PeakTrader.com Forum Index PeakTrader.com
Economics, Portfolio Optimization, and Technical Analysis
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 
Log inFast Charts

1111

 
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Articles
View previous topic :: View next topic  
Author Message
administrator
Site Admin


Joined: 28 Dec 2005
Posts: 10752

PostPosted: Fri May 22, 2015 8:42 am    Post subject: 1111 Reply with quote

PeakTrader:

It may also work for some U.S. states, to have some effect in spurring demand, for durable goods, with (lowering) state income tax rates and (announcing raising) sales tax rates, particularly for states, or states in a megalopolis, with many highly educated and affluent workers.

However, there may be a net increase in state taxes for lower income workers, given progressive state income taxes and regressive state sales taxes.

****

Unbiased research is very important.

However, it doesn't seem we've done enough about some major problems, e.g. the on-going U.S. deep depression, with no end in sight; the Middle East, while Russia annexed Crimea and China tries to annex the South China Sea; the War on Poverty (e.g. virtually eliminating "deep poverty," while maintaining or worsening poverty in general); the War on Drugs (accounting for massive social costs and pro-drug propaganda).

****

BC, massive idle resources (e.g. labor and capital) is completely unnecessary for this long.

According to the following chart, U.S. per capita GDP is about $6,000 a year below trend (although, it's overstated, because there has been some destruction of potential output):

http://www.advisorperspectives.com/dshort/charts/indicators/GDP-per-capita-overview.html?GDP-per-capita-since-1960-with-regression.gif

And, that's a lot of lost tax revenue, which we needed, including for the Baby-Boomer retirement (the last of the Baby-Boomers, born between 1946-64, will reach 65 in 2029).

****

We’re still in a deep depression, where GDP growth improves for a while, then deteriorates for a while, etc. with no end in sight.

http://www.advisorperspectives.com/dshort/

****

Also, I may add, I predicted in the mid-2000s, there would be strong economic growth in the 2010s, because high household debt will cause workers 55 and older to postpone retirement, and work longer and harder, to pay-down debt, adding to economic growth.

However, I didn’t expect so much and so many anti-growth policies, and the 16 to 54 labor force to work so much less.

****

"...enduring puzzles of international finance is the fact that the joint hypothesis of uncovered interest parity and rational expectations."

There may be some systematic risk.

For example, it’s much easier to change the supply of money than the supply of gold, and money can be created or destroyed very quickly, unlike gold.

Also, it seems easier to predict, with less of a deviation, where the stock market, for example, will be in 30 years than in three months (long-term investors outperform short-term traders, although, short-term traders can “hit-it-big” or lose big, unlike long-term investors).

****

I think, there’s a productivity cycle, from the time a worker starts a job to a point that job becomes inflationary, at full employment. And, at that point, the economy is more susceptible to an oil shock. Moreover, it seems, a small part of the workforce can have a big cyclical effect.

Since the last recession, we had a severe structural break, where monetary and fiscal policies haven’t had much of an effect. I think, there are many factors causing the economy to underperform.

****

Michael Zoller, an economist at Moody’s Analytics – January 2013:

“Indiana has better types of manufacturing, a lot of medical devices. It’s more resistant to outsourcing. Wisconsin is more traditional — paper, heavy machinery. Paper is very cyclical, it’s easy to mechanize. Heavy manufacturing is the same way,” Zoller said.

Wisconsin is home to a lot of small- to mid-sized companies. Those are easier companies to acquire,” Zoller said. “Financial industries have shut down entirely and moved to Minnesota or Chicago or have been gobbled up by foreign companies.”

“At Moody’s, we see the growth drivers in the nation are in higher skilled industry — health care, professional services, finance. People migrate because of money and jobs. You have to create high quality jobs to create a better economy,” Zoller concluded.

Bret Mayborne, economic research director for the Metropolitan Milwaukee Association of Commerce – May 2013:

About 16 percent of Wisconsin’s employment is in manufacturing, double the national average.

The biggest problem for manufacturing jobs, Mayborne said, is that Wisconsin’s durable and nondurable goods base continues to erode, hit in the 2001 recession and hit harder in the latest and worst economic slump in recent memory. And the sector doesn’t look to recoup anywhere near all of those lost jobs.

****

Large current account surpluses are expected when private saving surpluses are much greater than budget deficits.

China’s consumer spending declined from 45% of GDP in 2000 to 36% of GDP in 2010 (compared to about 70% in the U.S. and about 60% in Western Europe). However, it seems to have roughly stabilized, since 2010, while China’s GDP continued to grow, although at a slowing pace.

And, “the average Chinese household saves as much as 40 percent of its income” (compared to around 5% in the U.S.).

It seems, China’s budget deficit is around 2% of GDP (it’s questionable if all of China’s statistics are accurate).

****

Our Asian trading partners, particularly China, not taking account of their social costs (e.g. environmental and labor) is our gain and their losses.

U.S. gains from trade have been much greater than China, Japan, and other Asian countries gains from trade.

And, international trade, since around 1980, facilitated the U.S. Information and Biotech economic revolutions, where the U.S. not only leads the world (in both revenue and profit), it leads the rest of the world combined.

****

Matt, you’re shifting blame assuming Asian exporters caused the U.S. housing crisis.

Low lending standards, not low interest rates, caused the U.S. housing crisis.

It was U.S. policy, not foreign policies, that caused the U.S. housing crisis.

****

Bellanson, why would banks be “desperate” to lend money to people with no income, no down-payment, marginal credit, etc.? They would lend only if they couldn’t lose money, i.e. with the federal government backing them up, which became pro-cyclical, in an increasingly globalized world.

Citigroup, for example, knew the housing boom would end badly. Nevertheless, it had to join in, although late, because it had to compete with other money center banks. Consequently, since Citigroup was late, it lost the most.

What originates in Washington and New York can spread far and wide. If you don’t believe me, you may believe Michael Bloomberg, former Mayor of New York City:

“It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp.

Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t have gotten them without that.

But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and Congress certainly isn’t going to blame themselves.”

****

PeakTrader

May 13, 2015 at 5:59 am


Paul, see the law of supply and demand.

And, production is needed for consumption.

Reply ↓


Paul Mathis

May 13, 2015 at 8:28 am

So You Are Saying Keynes is Wrong?

Yeah, that just makes so much sense. Keynes forgot about the law of supply and demand.

Reply ↓


PeakTrader

May 13, 2015 at 11:00 am


No, I’m saying you’re wrong.

For example, raising production raises consumption.

Reply ↓


Paul Mathis

May 13, 2015 at 2:02 pm


Oh right, because supply creates demand. IOW, Keynes got it backwards.


PeakTrader

May 13, 2015 at 2:40 pm


You got it only one way,

There can’t be one without the other.

Income is an important component.


PeakTrader

May 13, 2015 at 6:05 am


Joseph, everyone benefits from lower prices and interest rates.

Of course, in a dynamic economy, some will win and some will lose.

Reply ↓


Paul Mathis

May 13, 2015 at 8:30 am


True! The 1% win and the workers lose, just as Sen Warren says.

Reply ↓


PeakTrader

May 13, 2015 at 11:06 am


Workers win when better jobs are created and poor jobs are destroyed.

You can thank capitalists, including in the 1%, later.


Paul Mathis

May 13, 2015 at 2:03 pm


Yes, trickle down economics has worked so well over the years. That’s why Pres. Hoover was elected 4 times.


PeakTrader

May 13, 2015 at 2:47 pm


Paul, I guess, you miss the textile mill, or living in Detroit.


PeakTrader

May 13, 2015 at 3:06 pm


The U.S. has benefited enormously offshoring older industries, importing those goods at lower prices and higher profits, and shifting limited resources into high-end manufacturing and emerging industries.

Of course, when you import tens of millions of dirt poor people, with low skills, from Third World countries, and include their children, along with spending trillions of dollars to pay people not to work, it’s not surprising the result would be greater wealth and income inequality.

Reply ↓


fladem

May 14, 2015 at 5:31 am


There starting place for any discussion of the economy has to be with the disconnect between wages and productivity growth. The intuition is this is a result of a shift in the balance of power between labor and capital. One explanation for this shift is the ability of capital to threaten to move work overseas.

The author of this article simply ignores this, and fall back to citing data from the late 90’s, as if the last 15 years did not happen.

Mr Frankel wants to pretend that the disconnect did not happen.

He then rather outrageously argues that we are close to full employment, an argument which broader measures of unemployment refutes.

Mr. Frankel needs to address the data since 2000 to make his case.

He does not do so here, and as a result he is not very persuasive.

Reply ↓


PeakTrader

May 14, 2015 at 8:04 am


If you compare the U.S. economy when it peaked in 2007, after the 1982-07 long boom, to the 1970s, it has improved dramatically. And, the explosion in international trade was an important part of the improvement.

Since 2007, we needed more pro-growth and fewer anti-growth economic policies, e.g. reducing and removing the $2 trillion a year of federal regulations, creating more incentives to work, for lower and middle class workers, tax reform, that promotes work and investment, raising the minimum wage to $15 an hour, to correct a market failure, etc..

The U.S. economy has the capacity for much stronger growth than the past six years. We need to unleash that growth, until we close the output gap. Then, we can afford more regulations and higher taxes, which will slow the economy to a sustainable rate.

Reply ↓


anon2

May 14, 2015 at 12:54 pm


This trade agreement may be great for the poorer countries. But for our country it looks like it’s just standard politics: more power for the corporations, less power for the rest of us.

How can any agreement that has secret courts, be good?

Reply ↓


PeakTrader

May 14, 2015 at 3:57 pm


So, you wouldn’t trade a worth less piece of paper for a valuable good, because you didn’t work to produce a valuable good to exchange for another valuable good.

If you just want to work, you can dig holes and fill them up again, or if you want to produce valuable goods foreigners don’t want, you can store them in a warehouse.


****
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Articles All times are GMT - 8 Hours
Page 1 of 1

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Powered by PeakTrader 2.0.8 © 2001, 2002