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The Economy, The Recession, Recovery and Roots
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PostPosted: Tue Aug 14, 2012 6:27 pm    Post subject:  Reply with quote

coebul wrote:
Bieramar I hate to tell you this but unemployment went up to 8.3% last month?  Unemployment isn't decreasing...

(1) As previously posted in this thread:
2008   2009   2010   2011   2012 (May)  
                  - Unemployment rate -
5.0%  7.8%   9.7%   9.1%   8.2%
   - Unemployment rate including parttime & discouraged -
9.2% 14.2% 16.7% 16.1% 14.8%
                - White unemployment -
4.4%  7.1%   8.7%   8.1%    7.4%
                - Black unemployment -
9.1% 12.7% 16.5% 15.7%  13.6%
              - Hispanic unemployment -
6.5% 10.0% 12.6% 12.0%  11.0%
       - Total private-sector jobs (millions) -
115.6  111.0  106.8  108.2  111.0
(2) As previously posted in the Unemployment thread in the July analysis:
172,000 private sector jobs were added in July.

An average of 151,000 private sector jobs have been added each month in 2012, compared to 153,000 added each month in 2011.

A net 168,000 more workers entered the workforce in July than left it.

(3) Previously posted in the Unemployment thread                                    ---------------
In February 2010 employers reported the smallest number of workers working since the recession as 129,244,000.  In July 2010 they report 133,245,000.  

In December 2009 households reported the smallest number working (legals, illegals, paid under-the-table) as 137,968,000.  In July 2012 they report 142,220,000 actually working.

As explained, cited and linked ad nauseum on the Unemployment (and other threads) the monthly nationwide unemployment rates are seasonally adjusted, and are based upon only those actively seeking work, i.e. the workforce.

IF the number of workers and the number of jobs remained exactly the same, but more people entered the workforce than left it, the unemployment rate increases, but the number of those unemployed hasn't changed at all.

The unemployed guy who wasn't looking for work in June, but then looked for work in July, was unemployed in both months, BUT only counted in the unemployment rate in July.[*]

Jobs are being added by the private sector, and more and more people are working each month. That the seasonally adjusted nationwide rate increased by 0.1% in July doesn't change that reality at all.

I post ALL the seasonally adjusted unemployment rates each month - including the underemployed, the parttime workers and the discouraged, and break them down into categories on the Unemployment thread. And I often post the raw numbers also, as I did in a separate post on the Unemployment thread this month.

If you choose to look at the 8.2% to 8.3% change and think/believe that it means that fewer people were employed, or that it means jobs were eliminated, you're simply wrong.

Jobs are being added in the private sector - both legal and illegal - and more workers are working at those jobs - that's the reality.

[*]Example of unemployment rate vs. number employed:

(1) A village has 1,000 residents.
- It has 600 jobs, all filled with 600 workers.
- 50 persons are looking for jobs.
- The remaining 350 persons are too old or too young to work, or disabled, or in school, or on vacation, or homemaking, or being "kept" by someone else (mistress, gigolo, unpaid servant, et al).

a. Workforce is 650.
b. Number of workers is 600.
c. Number of unemployed is 50.
d. Unemployment rate is 7.7% (50 divided by 650).

(2) Same village of 1,000 residents.
- Still has 600 jobs, all filled with 600 workers.
- 60 people are now looking for jobs, as they just graduated from school.
- The remaining 340 are still not looking for jobs, i.e., are not in the workforce.
a. Workforce is now 660.
b. Number of workers is still 600.
c. Number of unemployed is now 60.
d. Unemployment rate has jumped to 9.1% (60 divided by 660).

An huge jump in unemployment rate, BUT
- No change in the number of jobs,
- No change in the number of workers, and
- No change in the number employed.
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PostPosted: Fri Aug 31, 2012 3:53 pm    Post subject: Reply with quote

Who Really Changes The Economy?

By Marilyn Geewax  
National Public Radio
August 30, 2012

With Election Day drawing closer, each presidential candidate is pushing harder to make the case that he would be a better leader for the economy.

And voters are listening to the pitches. A recent Washington Post-ABC poll showed that nearly 3 in 4 Americans say the candidate's approach to the economy will be a "major factor" in deciding between President Obama and Gov. Mitt Romney.

But a clear-eyed look at past campaigns shows that presidential leadership is just one of many threads that can weave together a strong economy. Other factors - such as technological innovations, new business practices, shifts in other countries' politics, social changes and so much more - may shape the economy more than any president.

Consider this example: If you had to pick one figure from the 1970s whose ideas are having a major impact on your daily life today, would you pick President Jimmy Carter - or Apple co-founder Steve Jobs?

While presidential politics can get lots of attention from journalists, the factors that really end up reshaping our work lives may not get recognition until many years or even decades later.

Again, take that example of President Carter. In the 1980 election cycle, the Democratic incumbent was seeking votes to continue his fairly liberal economic policies. His opponent, Republican Ronald Reagan, wanted to make dramatic changes by cutting taxes, curbing union power and accelerating deregulation. Pundits predicted the voters' decision would be momentous.

At the time, the U.S. economy was in bad shape. The 1970s had been a period of slow growth, high inflation and intermittent energy crises. By early 1980, the economy was shrinking and the outlook was dismal.

Reagan won in a landslide and began implementing his tax-cutting policies [and his massive infusion of federal stimulus spending in the economy - deficit spending increasing the federal debt by $1.655 trillion over eight years, a 160% increase from $1.029 trillion to $2.684 trillion]. Many sectors of the economy improved and stock prices started shooting up. Unemployment declined.

So there you have it: The man who was elected president really mattered, no?

Well, yes, but at the same time, many technological and political forces were being unleashed too.

Their economic impacts would be immense, perhaps even more consequential than many of the big political decisions of the day

Just one example: In the late 1970s, Carter pushed to give control of the Panama Canal to the Panama government. Transfer of the U.S.-built shipping channel drew sharp criticism from Reagan. Journalists covered the debate heavily.

But reporters were paying relatively little attention to Sam Walton, a retailer from a small town in Arkansas. In 1980, he was laying the groundwork for a massive increase in the number of goods that would be shipped into the United States.

And few realized how dramatically the 1978 deregulation of the airline industry was starting to transform cargo shipping as the 1980s were beginning.

Today we can see that transportation deregulation "changed the whole economy," said Peter Belobaba, a principal researcher at the MIT International Center for Air Transportation. Greater efficiencies in air transport not only made just-in-time inventory deliveries possible at factories but also opened up leisure travel. That boosted Orlando, Fla., Las Vegas and many other cities, he said.

Here are 10 people who never ran for president, but whose efforts in 1980 were unleashing huge changes in the U.S. economy.


- Bill Gates. The computer software genius dropped out of college in 1975 to focus on building the company that he and co-founder Paul Allen called Micro-Soft (a blend of microcomputer and software). In November 1980, as reporters were focusing on the election, Gates was meeting with IBM. He offered to license software to IBM for the new personal computer. IBM agreed, and the geeky guy from Seattle was on his way to transforming the business world.

- Steve Jobs. In 1980, Apple Computer, started in Jobs' family garage in 1976, became a publicly traded company. Eventually, his company's devices, including smartphones and tablets, would launch a mobile revolution.

- Steve Case. In 1980, Case graduated from college and kicked off a career as an assistant brands manager for Procter & Gamble. Within a few years, he would use his marketing savvy to help convince Americans that they really needed a computer to communicate. The company he co-founded, AOL, got people to jump at the phrase, "You've got mail!"


- Alfred Kahn. Until the mid-1970s, Kahn was a Cornell University economist who knew almost nothing about flying. Then Carter chose him to serve as the chief architect of airline deregulation. Kahn's efforts in 1978 laid the groundwork for the subsequent deregulation of rail and truck transportation, utilities, telecommunications and financial markets. Those changes transformed much of the economy in the 1980s.

- Paul Volcker. In 1979, Carter appointed Volcker as chairman of the Federal Reserve, which sets monetary policy and regulates many banks. In 1980, both inflation and interest rates were running into the double digits. He used monetary policy tools to crack down on inflation and is widely credited with being the man who ended the combination of inflation and stagnation that characterized the 1970s.


- Sam Walton. By 1980, Walton was a very wealthy man with the fast-growing Wal-Mart chain. But what wasn't well-understood at the time was that he was not just adding stores but launching a "logistics revolution." He used 40-foot-long metal "intermodal" containers to move imports through ports, rail yards and warehouses. This push for efficiency and low-cost sourcing would drive down wages, as well as consumer prices.

- Sandra Day O'Connor. Female baby boomers were flooding the workplace by 1980, but few women wielded real power. Only one was serving in the Senate, and none had ever been on the Supreme Court. But O'Connor was working her way up, serving on the Arizona Court of Appeals. In 1981, Reagan appointed her to the Supreme Court. Suddenly, it became obvious to all of those boomer women in law school that glass ceilings were starting to shatter.


- Lech Walesa. In the summer of 1980, Walesa, a Polish shipyard electrician, co-founded Solidarity, the Soviet bloc's first independent trade union. He pushed relentlessly for greater political freedom and helped open up all of Eastern Europe to more democracy and capitalism. By 1983, he had won a Nobel Peace Prize, and he eventually saw the end of Communist rule in Eastern Europe. His efforts helped open up free-market reforms in developing countries and reshaped the European economy.

- Deng Xiaoping. As the 1980s were beginning, Deng Xiaoping was consolidating his power in China, serving as the huge nation's paramount leader. He opened China to foreign investments and global markets. He also allowed limited private economic competition within China. His policies are credited with transforming China from a closed and poor country into a global economic powerhouse.

- Ayatollah Khomeini. As the 1980s opened, the ayatollah was settling into his new role as supreme leader of Iran. He had been the leader of the Iranian Revolution in the late 1970s and now was in position to replace the country's leadership with a theocracy. His radicalism helped make the Middle East more unstable and violent. Worries about Iran have prompted businesses to become much more fuel-efficient to reduce dependence on oil from that region.

Today, as voters weigh the economic plans of Obama and Romney, who else should they be watching?
Who will really change the economy?
An energy entrepreneur?
A cancer researcher?

© 2012 National Public Radio.
Internet source:

Research into Connections and The Big Picture should always be included whenever we are faced with making decisions about whom we elect and appoint to make decisions in government at all levels - the decisions which form the matrix of trade and commerce regulations and taxes which govern "the economy" of us all.
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PostPosted: Wed Sep 05, 2012 4:56 pm    Post subject: Reply with quote

Key Economic Measurements - 2nd Quarter 2012

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.7% in the second quarter of 2012 (that is, from the first quarter to the second quarter), according to the Bureau of Economic Analysis.  In the first quarter, real GDP increased 2.0%.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.8%.  Excluding food and energy prices, the price index increased 1.4%.
- Real personal consumption expenditures increased 1.7%.
- Durable goods were unchanged.
- Nondurable goods increased 0.5%.
- Services increased 2.4%.

Real nonresidential fixed investment increased 4.2%.
- Nonresidential structures increased 2.8%
- Equipment and software increased 4.7%.

Real residential fixed investment increased 8.9%.

Real exports of goods and services increased 6.0%.
Real imports of goods and services increased 2.9%.

Real federal government consumption expenditures and gross investment decreased 0.1%.
- National defense decreased 0.1%.
- Nondefense decreased 0.3%.  

Real state and local government consumption expenditures and gross investment decreased 1.4%.

Private businesses increased inventories $49.9 billion, following increases of $56.9 billion in the first quarter.

Real final sales of domestic product -- GDP less change in private inventories -- increased 2.0%, compared with an increase of 2.4% in the first.
Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 1.4%, compared with an increase of 1.8% in the first.
Real gross national product -- the goods and services produced by the labor and property supplied by U.S. residents -- increased 2.2%, compared with an increase of 0.6% in the first.  

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 3.3%, or $127.8 billion, to a level of $15,606.1 billion.  In the first quarter, current-dollar GDP increased 4.2%, or $157.3 billion.

Real gross domestic income (GDI), which measures the output of the economy as the costs incurred and the incomes earned in the production of GDP, increased 0.6%, compared with an increase of 3.8% in the first.  
Profits before tax decreased $28.0 billion. Taxes on corporate income decreased $5.4 billion.

Profits after tax with inventory valuation and capital consumption adjustments increased $15.6 billion.
Dividends increased $20.9 billion. The rest-of-the-world component of profits increased $19.2 billion. This is (1) receipts by U.S. residents of earnings from their foreign affiliates plus dividends received by U.S. residents from unaffiliated foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreign parents plus dividends paid by U.S. corporations to unaffiliated foreign residents.  
Source, details, and more:


Much is being opined today in the media about the national debt[*] recently reaching 16 trillion dollars. I note that the total market value of the nation's output of goods and services is $15.6 trillion.

I also note that the 2nd quarter's output of goods and services is redistributed roughly 71% to employees, with 29% distributed to owners, including stockholders.  

As 70%+ of GDP is created by the demand of domestic purchasing of goods and services, and the economy remains stagnant/barely growing, it appears that the 71%-29% division of profits is insufficient to grow the economy and create new jobs.  

From 2001 (9/11 & tax cuts) to the end of 2007 (Recession) a combination of massive government spending for purchases of goods and services, and the cash/credit made available by inflated real estate values, provided the increased demand which fueled the growth of the economy. The loss of both of those sources of purchasing dollars must be replaced before the economy can again grow at a healthy pace and provide employment for all.

[*]Notes on the national debt of $16 trillion, and growing.

While obviously too much debt is disastrous if there is no income to repay it - plus interest - over time, the other side of the coin is that "Debt is the engine of Capitalism."

About $5 trillion of the U.S. debt is internal. Instead of the money collected and accumulated from wage earners for Social Security since the 1930s just sitting idle in a bank vault's Trust Fund (or computer memory) the U.S. General Fund has borrowed it to pay day-to-day expenses. To date the amount of S/S funds paid out to retirees has never exceeded the money collected, but at some point in the future, as Boomers live longer, the $5 trillion will need to be repaid from the Debt into the Trust Fund.  

Another $1 trillion+ of the U.S. debt is owned by U.S. individuals, and the interest received by them is spent or invested in the U.S. economy, i.e. part of the "engine" of the purchase of goods and services.  

$2 trillion+ is owned by U.S. insurance companies, private retirement funds and mutual funds, and state and city governments. Those monies are also recycled and redistributed throughout the U.S. economy.

The U.S. Federal Reserve also owns several trillion dollars, as it purchases the debt in bulk in order to manipulate money supply and interest rates.

Finally, about $5 trillion of the U.S. debt is owned by foreign investors and national central banks - so not quite 1/3rd of the $16 trillion debt directly grows non-U.S. economies.  However even there the money is often used in purchasing our export goods. For example China owns $1.16 trillion and Japan owns $1.12 trillion of our debt, with the central banks in most other of our major trading partners owning the remaining $2+ trillion.
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PostPosted: Wed Sep 05, 2012 5:23 pm    Post subject: Reply with quote

You've just about run out of lipstick and you've still got the same damned pig, Bier.  Very Happy

"The urge to save humanity is almost always a false front for the urge to rule."
H. L. Mencken
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PostPosted: Fri Sep 07, 2012 5:09 pm    Post subject: Reply with quote

Michael Moore: No Obama Didn't Save Detroit

For several years the left and their media minions have claimed that by bailing out Chrysler and General Motors, President Obama saved Detroit.

On Friday, the perilously liberal schlockumentarian Michael Moore debunked this in an article at the Huffington Post astonishingly saying, "No, he didn't."

"Last week, I said on the HuffPost Live webcast that we had all better start practicing how to say 'President Romney' because, living in Michigan, I can tell you that there's trouble here on the two peninsulas and it's not just because Romney is a native son or that we like to watch kids from Cranbrook chase down gay kids and chop their hair off," Moore wrote. "One recent poll here showed Romney leading Obama by four points! How can that be? Didn't Obama save Detroit?"

Moore answered his own question, "No, he didn't. He saved General Motors and Chrysler."

"'Detroit' (and Flint and Pontiac and Saginaw)," continued Moore, "are not defined by the global corporations who suck our towns dry and then split town to make more money elsewhere (except, of course, they continued to design and built crap cars, so eventually they didn't make the money at all). These cities in Michigan are about the people who live here, and in the process of 'saving Detroit,' Mr. Obama had to fire thousands of these people, and reduce the benefits and pensions of those who were left."

Inconvenient truths the Obama-loving media don't want the public to know. But Moore wasn't finished.

"There's a lot of pissed off people in Michigan (and Wisconsin and Ohio), people who weren't saved even though the corporation was. I'm just stating a fact, and those of you who don't live here should know this."

Actually, those that don't live in these areas would know this if America had an honest media.

Sadly, we don't leading to almost unthinkable ignorance about such matters and many other crucial issues facing the nation.

How extraordinary that an avowed Obama supporter would be willing to let this cat out of the bag two months before Election Day.

If only the rest of the so-called journalists out there would follow suit.

Don't hold your breath.


"The urge to save humanity is almost always a false front for the urge to rule."
H. L. Mencken
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PostPosted: Fri Sep 07, 2012 6:24 pm    Post subject: Reply with quote

Experts warn of 'perfect storm' for global economy

Associated Press 
August 7, 2012

CERNOBBIO, Italy (AP) - Experts and leaders gathered in Italy may disagree on the cure, but the malady seems clear: the world economy faces a "perfect storm" of risks that include prolonged crisis in a structurally flawed Europe, political paralysis pushing America off a "fiscal cliff," a slowdown in the emerging economies drying up the last of global growth, and the spectacularly destabilizing prospect of war over Iran's nuclear program.

A world of such unpredictable peril is also one in which jitters suppress the appetite for private and corporate risk, yielding meager investment and low consumption and prolonging the woes that snuck up on a booming world in the summer of 2007 as a "credit crunch", mushrooming a year later into the Great Recession.

Many attendees at the annual Ambrosetti Forum at Lake Como on Friday fretted about mounting U.S. debt and the Europe's inability to balance electorates' apparent insistence on national sovereignty with the need for regional coherence to salvage the teetering euro.

But economist Nouriel Roubini predicted years of gloom almost regardless of what is decided.

That analysis is rooted in the specific nature of this crisis, a downward spiral in which a financial meltdown largely caused by excess credit was defused by a blast of public spending; that 2009 stimulus, widely credited with avoiding a global depression, pushed some governments too far into the red for the markets' liking - a "sovereign debt crisis"; and this is turn was attacked through severe austerity measures that suppressed spending to the point that countries cannot grow their way back to prosperity.

"History suggests that whenever (there is) a crisis with too much private debt first and public debt second you have a painful process of deleveraging," said the famously apocalyptic New York University professor, a glowering fixture at such international talk-shops.

"That would imply many years, up to a decade, of low economic growth. And guess what? Economic recovery in the U.S. has been unending and in the eurozone and U.K. there's outright economic contraction right now, and that's not going to change unfortunately in the next few years."

The grim prognosis was consistent with new figures released a day earlier by the OECD, a club of the world's richest nations. Its report found that the global economy is slowing and that the G7 economies would grow at an annualized rate of just 0.3 percent in the third quarter of 2012.

Furthermore, the OECD found, the continuing eurozone crisis "is dampening global confidence, weakening trade and employment and slowing economic growth" worldwide.

How to fix the eurozone, then? The different views are familiar.

Ali Babican, Turkey's deputy prime minister for economic and financial affairs, bemoaned the lack of a sense of common European interest - alluding to the lack of sympathy in places like Germany for the woes of an economically hammered eurozone colleague like Greece.

Other speakers focused on structural problems such as the "Balkanization" of Europe's banking system, which lacks a central guarantor like America's FDIC.

Increasingly popular is the argument that it is fundamentally illogical to allow a country to blunder into massive debt if it doesn't have the monetary tools to diminish its debt - lacking a currency to devalue.

Roubini said that the only solution was to extend the euro's monetary union in the direction of a banking, fiscal or even political union, at least to the point of having a single eurozone finance minister empowered to veto individual countries' budgets for exceeding a given deficit limit.
"Today the eurozone is disintegrating. ... either move forward or you're going to fall off a cliff."

That rankled former Spanish Prime Minister Jose Maria Aznar, who declaimed the idea of "a United States of Europe" as counter to the psychology and history of the region.

"The history of Europe is a history of states," said Aznar, who led Spain from 1996 to 2004, a period of tremendous growth that seems an epoch away. "We must restrict this and not create another thing that does not work."

Better, he said quietly, was to ensure that countries take the "right decisions."

Some applied that label to one decision this week, a bond-buying plan from the European Central Bank that continued to lift financial markets on Friday.

But others noted that the offer by ECB president Mario Draghi is highly conditioned.

"The decision by the ECB is extremely important but ... the ECB is only one instrument (and) if governments do not do their part the ECB will not be able to succeed," said JPMorgan Chase International chairman Jocob Frenkel.

It was easier to find common ground on the question of the United States - with great concerns that country is headed toward another debt-ceiling crisis because regardless of the presidential election outcome Democrats and Republicans cannot agree on how to close a deficit that is digging an ever deeper debt hole.

"The largest economy of the world cannot continue this way without doing any kind of predictability about what is going to happen," said Babican. "We don't know much about the budget of 2012 and we don't know what kind of fiscal policy there will be in 2013. A fiscal cliff is coming."

Also clouding the atmosphere was the slowdown in emerging nations - including China, despite growth there that remains far higher than in the West.

"Seven percent growth may seem high, but for China, which had double-digit growth for 20 years, it really means bad news," said Li Cheng, a China expert from the Brookings Institute. He said there was risk of millions of layoffs which could spark "the largest crisis in (Communist China's) history because it may cause revolution."

The final element of what Roubini described as the "global perfect storm" is the possibility of an attack by Israel or the United States on Iran because "it's clear that negotiations have failed" on stopping Iran's nuclear ambitions. "The last thing the world needs given its fragility is another war in the Middle East and a spike in oil prices," Roubini said.

Israeli President Shimon Peres declined to address the Iran issue but sounded a philosophically optimistic note, suggesting that from his perspective at age 89, crises come and crises go. "Today what we call crisis is more of a profound change that we were not organized to meet properly," he said.

His solution was somewhat deflating to the audience, a graying crowd visibly given to collecting bulky stacks of paper: Hand things over to a younger generation - global, digital, and largely "not so impressed."

"They are better educated, better built, and more up to date."
©The Associated Press

Once again I find myself siding with President Peres (last three paragraphs).

The 20th century obsolescing white-, gray-, and blue-haired/brained "movers and shakers" who determine the policies and activities in the financial world - which is the "bottom line" of all the citizens of the world - are taking their last gasps in a desperate attempt to retain the economic nation-state/economic policies which have failed to provide security and opportunity for all since the end of WWII.

As the younger Boomers, Gen-Xers and Millennials assume the reins of power they will create and implement a new mixed-capitalist theory and action plan for the 21st century.

And only then, finally, the dream of the American Founders - and of the majority of the Framers of the U.S. Constitution - that all persons experience their unalienable rights and equal opportunities to enjoy life and liberty, and an equal opportunity to live securely and strive for economic happiness, will be achieved.
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PostPosted: Mon Sep 10, 2012 6:19 pm    Post subject: Reply with quote

Another Dismal Assessment of Obamanomics: United States Drops to 7th in WEF’s Global Competitiveness Index

Posted by Daniel J. Mitchell

Every year, I look forward to the annual releases of both Economic Freedom of the World and the Index of Economic Freedom. With their comprehensive rankings, these two publications enable interested parties to compare nations and see which countries are moving in the right direction.

As an American, I’m ashamed to say that these publications also show which nations are moving in the wrong direction. And the United States ranks poorly by this metric, having dropped from 3rd place to 10th place since 2000 according to Economic Freedom of the World.

The United States also has dropped to 10th place in the Index of Economic Freedom, and is now ranked only as a “mostly free” nation.

Some people dismiss these pieces of data because the two rankings are considered to reflect a pro-free market bias.

But the folks at the World Economic Forum surely can’t be pigeonholed as a bunch of small-government libertarians, and the WEF’s Global Competitiveness Report shows the same trend.

The United States took the top spot in the WEF’s Global Competitiveness Index as recently as 2007 and 2008, but then dropped to 2nd place in 2009.

I think Bush bears the full blame for that unfortunate development. But the decline has continued in recent years, and Obama deserves a good part of the blame for the drop to 4th place in 2010.

The United States then fell to 5th place last year, in part because of horrible scores for “Wastefulness of Government Spending” (68th place) and “Burden of Government Regulation” (49th place).

Given this dismal trend, I opened the just-released 2012 Report with considerable trepidation. And my fears were justified. The United States has now dropped to 7th place.

Here is some of what was said about America.

   The United States continues the decline that began a few years ago, falling two more positions to take 7th place this year. Although many structural features continue to make its economy extremely productive, a number of escalating and unaddressed weaknesses have lowered the US ranking in recent years. …some weaknesses in particular areas have deepened since past assessments. The business community continues to be critical toward public and private institutions (41st). In particular, its trust in politicians is not strong (54th), perhaps not surprising in light of recent political disputes that threaten to push the country back into recession through automatic spending cuts. Business leaders also remain concerned about the government’s ability to maintain arms-length relationships with the private sector (59th), and consider that the government spends its resources relatively wastefully (76th). A lack of macroeconomic stability continues to be the country’s greatest area of weakness (111th, down from 90th last year).

For people who like to look at the glass as being 1/10th full, the United States does beat Portugal (116ht place) in the score for macroeconomic stability.

Here are a few additional highlights. Or lowlights might be a better word.

  1. The United States scores 42nd in property rights, behind Namibia and Uruguay.
  2. The United States ranks 59th in government favoritism, behind Guinea and Bolivia.
  3. The United States scores 76th in wastefulness in government spending, behind Mali and Nicaragua.
  4. The United States also is 76th in the burden of government regulation, behind Kenya and Thailand.
  5. The United States scores 69th in extent of taxation, behind Gambia and Ethiopia.
  6. The United States ranks 103rd for total tax rate, behind Greece (!) and Philippines.

Now time for some caveats. The WEF report is based on survey results, for better or worse, and it also probably is best characterized as a measure of the attitudes of the business community rather than an estimate of economic freedom.

Regardless of limitations, though, it is a good publication. As such, it is downright embarrassing to see the United States fare so poorly in key indices—particularly when third-world nations score better.

We know that small government and free markets are the keys to prosperity. Bush took us in the wrong direction, however, and Obama is repeating his mistakes.

So don’t be surprised to see the American score decline further as additional reports are issued.

"The American Republic will endure, until politicians realize they can bribe the people with their own money." -- Alexis de Tocqueville
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PostPosted: Mon Oct 08, 2012 6:41 pm    Post subject: Reply with quote

Earnings Growth Disappears as Spending Cuts Hit Limit

By Chris Burritt

Profit gains earned through job cuts and factory closings in the absence of a global economic recovery are starting to reach their limit.

Third-quarter profits and sales for the Standard & Poor's 500 Index probably fell in unison for the first time in three years, according to analysts' estimates compiled by Bloomberg. Per-share earnings may have dropped 1.7 percent on average after they were little changed in the second quarter. Sales may have slipped 0.6 percent, the data show.

While most companies plan to keep a lid on spending, lower expenses aren't leading to the same kinds of increases they reported earlier this year.

Hewlett-Packard Co., the world's largest personal-computer maker, already forecast full-year profit that trailed analysts' estimates, FedEx Corp. cut its annual earnings forecast and Intel Corp. projected lower third- quarter sales, with all three citing softening demand.

"A lot of the earnings growth that we've seen has been related to cost reductions," said Peter Jankovskis, co-chief investment officer for Oakbrook Investments in Lisle, Illinois, which manages more than $3 billion. "Now many of those cost reduction efforts have run their course. Without revenue growth, there is no room for profit to expand further."

Alcoa Inc., the largest U.S. aluminum maker, kicks off the third-quarter earnings season tomorrow and is projected by analysts to report a 13 percent drop in sales, the biggest drop in three years, on plunging prices for the commodity. That may wipe out per-share earnings, according to estimates.

Further Cuts

The earnings season "may be rather ugly," based on early reports so far, according to Gina Martin Adams, a New York-based strategist at Wells Fargo & Co.

"While recession in the U.S. is not necessarily imminent, earnings are weakening fairly quickly,"¯ Adams wrote today in a note. For the fourth quarter, companies may struggle to match analysts" estimates as data indicates U.S. growth is stabilizing at a "depressed"¯ pace, she said.

The U.S. economic slowdown, coupled with a worsening environment abroad, is leading more companies to consider further job and spending cuts. A Business Roundtable survey last month showed 34 percent of U.S. chief executive officers anticipate they will have fewer domestic employees in the next six months.

That's up from 20 percent when the survey was conducted last quarter.

The gloomier outlook reflects "global demand flattening out, particularly in Europe and China," Jim McNerney, CEO of Boeing Co. and Business Roundtable chairman, said on a Sept. 26 conference call.

CEOs in the survey also projected U.S. gross domestic product will expand 1.9 percent this year, down from a projection for 2.1 percent growth three months ago.

Generally Tough

"The general economy is tough,"¯ William Lynch, CEO of Barnes & Noble Inc., said in a Sept. 25 interview. The largest U.S. bookstore chain released its Nook HD+ tablet computer the next day at a starting price of $269, about half the cost of the entry model of Apple Inc.'s newest iPad at $499. "We've made the pricing decisions on these devices accordingly,"¯ he said.

The S&P 500 is also on course for its best annual performance since 2009 after gaining 16 percent so far this year.

Lowering Forecasts

Still, companies may use third-quarter conference calls to trim profit forecasts for the rest of the year, according to Tobias Levkovich, an equity strategist at Citigroup Inc. in New York. Uncertainty over the presidential election and automatic deficit cuts that could go into effect starting in January may contribute to a lack of management confidence, he said.

Concern about the economy should make CEOs "reluctant to overpromise much for the next several months,"¯ Levkovich said in a Sept. 28 research note.

FedEx, the Memphis, Tennessee-based company viewed as an economic barometer because of its global shipments, plans to unveil specifics of a cost-reduction plan at an investor meeting this week after saying in August it will offer workers voluntary buyouts.

Hewlett-Packard, based in Palo Alto, California, has announced plans to cut 29,000 jobs by the end of fiscal 2014 to save as much as $3.5 billion a year.

"Not Dynamic"

U.S. companies dependent on overseas revenue were probably among the hardest hit in the third quarter. General Motors Co., the world's largest automaker, may report adjusted per-share earnings tumbled 42 percent with falling demand and price cuts in Europe trimming revenue 1.9 percent to $36 billion.

Tiffany & Co., the world's second-largest luxury jewelry retailer, cut its annual profit forecast in August for a second time this fiscal year. The New York-based company projects sales will rise as little as 6 percent, a third the pace of 2011.

"Revenue growth has matured,"¯ said Stanley Nabi, vice chairman and chief strategist for Silvercrest Asset Management Group in New York, which manages more than $11 billion. "The U.S. is not dynamic. Europe is headed south. Growth in many of the developing economies -- China, India, Brazil and others -- are decelerating. If you put all of these together, you come to the conclusion that heaven is not forever."¯

The euro area's economic slump is deepening, with at least five of the region's 17 nations already in recession. Last month, economic confidence unexpectedly dropped, service industries shrank and a gauge of manufacturing by Markit Economics showed contraction in that sector as well.

"Significant Weight"

"Europe is a very significant weight on revenue"¯ for U.S. companies, said Mark Zandi, chief economist at Moody's Analytics in West Chester, Pennsylvania. "The fallout from the European debt crisis is starting to hit sales and profitability more broadly."¯

Nike Inc., the world's largest maker of sporting-goods, reported on Sept. 27 that its Western European sales tumbled 5 percent in the three months ended Aug. 31 while sinking demand in China put pressure on future orders. Adjusted quarterly per-share profit for Procter & Gamble Co., the biggest consumer- products company, may have slipped 7 percent on sales of $20.7 billion, a decline of 5.5 percent from a year earlier, according to the average estimate of analysts.

In Europe, members of the Dow Jones Stoxx 600 Index are projected to boost profit 1.7 percent this fiscal year, almost a quarter of what analysts anticipated three months earlier, based on data compiled by Bloomberg.

Porsche, Vitamins

Heerlen, Netherlands-based Royal DSM NV, the world's largest maker of vitamins, announced in August it will cut 1,000 jobs as it works to meet profit goals. Porsche SE, the Stuttgart-based maker of the 911 sports car, said last month it will increase production next year by less than it had earlier projected because of the deteriorating economy.

Earnings at U.S. energy producers may have been among the hardest hit in the third quarter, falling an estimated 25 percent after prices for natural gas and some related liquids tumbled from a year earlier. The drop threatens to drag down the rest of the S&P 500, already under pressure globally.

"There is softness everywhere so it's going to be hard for corporate profit growth to pick up again until we see stronger growth domestically and abroad," said Jeremy Lawson, senior U.S. economist at BNP Paribas SA in New York. "That may not happen until we get into 2013."¯

I realize that in some bizarro simultaneously occuring alternate reality where many "conservatives" imagine they live, Romney as CEO of the US could wave a magic wand of "leadership" and the economy of the world would immediately begin to grow and bring prosperity to all.  

But in the real world it ain't gonna to happen!

The financial mixed capitalism matrix established at Bretton Woods at the end of WWII has reached its zenith and is on the verge of toppling completely as the weight of accumulated "commercial paper" debt overwhelms the true value of goods and services.

A seachange in the values of goods and services and a continuing flow of wealth to purchasers must occur, or the streets of every nation will fill with the disgruntled unemployed middle and poor classes.

The belief - and personal justification for greed - that owners and investors are "entitled" to more of the profits of labor and property than the workers who create the new wealth are entitled to, has gradually sucked dry the purchasing power of the working middle class and poor.  

No money to buy means no increased demand, which in turn means no need for increased supply, and no need to create new jobs.  It is a simple syllogism and the root premise of all economic systems of supply and demand - including capitalism - since the beginning of recorded history.

Only when enough of the profits are redistributed to the purchasers of goods and services will a healthy and growing economy exist.  The quickest and easiest method of accomplishing this is via the payment of wages to workers.
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PostPosted: Thu Oct 11, 2012 5:53 pm    Post subject: Reply with quote

----- exports excerpt -----

American exporters are reasonably successful on the global stage, selling overseas everything from soybeans to jet aircraft, banking services to Disneyland vacations. Last year, U.S. exports totaled $2.1 trillion, a 14 percent rise from 2010.

That activity accounted for many millions of jobs and about 14 percent of the nation's economic output.

If the world economy is going to come into better balance, with fewer vast sums of money sloshing around the globe fueling bubbles like the ones that imploded disastrously in 2008, it will be in part by getting that number up over time, and there has been progress. For the first eight months of the year as a whole, there was meaningful progress. That slowed in the summer, and the question is how lasting the downturn will be.

Looking at the inner details of the latest export numbers - what American goods and services are being bought internationally and where - gives a sense of both optimism at the nation's often understated advantages, and reasons to worry about the near-term.

Strong growth is evident in a number of categories of exports, particularly of sophisticated, complicated manufactured goods. Civilian aircraft exports are up 38 percent in the first eight months of 2012; telecommunications equipment up 7 percent; drilling and oilfield equipment up 24 percent; agricultural equipment up 23 percent; pharmaceuticals up 7 percent.

Some of the big losers among U.S. exports appear to be one-time problems tied to the drought in the American heartland: Wheat exports were down 34 percent and corn exports down 22 percent.

There was solid progress in that time span in exports to China, America's longstanding frenemy in economic relations. Through the first eight months of the year, exports to China were up 5.9 percent, which is roughly as fast as that nation's economy appears to be growing. In other words, Chinese purchases of American-made goods and services is growing, though not relative to its overall economy.

But all these trends look better over the January-through-August period than they do when looking more narrowly at the last few months. August to August, growth in exports to China was only 2.2 percent. Indeed, as the country tries to pivot toward a more consumer-oriented economy and away from investment, its demand for the heavy equipment that America makes to pave roads and build factories could come under further pressure.

And the same is true of the euro zone and its depressed economy. Over the first eight months of the year, U.S. exports to the 17 E.U. nations using the euro currency was up 1.2 percent. August to August, it was down 3.5 percent, reflecting both a European economy that has slowed as the year has progressed and a drop in the euro against the dollar that made U.S.-manufactured goods less competitive.

The result of those slowdowns in China and Europe is a slump in demand for some of the very products that the United States excels at making. Civilian aircraft, for example, after rising at a 38 percent rate through the first eight months of the year, was up only 1.1 percent in August compared to July. Pharmaceutical exports actually turned negative, falling 11 percent in August alone.

The question for U.S. exports - and the global rebalancing overall - is whether the downturns in China and Europe will be short lived enough that the longer, more optimistic trend can take hold once again.
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PostPosted: Fri Oct 26, 2012 4:06 pm    Post subject: Reply with quote

Excerpts of 3rd Quarter GDP changes:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.0% in the third quarter of 2012 (that is, from the second quarter to the third quarter), according to the estimate released by the Bureau of Economic Analysis.  In the second quarter, real GDP increased 1.3%.

     The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), federal government spending, and residential fixed investment.

     The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.5%.

     Real personal consumption expenditures increased 2.0%.

     Durable goods increased 8.5%.                
     Nondurable goods increased 2.4%.            
     Services increased 0.8%

     Real nonresidential fixed investment decreased 1.3%.
     Real residential fixed investment increased 14.4%.

     National defense increased 13.0%.

     Nondefense increased 3.0%.

     Farm inventories subtracted 0.42%.        
     Nonfarm inventories added 0.30%.
     Real final sales of domestic product -- GDP less change in private inventories -- increased 2.1%.

     Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 2.1%.

     Current-dollar personal income increased $89.3 billion (2.7%).

     Personal current taxes increased $13.2 billion.

     Disposable personal income increased $76.1 billion (2.6%).
     Real disposable personal income increased 0.8%.

     Personal outlays increased $111.4 billion (4.0%).
     Personal saving -- disposable personal income less personal outlays -- was $445.0 billion in the third quarter (3.7%).

     Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 5.0%, or $190.1 billion, to a level of $15,775.7 billion.  

NOTES.  Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified.  Quarter-to-quarter dollar changes are differences between these published estimates.  Percent changes are calculated from unrounded data and are annualized.  "Real" estimates are in chained (2005) dollars.  Price indexes are chain-type measures.
Complete report: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm


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