Some interesting stuff happening in the manufacturing sector. The US Dollar, despite the President's claim today that he wants a strong currency, continues to drop. Rising material costs, be it ore or petroleum, has had some unintended consequences. I noted on Daily Kos last week, that many businesses are starting to take a second look at the US given the rise in transportation costs.
There is a fierce debate going on at across a number of economic and financial blogs about the most recent price spikei in oil. After years of seemingly orderly increase, the price of oil took off dramatically in February 2007 and even moreso in early 2008, rising from $55 a barrel only 16 months ago to $140 a barrel now -- a percentage equivalent to the move from $20+ a barrel to $55 a barrel in the entire decade from 1997 to 2007.
Clearly, something happened in the last year and a half to cause the price of oil to go "parabolic" -- the straight to the heavens chart that we have seen before in the 1920s stock market and the Nasdaq tech bubble.
When I worked as a school teacher, I never saw, touched, felt or smelled funds that were supposedly taken from me for Social Security or income taxes. The same was true for the school janitor and the superintendent of Schools. Maybe each of us had the money for an imaginary instant in the mind of some bookkeeper, but where did the money come from? Maybe where the money came from is even more important than who paid it. Obviously it came from the taxpayers in our school district.
Let's take the example of Countrywide Financial.
Today both California and Illinois opened lawsuits against Countrywide for "using misleading advertising and other unfair business practices to trick borrowers into taking on risky home loans they didn't fully understand". Also today, Washington State is moving to pull Countrywide's licenses after it found "evidence of predatory practices aimed at minorities".
This is after a year in which Countrywide stock has dropped from nearly 40 to just 4.58.
By now readers of my blog posts know that I tend to have a "muddle-through" point of view. Times may be good, or times may be bad, but rarely does Armageddon happen. In the last 100 years, it only happened 1 time -- in the 1929-39 Great Depression. There may have been inflation, there may have been recessions, but always people adapted and an equilibrium was struck, and growth resumed.
Even World Wars 1 and 2 (and 2 had a lot to do with the oppressive settlement of 1) occurred after 100 years of near universal international peace in Europe.
Over the last 25+ years the entire globe has been undergoing a disinflationary period of growth. Interest rates have declined; consumers in advanced countries who haven't made much progress in wages could at least refinance their debt, or perhaps cash in the value of booming stock or real estate assets.
All of that appears to be coming to an end.
"I'm very well versed in economics."
- John McCain, January 24, 2008
Senator McCain may think he knows a few things about economics, but his latest comments show an increasingly widening gap between reality and his version of reality. This is one of those "Oh. My. God" moments.
The presumptive Republican presidential nominee regularly asserts that 1.3 million people worldwide ``make a living off EBay.'' He holds up the figure as evidence the world's largest Internet auctioneer is a model for job and economic growth.
Something tells me that selling beeny babbies on EBay isn't a real economic plan. In fact, the idea of selling used stuff online is some sort of economic model that we should aspire to as a country shows such a complete lack of understanding of fundamentals that it should scare you.
You know something is brazen when the New York Times can publish an article where corporations admit to not hiring anyone over 40 years of age.
The biggest obstacle, experts say, is that most companies are reluctant to retain or hire older workers. At the top of the corporate ladder, executive recruiters are routinely told not to seek anyone over 50, notes Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School.
Everyone knows that sin taxes on alcohol and tobacco are intended to discourage their use. Exactly the same rationale should cause one to question our present income and social security taxes. Working and investing are both desirable. Yet our nation collects over ninety percent of its income from taxes on American labor and investment. Does this make sense?
Certainly workers and investors should both pay taxes, but should we tax them more when they do these desirable things more often and better? Republicans see this problem when they advocate cutting taxes on corporations and investment. Neither party seems to recognize what our present taxes do to American labor.
When a business hires a worker, it has to come up with enough money pay the worker and also for the worker to pay taxes on his wages. Every incentive exists to cut jobs, automate, use imports, and outsource labor.
Now that the primary is over and many Progressives are now stunned at the realities of Obama being center (I always take that term to mean multinational corporations and the super rich agenda) and McCain is running around with the queen of offshore outsourcing, Carly Fiorina, who isn't even an economist, a huge question emerges of NOW WHAT?
The Economist's View has a good post on how to bring about transformative change we really need in this country.
Instead of shilling for Barack, or Hillary, or whoever, we should have been pressuring the candidates to work for our votes
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we're like cheap dates
Recently an individual emailed me believing increased fuel costs would magically bring back his service job (engineering). Not so, I pointed out, for unlike manufacturing which requires raw materials, components, shipped around the globe per their ill advised and little analyzed global supply chain fuel and transportation costs, service jobs can be offshore outsourced with almost no supply chain costs whatsoever. And no, putting a toll booth on the Internet super highway is not the answer.
That said, for manufacturing there might be a silver lining to rising energy costs. According to the Wall Street Journal, High cost of shipping goods brings some jobs back to U.S., global supply chain costs are taking their toll:
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