Industrial Output Drops Most in 34 years

industrial output

Bloomberg reports that industrial production is at it's lowest since 1991.

Manufacturing dropped 2.8% in September.

The Fed Bank of Philadelphia's general economic index plunged to minus 37.5 this month, worse than forecast and the lowest reading since October 1990, from 3.8 in September, the bank said today. Negative readings signal contraction. The index averaged 5.1 last year.

From RTTNews:

Industrial production fell by much more than expected in the month of September, according to a report released by the Federal Reserve on Thursday, with the report also showing a bigger than expected drop in capacity utilization.

The report showed that industrial production fell by 2.8 percent in September following a revised 1.0 percent decrease in August. Economists had expected production to fall by 0.8 percent compared to the 1.1 percent decrease originally reported for the previous month

Manufacturing Production declined 2.6%.

Mining fell 7.8%.

Capacity Utilization rate, has fallen dramatically.

The bigger than expected decrease reflected a reduction in the capacity utilization rates in the manufacturing and mining sectors, which fell to 74.5 percent and 85.0 percent, respectively. At the same time, capacity utilization in the utilities sector rose to 82.9 percent

So, utilities are going up while manufacturing is laying idle.

The reports try to blame Hurricanes and the Boeing strike but didn't we have a bunch of Hurricanes a couple of years ago?

There is a very good editorial, Manufacturers Know All About Economic Collapse on how manufacturing, the life blood of America is Wall Street and D.C.'s bastard child.

Manufacturers weren't looking for a hand out or a bailout. They only wanted one thing: for the United States government to put the interests of American producers above the interests of foreign countries, foreign producers, importers and the multinational companies that were taking advantage of mercantilist practices in China. American manufacturers wanted the U.S. government to put the interests of American producers ahead of the law firms representing foreign shipping companies, the lobbyists representing Wall Street and, again, the multinational companies that were swimming in record profits by sending their production offshore; all while the critical manufacturing sector was left for dead. "Good riddance," said the financial elite and its power structure: "those jobs sucked anyway."

Those same free-market, capitalist, anti-government, anti-regulation ideological zealots are now begging -- demanding -- that taxpayers give them a trillion dollars for destroying the American economy.

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The Path from Crisis is Economic Democracy

Before the Crisis began, and the beast began to bite, many in the progressive populist group saw the looming crisis and argued for infrastructure. Roubini,,, many others foresaw the crisis years ago.

To end the 'mainstreet crisis', the important questions are:
- What are the infrastructure projects appropriate for public finance (the private markets are dead for the time being)
- How should we finance our way out of the worst crisis since the Great Depression?

The approach is to understand that none of us is smarter than all of us banded together. Welcome to economic democracy. We, the people, will make the first and important decisions, corporations, governments, will follow.

So what is a concrete plan is capable of implementing economic democracy? Such a plan will allow the people to choose what is the appropriate list of economic infrastructure investments. Next, we will use public finance based upon 'full faith and credit' at first, then, private entities after confidence and success. We have enumerated the investments.

Let us define investments. We mean those projects with a regular commonly understood, stream of economic benefits ('cash flow'). Let us not intend subsidized government activities such as education, on-going health-care, and other operations of government at local, state, and national level. We need to rebuild means of production, transport, energy, manufacturing. The private means of finance are presently, dysfunctional (to be polite).

To be diligent, we confine investments in designated projects with secured lending. Taxpayer dollars are at stake. If a worthy project with a significant entity should fail, another player takes over assuming the obligations and facilities. We should include all players, domestic and foreign, willing to invest locally. That principle is not meant as chauvinism, but an international universal. The danger of the balance of payments deficit is enormous.
An object of INDEREFI is to minimize SWF and foreign source to keep the balance of payments minimal.

So how do we finance initially? Full faith and credit obligations. Later we can replace public with private finance, such as Mutual Funds, Mutual Insurance, Private Equity and others. Left side of the the balance sheet is infrastricture investments in secured assets. Right side of the balance sheet is full faith and credit obligations of the U.S. and States.

So where is democracy? People make the choice of individual investments. Dollar investments by US citizens may range from $10 to $10 billion. In all cases, the money goes the to projects chosen by the people. In that sense, we call this democratic. Critics will say that big money has too much say in this approach. I answer that mow they have too much say and nothing contra-cyclical, anti-recessionary gets done. Unless we follow a democratic approach. Critics of the U.S. in Europe say the the U.S is in a 'State Finance Capitalist System'. To that we must answer with a Jeffersonian, democratic, solution, democratic in nature.

Economic Democracy actuates when the people take control, aport from the state and corporate solutions. State and corporate solutions are parallized by fear. Time for economic democracy is arrived.

What are examples of projects? Listen to Boone Pickens, McClendon, Paul Krugman, and others. What all good infrastructure project do is to end the energy crisis, stop the balance of trade/payments deficits, create jobs, and ultimately, end the climate crisis. We know we are succeeding when we see Greensburg, Kansas times one thousand from Texas to the Canadian border and west from Texas to California, and again with Appalician Gas.)

A starting list of projects is what we discussed before. A democratic list will be chosen by the investors in the INDIREFI list of projects.

This is an incomplete list of choices. Please contribute. The criteria for inclusion is :
1) job creation 2) trade deficit minimization 3) energy crisis appropriate tech 4) assets kept locally

First Tier - basic auto component industries-specialty steel, generic microprocessors, copper, aluminum

Second Tier – fortify and build capacity of Polymer Lithium Batteries, direct solar, wind turbines, specialty steel tubing drilling), and custom microprocessors

Third Tier – increase cement and non specialty steel capacity
or highway construction and railroad rolling stock and rail and airport runway and management systems

Fourth Tier – auto shop floor capacity and automation for building
next generation automobiles, local financing to utilities for wind turbines, nuclear power, land fill methane, small hydro, co-generation

Fifth Tier – nanosolar fabrication capacity, next generation wind turbines, advanced vehicle designs and identifiable cutting edge technologies entering production stage but short of capital

Let the people choose each and every.

Welcome to EP Burton Leed

Maybe you would like to create an account and write up your thoughts as a blog post? This is quite a long, dense comment, deserves more attention and it would get it in a blog post.

Welcome to EP!