19 Facts About the American Economic Collapse.

[antagon]

this is one of the issues with monetary vs fiscal economic policy. we are literally bankrolling china's thin-margin growth. this is not sustainable for either one of us, however, my bet is that china will falter first.

You keep saying that in many different ways, and yes indeed, that is what happened to Japan when they were in a similar position.

But China is NOT Japan. And China has not faltered yet. And our leadership did something about Japan (convinced them to depeg hastening their ruin) while we are not in any way doing anything about China.

If China gets enough foothold in the world's economy and develops enough military strength, they are gonna screw us like jailhouse bitches.

What everybody seems to forget is that the manufacturing giant is the one who ends up with all the new technological advantages. Manufacturing innovation and military innovation are the biggest two drivers of technological advancement.

to cast a china/japan comparison, we would have to wait another 7-10 years to see it play out. that is that chinese would have to come out here and buy up property en masse like the japanese, then have their faltering. this is my prediction with this saga in the short term.

ultimately, the basis of china's economy is not sustainable, while ours is. this is the makings of an inevitable recession, but one which i feel will not correct in favor of their current advantage. over the next 7-10 years, pressure will continue to be applied on their advantage, and i say lower demand from competitive sourcing and increasing losses in their thin/inverse margin model will be the cause of a long-winded correction there. i suggest that unlike japan, chinese wont take that with the same dignity, either.

 

[william the wie]

Antagon you are behind the curve. Japan took off about 1950 and crashed 40 years later while China took off in 1980 which is where you are right but you failed to factor in two things:

The current global recession is much more severe than the late 80s/early 90s which is putting greater pressure on China than what Japan was under when it broke.

The product life cycle has sped up. Therefore a shorter time period is needed for a crash.

Combined I would slice your prediction by at least half and probably more.

 

[editec]

19 Facts About the Horrific American Economic Collapse!

The deindustrialization of the United States should be a top concern for every man, woman and child in the country. But sadly, most Americans do not have any idea what is going on around them.

For people like that, take this article and print it out and hand it to them. Perhaps what they will read below will shock them badly enough to awaken them from their slumber.
19 Facts About The Deindustrialization Of America That Will Blow Your Mind - BlackListed News

The following are 19 facts about the deindustrialization of America that will blow your mind....

#1 The United States has lost approximately 42,400 factories since 2001. About 75 percent of those factories employed over 500 people when they were still in operation.

FREE TRADE is not free.

#2 Dell Inc., one of America’s largest manufacturers of computers, has announced plans to dramatically expand its operations in China with an investment of over $100 billion over the next decade.

The solution to this is obvious...tariffs

#3 Dell has announced that it will be closing its last large U.S. manufacturing facility in Winston-Salem, North Carolina in November. Approximately 900 jobs will be lost.

The solution to this is obvious...tariffs

#4 In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States? Zero.

The solution to this is obvious...tariffs

#5 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

The solution to this is obvious...tariffs

#6 As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.

The solution to this is obvious...tariffs

#7 The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.

The solution to this is obvious...tariffs

#8 According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30 percent to 10.1 million. During that exact same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.

The solution to this is obvious...tariffs

#9 In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.

The solution to this is obvious...tariffs

#10 Ford Motor Company recently announced the closure of a factory that produces the Ford Ranger in St. Paul, Minnesota. Approximately 750 good paying middle class jobs are going to be lost because making Ford Rangers in Minnesota does not fit in with Ford's new "global" manufacturing strategy.

The solution to this is obvious...tariffs

#11 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941.

The solution to this is obvious...tariffs

#12 In the United States today, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services.

The solution to this is obvious...tariffs

#13 The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000.

The solution to this is obvious...tariffs

#14 In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th.

The solution to this is obvious...invest in better broadban service

#15 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

The solution to this is obvious...tariffs

#16 Printed circuit boards are used in tens of thousands of different products. Asia now produces 84 percent of them worldwide.

The solution to this is obvious...tariffs

#17 The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.

The solution to this is obvious...tariffs

#18 One prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

The solution to this is obvious...tariffs

#19 The U.S. Census Bureau says that 43.6 million Americans are now living in poverty and according to them that is the highest number of poor Americans in the 51 years that records have been kept.

Did I mention that the solution to this deindustrialization is obvious?

IN case I didn't make my POV clear, I think the the solution is obvious ....tariffs.

 

[Douger]

free trade !!!!

 

[antagon]

Antagon you are behind the curve. Japan took off about 1950 and crashed 40 years later while China took off in 1980 which is where you are right but you failed to factor in two things:

The current global recession is much more severe than the late 80s/early 90s which is putting greater pressure on China than what Japan was under when it broke.

The product life cycle has sped up. Therefore a shorter time period is needed for a crash.

Combined I would slice your prediction by at least half and probably more.

i was calling it imminent several months ago, but now i think that other competition in asia will ultimately have to deal the knockout blow. domestic sourcing in the US could play a role, but whichever the case, these prospects will take longer to develop than a few months. china will have to exhaust more of the 'cheap' in their labor market before competition can move in.

they appear to have the potential to cover the pressure on industry because the US is so aggressive with our monetary policy. i see this playing into their hands in terms of liquidity. it does, however, pitch a whose pocket's deeper contest with regard to their peg policy, and that could be an imminent breaking point in itself.

 

[loosecannon]

to cast a china/japan comparison, we would have to wait another 7-10 years to see it play out. that is that chinese would have to come out here and buy up property en masse like the japanese, then have their faltering. this is my prediction with this saga in the short term.

ultimately, the basis of china's economy is not sustainable, while ours is. this is the makings of an inevitable recession, but one which i feel will not correct in favor of their current advantage. over the next 7-10 years, pressure will continue to be applied on their advantage, and i say lower demand from competitive sourcing and increasing losses in their thin/inverse margin model will be the cause of a long-winded correction there. i suggest that unlike japan, chinese wont take that with the same dignity, either.

OK, you will have to clarify these points if I am ever to really understand you fully.

When it comes to estimating economies I discount nearly all economic theory and modeling, rules of thumb etc and focus on two things: fundamentals and special circumstances. IOW I discount the abstractions and focus on real circumstances.

And economies managed or not, have astonishing capacity for rigging the game.

Right now we have rigged the game to our own extreme disadvantage speaking of our national economy, so a few elite players could reap record benefits.

If the special circumstances and fundamentals that exist today persist I can't foresee the scenario you propose.

In fact a paradigm shift would be required. Meanwhile China is busy crafting a paradigm shift that as best as I can see only strengthens their advantages over the US. While we do nothing.

one small example: Hong Cong is on the brink of denominating their entire stock exchange in Renminbi.

While that assists us in weakening our currency it also erodes the foundation of our twin deficits economy.

If anybody is on the brink of collapse it still looks to be the EU, Japan and the US. Not China. IMO.

 

[uscitizen]

The US has a sustainable economy?

If China goes belly up the majority of our retailers will have nothing to sell.

Many of our auto makers would not have needed parts to build cars.

around 1/4 of our materials for making prescription medicines would vanish.

 

[william the wie]

Antagon you are behind the curve. Japan took off about 1950 and crashed 40 years later while China took off in 1980 which is where you are right but you failed to factor in two things:

The current global recession is much more severe than the late 80s/early 90s which is putting greater pressure on China than what Japan was under when it broke.

The product life cycle has sped up. Therefore a shorter time period is needed for a crash.

Combined I would slice your prediction by at least half and probably more.

i was calling it imminent several months ago, but now i think that other competition in asia will ultimately have to deal the knockout blow. domestic sourcing in the US could play a role, but whichever the case, these prospects will take longer to develop than a few months. china will have to exhaust more of the 'cheap' in their labor market before competition can move in.

they appear to have the potential to cover the pressure on industry because the US is so aggressive with our monetary policy. i see this playing into their hands in terms of liquidity. it does, however, pitch a whose pocket's deeper contest with regard to their peg policy, and that could be an imminent breaking point in itself.

A definite point I missed but that too would argue for an earlier break possibly starting in Europe.

 

[loosecannon]

The US has a sustainable economy?

If China goes belly up the majority of our retailers will have nothing to sell.

Many of our auto makers would not have needed parts to build cars.

around 1/4 of our materials for making prescription medicines would vanish.

If China ended tomorrow we could resume making most of their products for ourselves at much higher prices, or other nations could pick up the slack. But the infrastructure and skills and organization involved in replacing their industrial complex are massive, and can not be replaced in months or even a few years.

IMO the entire world economy would be set back 10-50 years depending on what other social changes accompanied the sudden loss in manufacturing capacity.

 

[antagon]

OK, you will have to clarify these points if I am ever to really understand you fully.

When it comes to estimating economies I discount nearly all economic theory and modeling, rules of thumb etc and focus on two things: fundamentals and special circumstances. IOW I discount the abstractions and focus on real circumstances.

And economies managed or not, have astonishing capacity for rigging the game.

Right now we have rigged the game to our own extreme disadvantage speaking of our national economy, so a few elite players could reap record benefits.

If the special circumstances and fundamentals that exist today persist I can't foresee the scenario you propose.

In fact a paradigm shift would be required. Meanwhile China is busy crafting a paradigm shift that as best as I can see only strengthens their advantages over the US. While we do nothing.

one small example: Hong Cong is on the brink of denominating their entire stock exchange in Renminbi.

While that assists us in weakening our currency it also erodes the foundation of our twin deficits economy.

If anybody is on the brink of collapse it still looks to be the EU, Japan and the US. Not China. IMO.

the basis of china's economy is not sustainable -- china's economy is based on growth, mandatory growth, but not profit. as it's laid out, that growth is artificial and not sustainable.

while ours is -- this is not the case with the US economy. we have growth, but we have profit. we have sustainable compensation for our labor force, yet we dominate the rest of the world's economies.

pressure will continue to be applied on their advantage -- monetization puts a lot of pressure on china. they have to match our presses and stifle private sector access to cash in their industrial complex to sustain that peg. there is also international political pressure to loosen their monetary policy, and an increasing exodus of monied chinese investing abroad.

lower demand from competitive sourcing -- lower demand for chinese goods caused by other asian competitors. caused by domestic production in nations with the wherewithal like the US.

increasing losses in their thin/inverse margin mode -- businesses in china go bust and turn debt-finance to bad debt at rates which make our crisis look like a cake-walk. for businesses which rely too heavily on cash-flow and growth in a nation which centrally manages the distribution of credit along lines of cronyism, this is inevitable. such is the basis of chinese economics, macro and micro. inverse margin, taking cash-flow and growth for a net loss, is not uncommon. chinese goods are not cheap because they're cheap to make alone. they simply don't take profit margins at a sustainable rate.

because china's reserved by the rest of the world's fiat, i dont buy the idea that they're any further from the brink than those reserve currency issuers. what makes them worse off is the geopolitical implications of insular tender in a full-floating world.

 

[loosecannon]

OK. Tho I am quite sure China intends to increase it's business profit margins over time, but as their costs of living are much lower than ours they actually don't need the same profits we do to satisfy their increased living standards.

And China's primary purpose for operating on such slim margins is to achieve full employment.

Your reasoning is based on just one of many aspects to economic sustainability. Aggregate debt being another. Your position in world wage parity a third. Globalization practically insures that low wage regions and high wage regions will each be forced toward a mean.

Which puts the wind at China's back and in our face.

 

[AquaAthena]

19 Facts About the Horrific American Economic Collapse!

The deindustrialization of the United States should be a top concern for every man, woman and child in the country. But sadly, most Americans do not have any idea what is going on around them.

For people like that, take this article and print it out and hand it to them. Perhaps what they will read below will shock them badly enough to awaken them from their slumber.
19 Facts About The Deindustrialization Of America That Will Blow Your Mind - BlackListed News

The following are 19 facts about the deindustrialization of America that will blow your mind....

#1 The United States has lost approximately 42,400 factories since 2001. About 75 percent of those factories employed over 500 people when they were still in operation.

#2 Dell Inc., one of America’s largest manufacturers of computers, has announced plans to dramatically expand its operations in China with an investment of over $100 billion over the next decade.

#3 Dell has announced that it will be closing its last large U.S. manufacturing facility in Winston-Salem, North Carolina in November. Approximately 900 jobs will be lost.

#4 In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States? Zero.

#5 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

#6 As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.

#7 The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.

#8 According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30 percent to 10.1 million. During that exact same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.

#9 In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.

#10 Ford Motor Company recently announced the closure of a factory that produces the Ford Ranger in St. Paul, Minnesota. Approximately 750 good paying middle class jobs are going to be lost because making Ford Rangers in Minnesota does not fit in with Ford's new "global" manufacturing strategy.

#11 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941.

#12 In the United States today, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services.

#13 The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000.

#14 In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th.

#15 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

#16 Printed circuit boards are used in tens of thousands of different products. Asia now produces 84 percent of them worldwide.

#17 The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.

#18 One prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

#19 The U.S. Census Bureau says that 43.6 million Americans are now living in poverty and according to them that is the highest number of poor Americans in the 51 years that records have been kept.

Relative to the title of the OP, here are three more:

"The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do NOT see.: --Barney Frank---September 10th, 2003

"I want to roll the dice a little bit more in this situation towards subsidized housing."--Barney Frank---September 25th, 2003

"I believe there has been more alarm raised about potential unsafty and unsoundness [of Fannie Mae and Freddie Mac ] than, in fact, exists."--Barney Frank---September 25th, 2003

 

[antagon]

OK. Tho I am quite sure China intends to increase it's business profit margins over time, but as their costs of living are much lower than ours they actually don't need the same profits we do to satisfy their increased living standards.

And China's primary purpose for operating on such slim margins is to achieve full employment.

Your reasoning is based on just one of many aspects to economic sustainability. Aggregate debt being another. Your position in world wage parity a third.

increasing margins, wages and standards of living are natural responses to an economy in the hot seat china's in. they are pressing this into growth -- 'full employment' as you say. they're precipitating unrest with this artificial suppression. if they fail to deliver the growth, they'll get unrest too.

capitulating to the upward pressures on wages and standards will put them out of their advantage altogether.

Globalization practically insures that low wage regions and high wage regions will each be forced toward a mean.

Which puts the wind at China's back and in our face.

indications are that globalization will push production to the most cost-efficient source at the behest of the holders of consumption power. as we've seen here, it doesn't drag on wages, it just takes the jobs and runs somewhere else. with china under pressure to up wages and standards while maintaining growth, i'd say they're in a squall, not downwind force 3.

 

[loosecannon]

it (globalization) does put downward pressure on wages as is evident throughout the developed world for 2 years.

And China can afford to capitulate to increase wages 100% and still maintain a remarkably strong advantage against us, because as their manufacturing base matures their productivity increases as well. Most goods made in China and sold in the US are marked up 200-300% between wholesale and retail. All they have to do is streamline their distribution stream, capture American marketing, and they can retain that advantage indefinitely. Their long term plan has been to eventually install full vertical integration, controlling the retailing of their products abroad being the last step in that process. But with the internet they don't have far to go. They already are undermining most of the US former retail establishment replacing it with discount internet sales venues and wallmart.

And without massive support from the US, India has neither the work ethic, geopolitical power, educated workforce, business savvy or national IQ that China has. Nobody does. I can't see India undermining China unless we engineer it, and in fact we have been laying groundwork for just that.

 

[uscitizen]

when China buys WalMart.....

 

[loosecannon]

exactly, and they will when it finally falls on hard times or needs a few billion in financing.

China is buying PIIGS bonds and buying the euro for basically the same reason.

China has been supporting US debt in much the same way.

 

[uscitizen]

A somewhat captive and willing market.

What happens when you economy is 70+% consumer spending based.

 

[antagon]

it (globalization) does put downward pressure on wages as is evident throughout the developed world for 2 years.

And China can afford to capitulate to increase wages 100% and still maintain a remarkably strong advantage against us, because as their manufacturing base matures their productivity increases as well. Most goods made in China and sold in the US are marked up 200-300% between wholesale and retail. All they have to do is streamline their distribution stream, capture American marketing, and they can retain that advantage indefinitely. Their long term plan has been to eventually install full vertical integration, controlling the retailing of their products abroad being the last step in that process. But with the internet they don't have far to go. They already are undermining most of the US former retail establishment replacing it with discount internet sales venues and wallmart.

And without massive support from the US, India has neither the work ethic, geopolitical power, educated workforce, business savvy or national IQ that China has. Nobody does. I can't see India undermining China unless we engineer it, and in fact we have been laying groundwork for just that.

i see your downward pressure functioning to outsource jobs from one labor market to a cheaper one, rather than affect the equilibrium you're suggesting. i dont think it is so easy to back down wages. it is easy to puff them up if you have a profit margin and great cashflow, however, most chinese firms dont operate on such a model. there's very slim margins, debt-based finance and an onus to grow rather than profit-take. i think you are simply wrong if you think that china has no competition for production. to make a serious problem for china, i dont think india needs to come along and knock them out of contention entirely. india, indonesia, malaysia, the philippines, vietnam and korea could collectively inch in on the chinese advantage sufficient to pinch the already tight formula described above. any hiccup in growth and china is that much in recession. a cough, and that much more. the result will be deflationary there because their monetary policy also asks a lot of their largess, and teeters on the edges of sustainability right now.

in such an event of recession, do they have the ammo to maintain the peg? at the rate they have to date, it is fair to call their growth a growth bubble as it is. do you see a potential for slowing demand exacerbating economic conditions there, even before accounting for the unrest already rattling sabers in the industrial sector?

how would you characterize china's progress on this supply chain ascent you describe?

 

[loosecannon]

I would characterize China's progress in developing a vertical business organization capacity to serve 40% of our US consumer needs to be very considerable, perhaps 60% accomplished within 15 short years.

I could see something happening to abort China's growth. Like a trade war or a debasement war.

But I can't see the surrounding SE Asian nations being capable of competing with China. China is predatory and will find ways to undermine those efforts like empires always do. For one thing they can set up shop in those nations if labor costs ever do fall below their own. Meanwhile they can focus on products that require higher technology and skill, and pay better wages.

If Japan had a population 10 times as large, Japan would already be the world's superpower. Japanese are also very smart people. Hell if Israel had a population land and resource base 100 times as large they would be the world's superpower by now.

I don't discount that it is possible for events to enfold and prove you right. I just view China as being perfectly capable or engineering a rise to the top given their considerable advantages. Like having 5 times as many geniuses within their population as we do. And we manage our affairs so pitifully below our own ability that we are our own worst enemy.

I mean if we are not even gonna try to erect a nationalist effort to protect our economic power then how could we possibly prevail?

China has been starving for centuries and they are f-ing hungry!

 

[william the wie]

Back in the 90s when China still published accounting statemenbts what was astonishing was even then its economy was a zero plus cashflow model based on money creation. That was despite mandated forced savings in excess of 20% of GDP. A 25% reinvestment rate yielding a 10% income growthrate indicates really serious fragility problems. When China will crack is unknown that it will crack is known.