Unsold Goods Piling Up As U.S. Spending Contracts
We're melting:
The economy shrank at an accelerating pace late last year, the government reported on Friday, adding to the urgency of a stimulus package capable of bringing the country back from a recession that has only deepened since then.
The actual decline in the gross domestic product — at a 3.8 percent annual rate — fell short of the 5 to 6 percent that most economists had expected for the fourth quarter. But that was because consumption collapsed so quickly that goods piled up in inventory, unsold but counted as part of the nation’s output.
“The drop in spending was so fast, so rapid, that production could not be cut fast enough,” said Nigel Gault, chief domestic economist at HIS Global Insight. "That is happening now, and the contraction in the current quarter, as a result, will probably exceed 5 percent."
The dismal result, and the likelihood of more of the same through the spring, are fueling discussion among policymakers and politicians over the best way to spend the soon-to-be-authorized federal money.
It's even worse than that. With the lack of people buying, the economy is contracting, so shipments to or from overseas aren't being made, which was a major component before WWII (although then it was because of protectionism.)
Diabolus est Deus Inversus
...because that would make sense during a worldwide depression.
It was both.
The World-Wide Depression created public demands for protecting local industries. Other countries would respond in kind, both to the move and their own public demands. The dwindling trade then worsened the conditions due to the Depression, making the parties increasingly hostile, and then further attempts at protectionism. So in effect these nations were warring with each other before the first trigger was even pulled.
Diabolus est Deus Inversus
It's looking far more like an impending Depression than merely a Recession:
http://www.bloomberg.com/apps/news?pid=newsar...
"The US has an army of 90,000 soldiers in Afghanistan and is spending $100bn a year, but has still been unable to defeat 20,000-25,000 Taliban who receive no pay at all." - Patrick Cockburn
As was suggested in an earlier thread.
Learn it, hate it, USE it.
"Parachutes are allowed in checked or carry-on baggage, but may not be worn in flight."
---Southwest Airlines
With these kinds of continuing contractions, this isn't a recesssion, it's a full blown depression.
The banks aren't going to make the situtation any better, unless they are compelled to under compulsion at law and regulation: they are not going to lend, no matter how flush they become with cash, because they are not going to obligate themselves to carry loans at the unprecedentedly low interest rates they would now have to offer; they will not hestitate to screw the nation over for the sake of profits. Funny how they won't hesitate to loan if the interest rates are high or usurious. That the FED hasn't noticed this is about what I'd expect.
It's time to nationalize the entire banking industry, including the Federal Reserve Corporation, and put the majority of bank officers and boards in prison. What they have done and are doing borders on sedition and treason...as economic acts of warfare against the nation.
not being used here while inventory piles up?
http://www.laht.com/article.asp?CategoryId=12...
in another thread here earlier today. It's very annoying isn't it?
"Thank you, American
taxpayerssuckers!""Parachutes are allowed in checked or carry-on baggage, but may not be worn in flight."
---Southwest Airlines
america - tin man > http://www.youtube.com/watch?v=GRXXSFRPZm8
Amended: http://www.youtube.com/watch?v=bcZGKvi5e0U
Study the symptoms not the virus...
Calculated Risk...he could have saved himself a whole lot of embarrassment when he publicly challenged Ali Velshi
http://calculatedrisk.blogspot.com/
the J.I.T. theory!
PS. ysb, beeehave, that's a [J]. :-)
Study the symptoms not the virus...
Oh, I thout it was another T.
What progeny results when the US has contractions?
http://www.youtube.com/watch?v=iO9z9LX_1zM
Diabolus est Deus Inversus
The thought is scary!
Study the symptoms not the virus...
........I know a great deal of the economic depression we are in/are about to experience is due to fraud, theft & greed.....but I think economists are not factoring in the Baby Boomers who have been conditioned by print, radio and television to be the consuming creatures that fueled our econimic growth for the last forty years.....I wonder if Boomers have looked around their homes, garages and remote storage facilities and said, "I have a lot of crap"! How much of the drop off is the fact that plenty of boomers are now frightened by the way they've lived their lives.....and now they fear their future more than they want to buy more crap....? I'm just saying, after the kids are up and gone, when Americans look around their houses.....how much of the shit that we purchased is now just sitting around.......like millions of Ginsu Knives and George Foreman Grills?
Economics is about emotion.....and they are not factoring in that variable,...especially if they think the economy is going to roar back in short order..
Regards,
O'Guillory
Although I would agree the economy spins on emotions, that's what caused bank runs in the past, it's usually brief, and this sort of sentiment at this time seems to corroborate gramm's we're "a nation of whiners" argument.
Diabolus est Deus Inversus
But then I took a second look, and perhaps you're talking demographic shifts; it's not so much accusatory of the "greed" of Baby Boomers, but the sheer size.
Diabolus est Deus Inversus
...yes, I think it is a demographic and societal shift...thus my point about "growing up". The greed part was more directed towards our corrupt government and financial thieves on Wall Street/Corporate Boardrooms......in fact I feel sorry for most Baby Boomers as they are not even aware of the degree to which they have been conditioned as consumers.....
Regards,
O'Guillory
I'm sick of finger pointing of those behind us in generations. One need only look at the influence of Generation X...those who came of age in the Reagan era, the birth of mad Greed.
how many of that generation went on to get MBA's or Marketing degrees, forgoing engineering and technical skills in favor the quick score on Wall St or Madison Ave.
We boomers tried to change the way America does business, but so many of our leaders were killed outright, assassinated by those in power, or imprisoned for a generation because of Nixon's war on drugs.
And check the rise of the Young Republicans too....these young brownshirts came of age under Reagan and Bush 1, this was generation X that turned their backs on what we started in the 60's.
I completely renounce your finger pointing as complete and baseless bullshit.
....gosh.......didn't mean to hit a personal hot button with you 'shorts........is it finger pointing to identify that different generations of hunanity are groomed and influenced by the society around them? The identification of one characteristic in a generation of society does not preclude more postive attributes as well......for example....I think Boomers beat their kids less than the parents of the "greatest generation"......so try to relax and lets talk.....
Regards,
O'Guillory
baby boomers are continuously singled out as the group that caused yours and others economic discomforts today, and one's own generation mayhaps, goes completely unexamined.
And when did it start taking duel incomes, too get by? As well, I share your frustration with same... Thanks for the time and effort, it's more then I cared to give.
Study the symptoms not the virus...
Dual incomes seemed to become the norm starting during the OPEC gas shortages of 1973.
Diabolus est Deus Inversus
any opinions on the cause?
Amended: That's is, besides the petroleum issue... :-)
Study the symptoms not the virus...
Wives had to go to work to afford the big-ticket items... plus, the almost-successful women's liberation movement convinced women that we SHOULD go to work, to be "our own person." Then the fact that our kids were bing raised on television and programmed into being perfect spending machines, i.e. Consumers, contributed to this mind-set as well.
"Courtesy is owed. Respect is earned. Love is given." --Unknown author, found in Guide to Texas Etiquette by Kinky Friedman
For everyone to get a piece of the pie, the pie had to be much bigger, which it never became. So wives in effect became job competitors with their husbands.
Kids being raised by television was more of an effect of Reagonomics when we first started hearing about latch-key kids.
Diabolus est Deus Inversus
that we were beginning to think of ourselves as consumers and not citizens.
It used to gall me to see the word "consumer" used in the place of citizen.
I would say that's about right.
The concept of citizenship unneccesarily went the way of the American Melting Pot (which during the 70's was called Fondue sets, for sale everywhere.)
Diabolus est Deus Inversus
Individual! :-)
Study the symptoms not the virus...
The noble concept of individualization, of each person being of value, paved the way to the baser Me Generation, of each person seeing themselves in an almost solipsistc light superceding all else.
Diabolus est Deus Inversus
tingling. :-O
Study the symptoms not the virus...
Now you know how my brain always feels:
http://www.youtube.com/watch?v=M68GeL8PafE
Diabolus est Deus Inversus
is threatened by U., their preparing too merge with AMD® :-P
Study the symptoms not the virus...
and opinion. I'm sure there is some accuracy in it.
Study the symptoms not the virus...
It's simple supply and demand, an unusually large population strata is born and has needs for every stage of life (not necessarily wants). Their quantity demand affects the quantity supply driving up prices for what remains, or spurring fabrication of new supplies. Now that their own kids are grown (or growing up,) and moving out, many will seek to simplify their lives, and reduce consumerism thusly, if for no other reason than they already have what they need. So, record sales numbers fall accordingly.
O'Guillory already set aside the greed, fraud and theft you're Alex P. Keaton's typified.
Diabolus est Deus Inversus
most responsible for the current state of the economy (and the state) are the ones who most hate the Sixties and wish they were living during the heyday of segregation and wage slavery.
back then. :-)
Study the symptoms not the virus...
They got their MBAs and Marketing degrees as those were the jobs that paid.
You have $20,000 to spend on college, do you learn:
Choice 1 - get a job that pays six digits average, millions at the top, in a major that is fairly easy. Jobs are plentiful in this field.
Choice 2 - be an engineer, it can be a hard major. Jobs are disapearing slowly in this field. Nice mid-five figures to start, but it will never go up much, unless you get an MBA and go into management.
What would you chose?
Read a very interesting Chinese editorial on this problem. They feel they need to start looking at caps themselves, fast, or they will lose the edge they currently have in high quality students going into engineering and hard science. Oh, just read, they have started.
IMHO, we cap executive and wall street pay too, or the Chinese will not only have the money and economy, but all the engineers to run high tech industry in the next generation too.
All the engineers I knew from school are either retired from engineering, or managers in a non-engineering fields. Yeah, I was an idiot to pick engineering.
.
Why worry about the economy when we still got this?
http://www.youtube.com/watch?v=jwhHmDy-t1Y&fe...
Diabolus est Deus Inversus
laughter is the best medicine?
Study the symptoms not the virus...
Binky, Bupkis, and Bonzo funeral homes.
Diabolus est Deus Inversus
digest that... hint hint
Study the symptoms not the virus...
http://www.youtube.com/watch?v=wCEfxBFu6q8
Diabolus est Deus Inversus
http://www.youtube.com/watch?v=7Nxu84Kv7DA
Study the symptoms not the virus...
If they are from China they can keep them.
Serves them right for trying to poison the doggies and kitties.
I guess this means there is all kinds of surplus..and you know what that means in a free market economy?
...low prices!!!! hooray!! ...maybe I'll finally get me an I-pod and one of those nice blackberrys! (not)
audit-prosecute-incarcerate
DEFLATION
And Krugman and CR have a lot to say about this phaze of economic contraction. It's more damaging than inflation. it's when REAL goods lose REAL value and signals the beginning of depression style. contraction.
Deflation is BAD
stagflation no treat either
I'd ask the does first.
Diabolus est Deus Inversus
air hose without getting poked by their antlers.
...even though I made absolutely no mention of "REAL GOODS" and was careful to just mention consumer "toys"...we have yet to see what "REAL GOODs" are gonna do as far as price goes...oil is creeping up though demand surely must be down...and food aint no cheaper yet. and I doubt it will be!
audit-prosecute-incarcerate
Not with world trade.
Diabolus est Deus Inversus
Wonder how many of those $200 tax cut addicted GOP dupes are still gonna vote repuke after the 2nd Great Depression (which already has started) is officially acknowlegded?
No job, don't need to worry about taxes! Maybe El Limpdick and Beck the imbecile can sell that one to the dupes to keep them happy?
Will probably work in Kansas, Oklahoma, and south of the Mason-Dixon.
If I were a psychopath, I would join the republican party, and get in on the gravy train taking the Teabircher morons to the cleaners.
What's going to happen when the $596 TRILLION in derivatives come due?
Go to the Village Voice and check out James Lieber's article UP IN SMOKE.
http://www.villagevoice.com/2009-01-28/news/w...
But there's more going on. Things are very likely to change radically... at the Summit going on in Davos right now, the politicians are in charge (for the first time) rather than the bankers.
Putin Speaks at Davos
The Wall Street Journal
(snip)
Excessive intervention in economic activity and blind faith in the state's
omnipotence is another possible mistake.
True, the state's increased role in times of crisis is a natural reaction to
market setbacks. Instead of streamlining market mechanisms, some are tempted to
expand state economic intervention to the greatest possible extent.
The concentration of surplus assets in the hands of the state is a negative
aspect of anti-crisis measures in virtually every nation.
In the 20th century, the Soviet Union made the state's role absolute. In the
long run, this made the Soviet economy totally uncompetitive. This lesson cost
us dearly. I am sure nobody wants to see it repeated.
Nor should we turn a blind eye to the fact that the spirit of free enterprise,
including the principle of personal responsibility of businesspeople, investors
and shareholders for their decisions, is being eroded in the last few months.
There is no reason to believe that we can achieve better results by shifting
responsibility onto the state.
And one more point: anti-crisis measures should not escalate into financial
populism and a refusal to implement responsible macroeconomic policies. The
unjustified swelling of the budgetary deficit and the accumulation of public
debts are just as destructive as adventurous stock-jobbing.
* * *
[Edited. 3-4 paragraphs plus a link ought to be enough-Sitemonitor]
"Courtesy is owed. Respect is earned. Love is given." --Unknown author, found in Guide to Texas Etiquette by Kinky Friedman
is in serious conflict in comparison to other sources.
VERY SERIOUS Conflict.
It should retract the article, it is very misleading.
One should research multiple sources on all forecasting.
The worldwide derivative market is $683 trillion according to Bloomberg here.
This number represents all types of derivatives.
The worldwide Credit Default Swap (CDS) market, aka Credit Derivatives is something on the order of $50 trillion, reported as $45 trillion in 2007 by Time here.
Reported as $50-$60 by CBS in the fall of 2008 here & here and the looming wave of mortgage defaults here.
Extant CDS on the US mortgage market is something like $30 trillion of which $15 trillion is offset and $15 trillion is not. (NY TImes) here.
The great concern is the scenario of continuing foreclosures and the $15 trillion or so in CDS that these will trigger.
The Grethchen Morgenson article is most important. It is absolutely unconscionable that the US taxpayer should pay out to those that essentially bet against the system.
Here is my recent post on who knew what.
There are numerous links for additional research.
statusquObama, change you can only pretend in
The short sell/short bet is inherently predatory.
is a market tool for exposing fraud.
Credit Default Swaps for the security holder were like insurance. For the speculator the CDS was a bet that those Mortgage backed securities would go bust. There was a huge amount of fraud in those securities. Top to bottom.
Those securities did go bust and the CDS came due. The CDS bet was predatory against the predators.
This supposed 'free market' that the deregulators wanted and got did not regulate these transactions. The guys selling the CDS were over leveraged and could not pay off the bets.
The outrage now is the taxpayer is picking up the bill. That is ironic except to the people who KNEW they could buy off the congress and get their money back.
THAT, is the greatest part of the crime and that IS predatory.
statusquObama, change you can only pretend in
on capitalism here.
Other voices of reason here.
The business cycle of capitalism: over produce, over consume, go bust. Start the cycle again.
statusquObama, change you can only pretend in
and hiring the FED to supposedly "fix" that natural cycle...almost 100 years ago has done nothing to "correct" that natural cycle so...
I say we fire em! ...hire a different bank and give em a printing press!
and put Burnbanke and Greenspam in jail!
audit-prosecute-incarcerate
We certainly haven't had the number of depressions they had in the 19th century, 1819, 1836, 1873 and 1893, and the Bank Panics without number, including the one in 1910 that started the Fed in 1913.
Diabolus est Deus Inversus
I haveta go look.
Study the symptoms not the virus...
Probably a bank run, not sure, but they were common enough, and could be caused by little more than a rumor. And what happened in 1910 could've been caused by what happened in 1907.
I sometimes wonder if larger banks started the rumors to stampede customers of smaller competitors so they could swoop in, buy the assets for a song, and be seen as saviors like Mr. Potter in It's a Wonderful Life.
Diabolus est Deus Inversus
that spurred the creation of the Fed.
Anti bucket shop state laws also occurred at the same time.
These were overturned at the Federal level by Phil Gramm et all in 1999 and 2000.
statusquObama, change you can only pretend in
that Phil Gramm, what a cracker! Thanx :-)
Study the symptoms not the virus...
Bye
George, I think your onto to something!Study the symptoms not the virus...
...the functions that we handed over to the Federal Reserve corporation could, and should, be just as easily handled by the US gov't.
has to increase, or we are seriously screwed as a nation.
Funny, isn't it, that putting 400% more compensation in a CEO's pocket than in his low-paid worker's pocket doesn't mean that the CEO spends 400% more than the worker?
It seems axiomatic: when wealth is spread more evenly across the entire population, then more goods get purchased because more people have the money to spend on the goods. Concentrating wealth hurts the economy.
Even if the stimulus package creates new jobs, if the jobs pay the same low wages that the majority of us make and that have flatlined since the '80s, how is this going to increase consumer spending significantly enough to solve the GDP problem?
400 Times?
The CEOs make 400 times the amount of the little guy. Maybe more.
400% is four times which is what it should be, max.
statusquObama, change you can only pretend in
I did mean 400 times. Thanks for catching that. I shouldn't write and seethe at the same time.
we are already screwed, and this incoming depression is it. Yes, income disparity is one of the two factors for the depression.
http://www.informationclearinghouse.info/arti...
and here 2008
http://wonkroom.thinkprogress.org/2008/03/17/...
Actually, Generation X hasn't even got to be in control yet.
This is a baby boomer mess, for the most part, deal with it.
or shut up.
Young republican's didn't even exist when I entered the work force in '81. Control means votes and donations...
http://en.wikipedia.org/wiki/Young_Republicans
Plenty of blame all around, tyler...you just don't want your share as the generation of greed.
at that specific time.
In this case it is the baby boomers.
I would love to see how many thirty-something president we have had in the past decade, or how many CEOs belonged to the generation-x...
See, baby boomers are quick about getting the credit for things like ending the vietnam war, the civil rights, etc. Things that happened when they were not in charge. But now that they are, well... now it is everybody's blame. Right?
And btw, college republicans are not a new thing. Both Hillary and Rove were college republicans back in the 70s.
Actually, I'm not convinced it is the baby boomers, I think it is still under the control of the holdouts from their parents generation...like Poppy Bush who use the Baby boomers as their proxies.Regardless, there is more than enough blame to go around for each generation, and more than enough cause for every generation to examine their own roles in contributing to the problems that we all must deal with.
Photo Gallery from Guardian UK Jan 16:
Growing stocks of unsold cars around the world
When will government of the people, by the politicians, for the corporations perish from this Earth?
Not soon enough!
I found the information I was seeking. There was a bank panic in 1907 starting in New York, and it gradually spread across the country, and was even delayed a little by the issuance of illegal loan certificates, which sounds strangely reminiscent of Schwarzenegger's IOU's.
http://www.youtube.com/watch?v=MESRnjsNEtA
Diabolus est Deus Inversus
and answering my aforementioned question, in greater specificity as well. :-)
Amended: Based on your commentary, I noticed a gentleman by the name of James G. Cannon and wonder if he may have been a lawman? :-) I might add, no I will add, your observations are remarkable. It's about time this grasshopper snubs the flame and retires for awhile with this waxing mind. I'll leave you with this...
http://www.youtube.com/watch?v=0DhnAnGd8PY :-P
Study the symptoms not the virus...
don't see him posting any more
It isn't the generational differences; it isn't a pile of junk nobody needs, its basic arithmetic. Our income has increased by 1% while our personal debt increased by 1000%. While there was seemingly cheap credit floating around, most of us borrowed our way out of the middle class and into the poverty ghetto, where people have a lot of stuff, but really own nothing.
We have to get out of a consumer economy and back to one based on manufacturing or technical superiority. We could practice the skills and the factory re-build when we work on the infrastructure, as long as we create an infrastructure that is based on 21 century engineering and not on the repair of 19 century structure, which seems to be the case right now. The opportunity to educate the country in real terms as opposed to the lame way we are training children and the older work force now is standing right in front of us; we need to kick out the politicians that are still kneeling to the past propagandistic image of what America was like, and start to see it for what it is now. We need to think of the control of work as a matter of control by labor and not by the executive suite cowboys. I don’t mean a workers state, but a country where the people tell the government what is going to be done, and not them telling us what will be done. We are running out of time.
DEFLATION
And Krugman and CR have a lot to say about this phaze of economic contraction. It's more damaging than inflation. it's when REAL goods lose REAL value and signals the beginning of depression style. contraction.
Deflation is BAD
---------
Deflation is the completion of the inflation/deflation cycle.
Inflation causes deflation. If deflation is bad, so is inflation.
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