretty hard, so most of my tools are of the high quality variety. I'll snap a $25 socket wrench pretty quick putting 1/2 lag bolts into deck framing. And even I won't buy American if the American version isn't as good, but I think there are many, many US companies that I can support with a clear conscience. I just want to see some enthusiam for it the way people used to say 'Buy American' with pride. Now it's 'Buy Walmart. Cheap!' That kind of leadership needs to come from the top. That's the kind of position a government should take. It doesn't force anyone to do anything, it just encourages behavior that keeps jobs here and promotes US business.

Buy American? I have. A 1978 580C Case backhoe and a 1980 GMC 7000 dumptruck. No metric nuts or bolts. Quality? I have no complaints. But my primary Terlingua vehicle is a 1985 Toyota 4WD PU, because no other brand of vehicle--even other Japanese--will survive this country down here nearly so well.

Once upon a time, the US Had It All. But, how successful is your hamburger joint gonna be, comparatively, if six other guys open hamburger joints on your street? Seems to me a wise fella oughta think up a more competitive line of bidness. Finger out sumpn nobody else is making and selling. Historically, ain't that the American way?

:), 'Rat

Like I said, I don't always buy American either. There are cases where the American company needs to be persuaded (by taking my business elsewhere) that their products aren't as good as they could be. I just got myself a Toyota pickup as well. I hope it lasts for as long as yours, and I have faith it will. None of the American trucks I tried felt as good. For the same reason I also have a Honda Civic. Best build quality for the money IMHO. But when I can, I support local businesses and business people.

[3rdpath]

one way to add jobs in a sluggish economy is to shorten the work week...thereby splitting the number of hours worked between multiple employees.

companies did this( with excellent results) during the great depression. kellogg even found it possible to pay it's employees full-time wages because productivity increased substantially.

i much favor this approach over the current " have one worker do the job of two employees" method that has been used to pump up productivity. workers are unhappy, job quality suffers and eventually people burn-out and productivity declines.

the candle that burns twice as bright burns half as long....

[Neserk]

And Bush is *defending* is economic policy by thorughing around lower taxes! Hello? Lower taxes don't help if you aren't working!


http://story.news.yahoo.com/news?tmpl=story&cid=544&e=2&u=/ap/20040306/ap_on_go_pr_wh/bush_economy

[zimv20]

d'rat - the only idea i have is to have gov't make it easier for small business and the self-employed. i think people like to buy locally and from small business provided they can stay competative. small business is more likely to hire locally and outsource locally.

a good start would be:

for the bush administration to lay off the Small Business Administration (their funding is getting killed)
the self-employed should be given a lighter tax burden
local gov't should be more helpful/consistent w/ licenses and zoning (as a member of a small theater company the city of chicago just shut down, i'm more than familiar w/ this particular pain)
gov't should make it easier for small business and the self-employed to get healthcare
gov't should improve retirement plans for small business owners and the self-employed

[numediaman]

How to create jobs?

For a start, let's do some of things the Republicans used to believe in -- balanced budgets, tax cuts for consumers, etc.

What? Didn't we cut taxes for consumers?

No, we didn't. Bush's tax cuts for those earning less than $200,000 have been more than offset by user fees, state reductions in services and benefits, etc. "No child left behind" is a burden on state governments who must find the funds to pay for this -- they pass those costs to tax payers across the board.

I'm getting tired of "Bush Republicans" who have abandoned traditional conservative ideals of fiscal responsibility -- then point that finger at liberals. We have had three years of the White House and the Congress being in the hands of the Republicans -- enough.

Want more ideas? How about cutting some corporate cut benefits and reinstituting consumer tax benefits? Remember when you could write off the interest on your car loan? Well, business still can deduct these expenses (under almost all circumstances). If I make a capital improvement to my house or property my taxes go up and I can't write off the expense on my taxes. Capital improvements for business is a write-off and a reduction in their tax load. Double standard, don't you think? If consumers account for over 75% of all spending, why do we punish "investment" by individuals?

Here's an intelligent viewpoint: http://money.cnn.com/2004/03/06/pf/buffett_letter/index.htm?cnn=yes

[wwworry]

Bush's whole "top-down" approach just isn't working. All those billions subsidizing big businesses that are exporting jobs when it could be spent encouraging small businesses which create the majority of jobs in this country. Also the tax structure seems to favor offshore businesses.

Universal healthcare would take a tremendous load off business. Canada seems to be doing quite well with it. You could buy supplementary insurance if you want it.

Better educated workers would help.

Also it is harder to get a small business loan under $500,000. I have talked to bankers and they say it's just not worth it to underwrite small loans.

Lower deficits.

We have been cutting corporate taxes for years, writing special loopholes for multinationals, writing special exemptions for mega businesses and for what? They'll screw you over for 12 cents.


But, coincidentally, big businesses are Bush's biggest contributers.

[Desertrat]

zim, I concur with your ideas about small businesses. One thing rarely considered is that the added cost to overhead from red tape is a higher percentage than for the larger corporations. Once you pass fifteen employees, Life Is Hell. Paperwork impact isn't so bad, for ten to a dozen; but when you expand, you darned near need to go toward a hundred in order to support the salaries of the paper-pushers.

numediaman, you said, "Want more ideas? How about cutting some corporate cut benefits..." (I assume you meant tax benefits.) Question: How does this lead corporations to expand investment and hire more people?

"Remember when you could write off the interest on your car loan? Well, business still can deduct these expenses (under almost all circumstances). If I make a capital improvement to my house or property my taxes go up and I can't write off the expense on my taxes. Capital improvements for business is a write-off and a reduction in their tax load. Double standard, don't you think? If consumers account for over 75% of all spending, why do we punish "investment" by individuals?"

The quick answer is that We The People have collectively become an insatiable maw. Gotta pay for all those programs, somehow. (Even cutting back the military budget to 2000 levels and ignoring the cost of Iraq, there would still be a helluva deficit in the federal budget.)

Sure it's a double standard. We--as government--punish individuals because we can. We want the money to service all those transfer payments.

Once FDR taught folks that voting ourselves largesse from the public coffers was a Good Thing, we started Doing Good For The Unfortunate. LBJ really got us into the program, full time. Note the concurrent debasement of our currency from 1932 onward. Then, Nixon sealed the doom of the currency when he cut the dollar totally loose from any intrinsic worth. We now take it for granted that government should fill all the roles once performed by various parts of the private sector. Ergo, to wit and therefore, the total tax burden at all levels of government is about half one's gross income--and each tax dollar buys less each year, which means more tax dollars are needed.

'Rat

[wwworry]

yes the dollars worth should be dependant on rare pieces of chewed gum sitting here on my desk

What's the intricsic worth of gold? ZIP

[wwworry]

also it's pretty obvious that you can't do the typical "blame programs for the poor" song and dance this time. How many times have we heard that one?

The deficit is caused by
balloning federal payrolls (GOP's responsibilty all the way - they have no one to blame but themselves)

balloning federal pork projects (GOP's responsibilty all the way - they have no one to blame but themselves)

huge tax cuts that go primarily to the wealthiest 13000 families. And let's not shift the conversation to whether or not they deserve it. THat fact is that at LEAST 40% of the deficit is because of this tax cut.

Mismanagement of the economy. No new jobs mean no new tax payers.

Lies about how much Iraq will cost. They actually fired the guy who mentioned the realistic cost of the war before it started. (like they outed the wife of the guy who told the truth about Niger Uranium - showing you how much they care about the truth)

It's strange how people refuse to look at the facts. Blame FDR. We've had years of fiscal stability since FDR and huge destabilizing deficits under Backwards Bush. I think you're barking up the wrong tree 'Rat.

[Desertrat]

West Virginia's Senator Byrd is a Republican? "Senator Pork"? :D

During boom times, it's easy to balance the federal budget. (Insofar as it's ever really been balanced, given the games played with the FICA monies.) In lean times, fewer transactions occur, so less tax money comes in. Trouble is, Congress doesn't reduce spending in lean times.

If the federal budget is 2+ trillion, and you subtract the military budget from that, you're left with a helluva lot of social spending of one sort or another. Sure, some of it is desirable. Some of it is worthwhile. But one helluva lot of it is nothing but "largesse from the public coffers".

FDR started a bunch of new programs; LBJ initiated many more. They're all still with us--regardless of which party (or both) expanded the spending--and I've not seen any serious efforts to separate wheat from chaff and reduce any of it.

Gold and silver do indeed have intrinsic value. The millions of people who make up "the marketplace" say so, relying on history to support that belief. Gold has always been something which could be used to trade for some other item. Fiat, or paper, money has often become worthless. The Weimar Republic; Japan; Mexico...

In the 1970s, the Mexcian peso was worth about eight cents. Over the next ten or so years it sank to 3,000 to the dollar. They shifted the decimal point so it was three pesos to the dollar. Now it's roughly eleven to the dollar--or 11,000 old pesos. The 1980s and 1990s aren't exactly ancient history of a bygone age.

But if you think gold is worthless, I'll happily take yours off your hands. Heck, I'd even give you a perfectly good US one-dollar bill for each and every ounce!

:D, 'Rat

[numediaman]

Growing (un)employment
Numbers directly from the government web site:

[zimv20]

Growing (un)employment
Numbers directly from the government web site:

you can tell visually the negative effects of 9/11 and the positive effects of the tax cuts

not.

[wwworry]

paper dollars have the same intrinsic value as gold, because people see it as valuable. Salt was once intrinsicly valuable as well as oyster shells. Any material is only as valuable as the worth people put on it.

Forgive me but I, for one, do not want the value of my currency peged to the doings of Russian and South African nationals and/or other foreign speculators. I would rather have it more controled by the Federal reserve. The proof is in the pudding right? We have had 60 years of a strong and stable dollar. Can you give me a 60 year period of strength and stability when the dollar was based on gold? No??? OK.

To lay the blame on LBJ and FDR is an old song and dance. Social security and medicare are paying for themselves. THe problem is that this GOP led congress and president are borrowing money from the SS fund to pay for their corporate give-aways. Four years ago we had surpluses and today we have debt and the largest growth in federal payrolls since LBJ. 'Rat, Clinton cut federal payrolls and presided over surpluses. Please, for once, look at the facts.

Is the Bush program creating jobs? No.
Is the Bush program fiscally sound and managing debt? No.
Is the Bush program controlling government growth? No.

When was the last time we had real job creation in this country? When was the last time we had surpluses? When was the last time govt. growth was under control?

It's time we got beyond tired old stereotypes and really look at what's going on here. Maybe it's time to send a message to Washington about fiscal mismanagement.

[zimv20]

We have had 60 years of a strong and stable dollar.

and there's about one more year left. i believe that bush's plan is to devalue the dollar -- to about 1 euro = 1.50 USD -- so that the US' debt is much cheaper. short of reversing the tax cuts and closing gazillions of corp. tax loopholes, it's about the only way out of this deficit mess.

[Desertrat]

Strong and stable currency? wwworry, where have you been? We haven't had that since LBJ's guns'n'butter policy of the late 1960s! Sheesh! It was so bad that in 1968 the Texas government gave us a 30% pay raise! It got no great amount better in ensuing administrations. Remember those silly "WIN" (Whip Inflation Now) buttons that was the best Pres. Ford could do? Or the incredible inflation during the Carter era, when CDs were paying 15%?

Fast forwarding through the 1990s: Gold has "risen" from $260/oz to $400. Actually, in Euros, it has been stable. Some two or so years back, a Euro was worth 83 cents. Now, it's a buck and a quarter. A 50% drop in buying power is stability? Wanna take a vacation in Europe?

Trouble is, a "strong dollar" means even more jobs lost...Given what would be needed for a balanced budget, it, too, would cost jobs.

And we ain't seen the bottom, yet.

'Rat

[IJ Reilly]

You're not the only one here who remembers stagflation, or how we got there. A weak dollar is a vote of no confidence in the US economy. It also tends to be inflationary. Combine a weak dollar with increasing oil prices and skyrocketing federal deficits, and you might well find the next president handing out WIN buttons on the unemployment lines.

[wwworry]

I do remember the inflation of the 1970's come to think of it. But I also remember that in the late 1980's gold was up to $380/oz. and then it fell to $260. That happened within a year or so. (This is all vague recolection. But it did drop quite a bit to hit $260.) I also remember those brothers (from Texas last name begins with an H) who tried to corner the silver market driving prices up before it all collapsed.

which proves my point about speculators

Paul Volker instituted strong anti-inflationary policies (still vague, by the way, Good Morning!) and Greenspan continued them. Since then, inflation has been kept in check. What if someone discovers a huge pot of gold somewhere? All of the sudden my paycheck gets cut in half. I would rather accept that money is a measure of the economy, production and faith and not add into that mix foreign suppliers and leprocans.

A weak dollar also benefits people who can move their money easily between dollars and euros or yen or whatever. And who are those people? - Big business Fat CEOs

[Desertrat]

H.L. Hunt's sons (Bunker, and I forget the other's name) tried a major play in the silver market in 1979/1980. Although they eventually lost most of the family fortune in the effort, their actions drove silver to $50/oz and gold to $800. I had been watching geopolitics during my own little-dab bullion playing, and could see no reason for the action. I'd thus buy, hold very briefly, and then sell. On the Famous Final Fatal Weekend, I had a table at a gunshow. I bought everything I could find, and would leave the show to resell at a coin store up the street. By Saturday evening I was sold out of bullion, and bought none on Sunday. On Monday, the roof fell in. :D

Paul Volcker's monetary ideas, under Reagan, brought down the inflation of the prior decades. While they led to the recession and stagflation of Reagan's first year, by his second year things were back to about as normal as could be. Those first tax cuts led to the beginning of the Reagan boom.

In 1985, the federal discount rate--and thus the Prime and other interest rates--was lowered in order to decrease the relative strength of the dollar vis-a-vis Japan. This improved our export picture at a time when the Japanese were killing us in foreign markets.

Which is the whole deal with strong dollar/weak dollar. Want a strong dollar back? Raise the fed's discount rate. See the dollar grow. See exports plunge. See jobs go. See people's house payments go up if they have floating mortgage interest rates. See some people lose those new houses.

The Clinton era's stock market bubble was due to two things: The dot-com fever and Greenspan's low discount rate. If CDs aren't paying much, where do people put their money? Why, simple, Grasshopper. They go to where the returns are, and CNBC et al advised the stock market. Some indeed made a killing. Others held too long, and the 2000 decline cost, collectively, eight trillion dollars. (Bush took office in 2001.)

The relative strength of currencies is due in large part to comparative interest rates in certain countries (Somalia and suchlike aren't in the game). It's also tied to industrial output. Berkshire-Hathaway (Warren Buffet) stuck 12 billion bucks into currency plays. Profit to date? Probably--depending on when it was done--could easily be 15% to 25% if not more from Euro action. I imagine Mr. Soros has also done well.

Don't put morals to money plays, except when folks like Soros make plays which hurt a currency. His short sales clobbered Thailand, and by ripple effect hurt other SE Asian countries for over a year. He also caused a lot of grief in England with his short-sale plays on the Pound. The B-H deal is quite straight-forward, merely a buy and hold, rather than a short sale.

If you're interested at all in currencies, go to www.everbank.com for the thoughts of the day. Quite interesting, at least to me.

So, no, a weak dollar is not of itself a vote of no confidence in our economy. There'd be even less confidence if the effects of a strong dollar occurred *at this time*. Inflation? They're lying to us. Everytime I go buy parts for any of my equipment or car repairs, the prices are up more than any two or three percent. And housing and oil-related products aren't included in the "market basket".

Greenspan's games with the discount rate have given us today's situation. The Bushies have no choice but to stay with the game, as a rise in interest rates would be a killer--and yet Bush gets blamed for something he didn't do and can't change.

I dunno. I don't think it's a matter of "Buy American", as suggested in those other threads. I think it's more a matter of "Don't buy anything except must-have stuff" and save the money in spite of today's low interest rates. That would strongly reduce our foreign trade deficit.

Sorry for the length, but this subject ain't subject to sloganeering. :)

'Rat

[IJ Reilly]

So, no, a weak dollar is not of itself a vote of no confidence in our economy. There'd be even less confidence if the effects of a strong dollar occurred *at this time*. Inflation? They're lying to us. Everytime I go buy parts for any of my equipment or car repairs, the prices are up more than any two or three percent. And housing and oil-related products aren't included in the "market basket".

Greenspan's games with the discount rate have given us today's situation. The Bushies have no choice but to stay with the game, as a rise in interest rates would be a killer--and yet Bush gets blamed for something he didn't do and can't change.

The currency markets are driven by demand. Disregarding ordinary fluctuations, currencies in severe and prolonged declines are a response to relatively weak economies. Like any other market, declines tend to feed on themselves because no smart investor tries to catch a falling knife. With the need to finance record federal debts, much of it coming from foreign investors, we can't afford a dollar crisis. Interest rates will go up no matter how the Fed responds, simply as a function of supply and demand. The stagflation of the '70s began and persisted for much the same set of reasons. I'm not saying this will happen again now, but the table is certainly being set.

Here is the scenario: The dollar continues its steady decline. Foreign investors become less than enthusiastic about investing in the federal debt market, which drives up the rates on t-bills. Our addiction to foreign products, and particularly imported oil (which is on a steady price climb anyway), sparks inflation. The Fed is forced to raise the discount rate even though the economy remains sluggish. This is the recipe for stagflation.

The Bush administration had plenty of choices. The main ingredient in this witch's brew is uncontrolled federal debt.

[wwworry]

So I think we could agree that we do not want a dollar that is abnormally strong nor abnormally weak, whatever normal is. :) It does seem like China's currency may be on the weak side but there is not much we can do about that.

My thought is that Bush wants to hold interest rates low until after the election and then let it loose. I do not like all this election planning and false deadlines. But I am interested in low interest rates until November. By then my house should be done and my construction loan should be converted into a fixed rate loan. 'Rat I remember you said you built one for $33/sq. ft. I am shooting for $25 (but with a lot of open "industrial" space). SIPs are the way to go. Super insulated and super fast to put up with low amounts of waste. Stick framing is passe.

[numediaman]

This one is from the Bureau of Labor Studies via the N.Y. Times:

[Dont Hurt Me]

d'rat - the only idea i have is to have gov't make it easier for small business and the self-employed. i think people like to buy locally and from small business provided they can stay competative. small business is more likely to hire locally and outsource locally.

a good start would be:

for the bush administration to lay off the Small Business Administration (their funding is getting killed)
the self-employed should be given a lighter tax burden
local gov't should be more helpful/consistent w/ licenses and zoning (as a member of a small theater company the city of chicago just shut down, i'm more than familiar w/ this particular pain)
gov't should make it easier for small business and the self-employed to get healthcare
gov't should improve retirement plans for small business owners and the self-employed
Self Employed are getting screwed with taxes and Healthcare but that doesnt fit with George's vision of corporate America and Big business getting the breaks while moving factories overseas. George is out of touch with the common worker or the regular American with all his policies. Please forgive me for voting for this guy,the sun must have been in my eyes that day! or perhaps those chads confused me :confused: Maybe i just pulled the wrong darn lever :mad:

[Desertrat]

Sure, IJ, the currency markets are driven by demand. That demand is often a function of interest rates. When the Bank of Japan dropped below 1% to favored customers, folks borrowed there and bought T-Bills and suchlike, making some 3% while they slept. Right now, you could borrow money in the US and put it into Australian instruments and have both a capital gain AND a profitable interest rate.

wwworry, you're right about the more modern construction methods. I was faced in part with a transportation problem to the top of my mountain, as well as the availability of competent labor at affordable cost for the initial drying-in. The $33/sq-ft includes 14 acres, a water system, a detached garage, appliances and almost all the furnishings, though. :)

Lemme say that I'm as amazed as anybody about the "doings" of the Administration. I voted for Bush mostly due to his record in Texas as governor. Not perfect, no, but I never expect that. His people got a good bit of good legislation passed. But I never in my wildest dreams would have imagined some of the stuff emanating from this White House. I still don't mind defending him in those areas where I don't see "fault", and I don't care for automatic bashing--Bush or Kerry or anybody else.

'Rat

[zimv20]

This one is from the Bureau of Labor Studies via the N.Y. Times:

seems the downturn came right about the time of the first round of tax cuts. i see the decline was already evident by 9/11.

[wwworry]

the point of that graph was administration predictions in grey versus actual munbers in black.

That's good with the water system, transportation and all. My cost does not include demolition of an existing building. It's better to build it yourself because you get exactly what you want.

[IJ Reilly]

Sure, IJ, the currency markets are driven by demand. That demand is often a function of interest rates.

That's right, interest rates will rise if the demand for the debt isn't sufficient. This is what I've been saying. What you're trying to say eludes me, but if it's that the situation will magically correct itself, and that we don't have to concern ourselves with the possibility of a prolonged economic crisis like the 1970s, then I have to wonder where you're hiding all those years of life experience. I mean, I can see where the Reagan Babies might not have the personal histories to comprehend how such a thing could happen, but you and I should certainly know about it first-hand, and not have to argue about whether the scenario I've suggested is even possible.

[Thomas Veil]

FYI: Netscape today has collected a bunch of articles on outsourcing from CNN Money, here (http://money.netscape.cnn.com/default.jsp).

Buried in one of those articles is a link, "Coalition battles outsourcing backlash". In the context of the other articles, "outsourcing backlash" means the very thing we're talking about here -- trying to figure out how to keep more good jobs at home. If there's a "coalition battling" that ideal, I'd love to know exactly who they are. :mad:

Unfortunately (suspiciously?), the link is dead. I've e-mailed CNN to ask them the current location of the article. I'll let you know what they say. Meantime, I hope the other articles are helpful to this discussion.

[Desertrat]

IJ, my understand of conventional central bank behavior is that when there is an economic downturn, they lower the interest rates in order to stimulate spending and thus demand and thus investment in more manufacturing.

When interest rates have already been lowered, and then a downturn occurs, that tool is gone. Broken. Dull. Not available. And that's where we're stuck, right now.

There ain't no magic. The present situation won't automatically correct itself. If I understand the various comments and views from both conventional thinkers and contrarians--and I'm not positive that I do--it looks as though we have a fairly long term of economic doldrums ahead of us. I have no clue how long. I have no clue about what will change it.

I have seen no source with ideas about how to create comparable-pay jobs for those lost through out-sourcing or corporate exodus. Yeah, when Toyota builds a plant here, that's good; but hiring thousands when the lost jobs are in millions doesn't seem like "the" solution. It's a partial solution for a few; better than nothing, but what else can be done? The "What else" needs answering, and I've not yet seen that. Which goes back, then, to my earlier comment about bright people and mousetraps...(This thread? The outsource thread? :))

Tying a bit to the Thomas Veil comment, it seems to me that outsourcing is gonna remain a done deal. Rather than try to save jobs in unprofitable industries, we need to figure out what we can make to sell that then requires firing folks for these new jobs. (I know; repetitive. But I still think it's closer to reality than "backlashing" or looking to government.)

'Rat

[IJ Reilly]

IJ, my understand of conventional central bank behavior is that when there is an economic downturn, they lower the interest rates in order to stimulate spending and thus demand and thus investment in more manufacturing.

When interest rates have already been lowered, and then a downturn occurs, that tool is gone. Broken. Dull. Not available. And that's where we're stuck, right now.

News flash: Trade Deficit Reaches Record $43.1 Billion in January, Exports Drop, Despite Falling Dollar

Yes, the Fed has run out of interest rate bullets, but they probably weren't going to be firing any more of them anyway. My fear is the opposite scenario: rates will have to rise despite a flaccid economy to offset the effects of a falling dollar and to induce overseas investors to buy our federal debt. Meanwhile, rising fuel prices and a weak dollar begin to make everything more expensive. Inflation with stagnation. It could happen.

[mactastic]

Well I'm sure another round of tax cuts would be good for what ails us. Got a surplus? Cut taxes! Got a deficit? Cut taxes more! Boom times? Cut taxes! Lean times? You guessed it, more tax cuts!

Who knows, without the 3 rounds of tax cuts we've had in the last 3 years we might still be losing jobs each month instead of creating them. [/sarcasm]

[Desertrat]

zimv20, you're forgetting inertia and lag times. The downturn began long before 2001. The downward trend in profitability began a couple or three decades back. "Downsizing" of the workforce began in the 1980s; the 1989/1990 recession--the first-ever white-collar recession--was but a symptom. Downsizing slowed during the stockmarket bubble of the 1990s, since there was so much money flowing about--which made the balanced budget achievable. The 2000 bust allowed the other problems to become more evident.

I'm not alone in believing that had interest rates been two or three point higher in 1996 or 1997, we'd have had a milder, shorter period of hard times. Now, whatever the Administration is doing is merely stopgap with prayer attached. I don't see any way that times will get better for another several years.

And, yeah, IJ, I agree that some sort of stagflation is coming--if not already "sorta" here. When you look at problems like a stronger dollar hurting exports, vs. a weak dollar leading to less buying of our debt, I don't see any "kiss the ouchie and make it well."

Ran across a datum earlier today. (Factoid?) Anyhow, if those no longer eligible for unemployment compensation and those no longer looking for work are added in to the official numbers, our present unemployment rate is about ten percent of the workforce. And the numbers of "underemployed" are not at all heartening.

Scary.

'Rat

[wwworry]

EDIT: just posted what Diamond Geezer started a new thread about - deleted my post