And Now We're Headed For The GREATEST Depression

[LegendKiller]

Not sure why anybody listens to this fool. His "predictions" are numerous, almost always wrong, and are revised after the fact to make himself seem "smart".

Any doof can make 1,000,000 predictions, have 999,999 of them turn out wrong, revise his past predictions so that they are hazy, and then say "AHA, I WAS RIGHT!".

This is similar to Denninger who predicted a "currency devaluation" in 2008/09 and then went on to predict the fall of the US society in the fall of 09.

As far as "corporatism", sorry, but corporations employ people and that will always happen.

 

[classy]

Very good video on yahoo today. Not sure I agree with everything he is saying, but the general idea I do agree with.



I have been saying this for a long time. Big corporations are what is ruining our country. These corporations are the ones driving off-shoring and other behavior that has crippled the poor and middle class workers.

And Now We're Headed For The GREATEST Depression, Says Gerald Celente

There is absolutely zero credibility to anything he just said. Profits are up and many companies have revamped and stabilized. As soon as the consumer stops worrying about spending 1 dollar, employment will go down and the face of a healthy economy will be seen. The body is getting better, but the face, the consumer is still lagging. This whole doom and gloom has zero evidence. Employment has been spiking for months now, but hasn't come crushing down.

 

[gregulator]

I know it is easy to point fingers at our government and big corporations, but the consumers have to point some fingers back at themselves. By demanding cheap disposable goods at one stop shops, we have basically created these large companies that will do anything to cheapen goods and maximize profits. No longer do we have very specialized companies creating quality products that last. If we do, they get bought up by larger corporations; the product is cheapened, and employees are let go. If consumers demanded higher quality, longer lasting, made in the USA products, and then bought them from smaller specialty shops, then we might have a different story. We might not have as many products as we all own now, but we would have better products that we would maintain for longer (and more green too, yay)!

Thoughts?

 

[jackace]

There is absolutely zero credibility to anything he just said. Profits are up and many companies have revamped and stabilized. As soon as the consumer stops worrying about spending 1 dollar, employment will go down and the face of a healthy economy will be seen. The body is getting better, but the face, the consumer is still lagging. This whole doom and gloom has zero evidence. Employment has been spiking for months now, but hasn't come crushing down.

So what happens if the consumer never comes back at least not like in the past? I have seen a few articles talking about how consumers have woken up and realized they can't spend themselves stupid anymore and rack up large amounts of debt doing it. Not to mention people can't spend money without jobs and with so many people either unemployed or under-employed how are they supposed to spend more?

On a separate note with the huge reductions in hiring (and pay for those who do get hired) in the last few years the long-term earning potential for many people has been greatly reduced which in-turn also effects consumer spending not just now, but in the future.

 

[LegendKiller]

This is the problem with libertopians, anarchists, and anti-business tools. They refuse to accept the fact that people are what brought us here. If people would stop buying from Wal Mart, or stop buying foreign produced goods, demand for domestic goods would go up and we would see a resurgance.

You wouldn't believe how many times I think about "buying american" in my every day life, only to find that the stuff I buy is cheap trash.

I have written off any dress shoe but those made in England or the US. I largely buy Peal&Co (Brooks Brothers, england (Sargeant) or US (Alden), or Allen Edmonds. You can find decent AE shoes for about double what your typical Bostonian/JohnstonMurphy/Florsheim...etc cost. They are made in Wisconsin (Alden in Maine I think). I buy AE belts (US only), and wallets (US only).

As far as my clothes, I shop the clearance from Brooks Brothers, most pants are made in US, although shirts not so much. Suits and ties are US based.

People make a concious decision to buy cheap shit and get cheap shit in return. For example, US consumers spend the least on food out of all developed countries. Why? Because we will buy the cheapest shit found, not caring about quality, only quantity.

We then spend more money on shit that most developed countries spend a fraction on, such as cars, gas, TV, computers...etc.

We've completely fucked our resource allocation. Most will say it's "big business", but it isn't, it's the US consumer driving the psychological need to "keep up with the jonses".

This is why I laugh so much when people blame "big business" when they should be blaming their own countrymen/women.

 

[BoberFett]

🙄 Sigh. Silly socialists.

One can be against both big corporations and big government. The two are in collusion.

 

[BoberFett]

I know it is easy to point fingers at our government and big corporations, but the consumers have to point some fingers back at themselves. By demanding cheap disposable goods at one stop shops, we have basically created these large companies that will do anything to cheapen goods and maximize profits. No longer do we have very specialized companies creating quality products that last. If we do, they get bought up by larger corporations; the product is cheapened, and employees are let go. If consumers demanded higher quality, longer lasting, made in the USA products, and then bought them from smaller specialty shops, then we might have a different story. We might not have as many products as we all own now, but we would have better products that we would maintain for longer (and more green too, yay)!

Thoughts?

You're right. But the same people who are stupid consumers are also stupid voters, and apparently it's the government's job to protect them from themselves.

 

[LegendKiller]

I'd also like to point out that people think that companies are making massive profits on "cheap" goods. The economic cycle completely refutes this. The cycle goes like this...


1. Industry makes goods domestically at a relatively low price, probably making a net profit of 8%.

2. One industry player decides that they can make more profits by exploiting "cheap" foreign labor resources. The company moves manufacturing to China, both reducing variable (labor) costs (increasing profit) and dropping prices to bring in more customers. This double-whammy increase to profits (volume + cheaper manufacturing), gives the company a big boost in earnings. Net profit jumps to 12%.

3. As consumers are now "used to" the lower prices, other manufacturers still in the US have to lower prices to stay competitive. However, as a result, their profit margin goes down to 4%. They try to cut wages but higher standard of living in the US combined with perhaps unions, shuts that idea down. Their stock price is hammered (because stocks are only worth what the company is worth and the company is worth less if they earn less).

4. Investors pressure the manufacturer to move manufacturing overseas. This pressure is redoubled as the cheaper company cuts prices even more to gain more market share. Domestic manufacturers face two decisions, go out of business since they can't compete price-wise, or move manufacturing.

5. Domestic manufacturers move manufacturing overseas, cutting prices. As they do this the "balance" of supply/demand driven by prices comes back into equalibrium. Profit margin goes back to 8% from the initial 12% for company 1.

Now everything is moved overseas. All the remaining manufacturers who say "eff that, we ain't moving" eventually go out of business or are forced to become niche players in higher-end quality (such as Allen Edmonds or Alden).


You see, nobody is making a "profit" outside of supply/demand constraints after everybody moves. The move isn't driven by the company, it's driven by the consumer "price shopping". If the consumer said "eff that, I am staying American" they would eventually force the foreign manufacturer to come back into the US since their demand would go down and everybody else's would go up.

 

[child of wonder]

TBH it's glib dismissive comments like this that allow the problem to perpetuate.

Not in my case.

The economy is in dire straights and we just keep propping it up with more and more borrowed money. Eventually the other shoe is going to drop and then shit will REALLY hit the fan.

However, the article is fear mongering by saying:

This has put a shocking amount of the country's wealth in the hands of a privileged few and left the rest of the country to subsist on chicken-feed wages and low job satisfaction as Wal-Mart "associates" -- or worse.

There are MANY people who don't subsist on chicken-feed wages. To suggest those people are part of "a privileged few" is ridiculous.

 

[StageLeft]

I'd also like to point out that people think that companies are making massive profits on "cheap" goods. The economic cycle completely refutes this. The cycle goes like this...


1. Industry makes goods domestically at a relatively low price, probably making a net profit of 8%.

2. One industry player decides that they can make more profits by exploiting "cheap" foreign labor resources. The company moves manufacturing to China, both reducing variable (labor) costs (increasing profit) and dropping prices to bring in more customers. This double-whammy increase to profits (volume + cheaper manufacturing), gives the company a big boost in earnings. Net profit jumps to 12%.

3. As consumers are now "used to" the lower prices, other manufacturers still in the US have to lower prices to stay competitive. However, as a result, their profit margin goes down to 4%. They try to cut wages but higher standard of living in the US combined with perhaps unions, shuts that idea down. Their stock price is hammered (because stocks are only worth what the company is worth and the company is worth less if they earn less).

4. Investors pressure the manufacturer to move manufacturing overseas. This pressure is redoubled as the cheaper company cuts prices even more to gain more market share. Domestic manufacturers face two decisions, go out of business since they can't compete price-wise, or move manufacturing.

5. Domestic manufacturers move manufacturing overseas, cutting prices. As they do this the "balance" of supply/demand driven by prices comes back into equalibrium. Profit margin goes back to 8% from the initial 12% for company 1.

Now everything is moved overseas. All the remaining manufacturers who say "eff that, we ain't moving" eventually go out of business or are forced to become niche players in higher-end quality (such as Allen Edmonds or Alden).


You see, nobody is making a "profit" outside of supply/demand constraints after everybody moves. The move isn't driven by the company, it's driven by the consumer "price shopping". If the consumer said "eff that, I am staying American" they would eventually force the foreign manufacturer to come back into the US since their demand would go down and everybody else's would go up.

This makes perfect sense. And if somebody wants to restrict it, though, they cannot expect the consumers as a whole to join in and simply stop buying foreign crap because the tragedy of the commons motivates them to act singularly. Thus only regulation could do it.

The economy is in dire straights and we just keep propping it up with more and more borrowed money. Eventually the other shoe is going to drop and then shit will REALLY hit the fan.

I likely misinterpreted your comment and made my own glib and dismissive comment!

There are MANY people who don't subsist on chicken-feed wages. To suggest those people are part of "a privileged few" is ridiculous.

It's hyperbolic but the wealth is clearly moving away from the many and into the few leading toward a greater disproportion than the US has had in, say, 1970.

 

[jackace]

There are MANY people who don't subsist on chicken-feed wages. To suggest those people are part of "a privileged few" is ridiculous.

The quote you are talking about is talking about wealth, and the numbers show that over 90% of the countries wealth is controlled by 10% of the population. The rest of us are by comparison left with "chicken-feed wages". Call it what you want but when 90% of the population splits up less than 10% of the countries wealth IMO "chicken-feed wages" is pretty accurate.

 

[jackace]

This makes perfect sense. And if somebody wants to restrict it, though, they cannot expect the consumers as a whole to join in and simply stop buying foreign crap because the tragedy of the commons motivates them to act singularly. Thus only regulation could do it.

Very good point. To blame the consumers for doing what is in their personal best interest is no different then blaming the corporations for doing what is in their best interest. This is why the blame lies squarely on the government and our current laws and regulations.

 

[WhipperSnapper]

It goes way beyond the current bailouts. Our entire system is setup to benefit the rich and corporations. They just continue to grow and grow, while the poor and middle classes stagnate or decline. Look around your own communities how many locally owned businesses do you see these days compared to large corporations?

I'm pretty sure that The Economist magazine has reported that class stratification is now stronger than it has been in decades in the U.S.--that is to say--your chances of being able to rise up above the economic class you were born into is at an almost all time low.

 

[LegendKiller]

Very good point. To blame the consumers for doing what is in their personal best interest is no different then blaming the corporations for doing what is in their best interest. This is why the blame lies squarely on the government and our current laws and regulations.

Ahhh yes, the idea that the "government" is a monolithic entity that has no ties back to the consumers.

Sorry, but who votes for the "government"? Who comprises the "government". Who refuses to acknowledge different policies that would direct the "government"?

Consumers.

Furthermore, if consumers thought through the process more they'd realize that it isn't in their best interest to shop at Wal Mart. However, most Americans are dumb and shop there, only thinking about the first-order affects of their decisions. They refuse to think about that one decision like a pebble into a calm pond. The first ripple is only from the initial decision (shopping at Wal Mart). However, the concentric circles of more ripples are the nth order effects of that decision and they have massive implications.

For instance, I finance companies in the US. If I didn't shop US, then where would my job be? Sure, I could get cheaper goods elsewhere but in the end it's a self-defeating proposition. This is why I buy Allen Edmonds shoes, they are made in the US, by US workers, for US people, pay US taxes, and develop more business in the US.

American's want to blame the "government", but they should be blaming their fellow consumer and attempting to shift the perception, not through hyperbole, but through logic, like I used above.

My problem? I buy foreign cars (honda) because I don't like buying US trash. However, newer US cars are finally better quality, my next one may very well be American (Ford).

 

[WhipperSnapper]

So what happens if the consumer never comes back at least not like in the past? I have seen a few articles talking about how consumers have woken up and realized they can't spend themselves stupid anymore and rack up large amounts of debt doing it. Not to mention people can't spend money without jobs and with so many people either unemployed or under-employed how are they supposed to spend more?

The only solution is for the U.S. to end its exposure to Global Labor Arbitrage. All of the money that consumers are spending on goods and services IS NOT cycling back into the U.S. economy to create jobs for Americans. Instead much of it is going to other countries (our trade deficit).

The other problem is that millions of jobs are being occupied by illegal immigrants and foreign workers on H-1B and L-1 visas (often college-education-requiring jobs).

So, we could go a long way towards ending our nation's employment problem by instituting a zero-dollar trade deficit policy, expelling the H-1B and L-1 visa workers, and by deporting the illegals.

However, our politicians and most economists won't even acknowledge any of that as a problem. Why? Probably because cheap labor serves the interests of the rich who could care less about the lower classes.

 

[child of wonder]

This makes perfect sense. And if somebody wants to restrict it, though, they cannot expect the consumers as a whole to join in and simply stop buying foreign crap because the tragedy of the commons motivates them to act singularly. Thus only regulation could do it.

Unfortunately, as times are tough very few people can afford to buy American. It's sad.

I likely misinterpreted your comment and made my own glib and dismissive comment!I t's hyperbolic but the wealth is clearly moving away from the many and into the few leading toward a greater disproportion than the US has had in, say, 1970.

Agreed. However, there are some decent "privileged few" who are trying to make a difference. "The Giving Pledge" is a good example.

On the other hand, we're also seeing a gross worship of materialism as so many people try to acquire things in the pursuit of happiness. This often gets worse the more money one has.

What's the answer? 🙁

 

[child of wonder]

The quote you are talking about is talking about wealth, and the numbers show that over 90% of the countries wealth is controlled by 10% of the population. The rest of us are by comparison left with "chicken-feed wages". Call it what you want but when 90% of the population splits up less than 10% of the countries wealth IMO "chicken-feed wages" is pretty accurate.

To me "chicken-feed wages" would only be enough to pay for bare essentials and nothing else. Think lower middle class or lower class wages.

Quite a few families are still middle class or upper middle class but I wouldn't classify them as a "privileged few." I do concur that their numbers are dwindling.

 

[WhipperSnapper]

This is the problem with libertopians, anarchists, and anti-business tools. They refuse to accept the fact that people are what brought us here. If people would stop buying from Wal Mart, or stop buying foreign produced goods, demand for domestic goods would go up and we would see a resurgance.

But many of those foreign products are of high quality; they have access to the same productive capital as we do here in the U.S. When was the last time you purchased a computer component that was made in the U.S.?

The problem is not the individual people who are just trying to survive as their wages are decreasing. The main problem is that businesses realize that they can earn higher profits by cutting their labor expenses if they move production (for domestic consumption) overseas. This also allows them to lower their prices, which forces their competitors to do the same.

Our politicians are the ones to blame for allowing this to happen. They could end most of our exposure to Global Labor Arbitrage if they want to.

Ultimately, it is individual Americans who are the problem since they elect the politicians. People in many other nations where the people have a sense of economic self interest would revolt if they had our traitorous politicians.

 

[WhipperSnapper]

You see, nobody is making a "profit" outside of supply/demand constraints after everybody moves.

I'm not convinced of that. Have prices really decreased all that much? I'm concerned that the businesses have higher profit margins and are essentially looting the lower classes.

Basic economic logic dictates that if the supply of labor increases dramatically relative to the demand, then ultimately business owners will be able to keep larger percentages of workers' contributions to the act of production as profit for themselves.

At least they can continue earning higher profits as long as Americans can borrow money or deplete their retirement accounts to purchase their goods and services.

 

[Moonbeam]

It's all my fault but because I hate myself I'm not going to admit it. I just couldn't handle opening up all that pain and even mentioning it makes me want to go shopping for some cheap little pick me up.

 

[WhipperSnapper]

For instance, I finance companies in the US. If I didn't shop US, then where would my job be? Sure, I could get cheaper goods elsewhere but in the end it's a self-defeating proposition. This is why I buy Allen Edmonds shoes, they are made in the US, by US workers, for US people, pay US taxes, and develop more business in the US.

The problem is that you don't benefit directly from your virtuous action of buying American. When you buy an American-made product, your own job isn't the one that's going to be saved.

So, if you pay more for the same item, you are losing. If you purchase the less expensive foreign-made item, you save money.

This situation is akin to a tragedy of the commons. Everyone is going to feel compelled to despoil the commons and extract as much value from it as possible because everyone else is doing it and being responsible has no personal benefit. Of course--everyone would be better off if the commons were not despoiled and if people acted responsibly--but no one has an individual incentive to do that.

American's want to blame the "government", but they should be blaming their fellow consumer and attempting to shift the perception, not through hyperbole, but through logic, like I used above.

Is there an entity in our society that could solve this tragedy of the commons-like problem? Is there an entity that has the power to make rules for everyone's benefit?

Oh, that's right. It's the federal government.

The federal government could force Americans to buy American by instituting tariffs and a zero-dollar trade deficit policy. End of the problem.

But as I said in my other post: Ultimately, it is individual Americans who are the problem since they elect the politicians. People in many other nations where the people have a sense of economic self interest would revolt if they had our traitorous politicians.

 

[kranky]

Government regulation is it's own barrier to entry now. The basic costs for doing business can be absorbed by a giant corporation far more easily than a startup. As soon as you hire a single employee it's easy to get mired in costly regulation. Some regulations are relaxed for companies with fewer than XX employees but many are not.

The CPSIA for example put many small businesses out of business with the stroke of a pen. Want to make niche, small run kids toys? Better be prepared to pay out the ass because Hasbro was importing shitty Chinese made toys. Now you as an honest business person pay the price.

Want to write the next great computer app? Better hope you don't step on any of the tens of thousands of ridiculously obvious software patents that giant software companies are sitting on for the sole purpose of torpedoing anyone that crosses them.

That's right, government is as much a barrier to startups as big corporations are. Read this story I saw recently:





"I am a building designer, used to have employees and wanted to grow my firm to about 8 people. No longer. I will be more likely semi-retired by choice from this point on because:

• Cost of Employees way up: Workman’s Comp, Unemployment insurance, Health Care is up by nearly $ 8 per hour over 3 years. Health care alone now costs $4 an hour if they are young, over $5 per hour if over 50.
• Business Regulation – every purchase over $600 needs a 1099 form, meaning I have to get the address and the tax ID of the power company, the insurance company, Office Depot, etc. I will be going from 4 1099’s to over 100.
• Health Care – I will now have to track where my employees go in the event of HazMat exposure. Did the government office they measured in for a few days contain lead or asbestos. Duh – yes, but it is supposedly safe for government employees why not mine.
• Security – I must have lots more records on my employees keyed to their SS#, but if somehow I lose my laptop I am a crook.

I could go on and on, but my reward is:

My marginal tax rate jumps in 2011, about 30 percent more than before. The FICA income limit keeps rising, that is 15 percent of net for the self employed on the marginal increase. It is obvious that there will be a lot more taxes coming. So my risk is way up, but the government now TAKES over half of any marginal increase. I would rather fish."

The columnist added: Multiply “I would rather fish” by a few hundred thousand small business owners and you get a jobs crisis. You get 9.5%, 16.5% or even 22% unemployment when the models say it should be 8% at this point in the rocky recovery.

 

[StageLeft]

Furthermore, if consumers thought through the process more they'd realize that it isn't in their best interest to shop at Wal Mart. However, most Americans are dumb and shop there, only thinking about the first-order affects of their decisions. They refuse to think about that one decision like a pebble into a calm pond. The first ripple is only from the initial decision (shopping at Wal Mart). However, the concentric circles of more ripples are the nth order effects of that decision and they have massive implications.

Most don't think about it, but of those who do it is not dumb. If I can make my personal finances much better buying something chinese for $20 or the exact same thing made in US with the same quality at $30 I personally will do much better on that $20. Like I said, tragedy of the commons is at play here. The individual's actions are meaningless to all except himself. And even if all the individuals in aggregate have a huge impact the individual still can only meaningfully impact himself, so does best serving himself to buy the import product (assuming quality is the same). Hence only regulation to "force" him away from this action works. This is why we regulate where sewage can go and any number of things where behavior has to be forced for the betterment of all.

The other problem is that millions of jobs are being occupied by illegal immigrants and foreign workers on H-1B and L-1 visas (often college-education-requiring jobs).

So, we could go a long way towards ending our nation's employment problem by instituting a zero-dollar trade deficit policy, expelling the H-1B and L-1 visa workers, and by deporting the illegals.

Legal, skilled immigration to the US is not a problem IMO. And if it is it's a tiny blip on the radar. I am one, all my money stays in the US I've brought the average up very slightly by my being here (I am that awesome). I know some guys from India, one how married another Indian in the US, but their money stays here, they work in IT they're permanent residents (or at least will be soon) and are essentially well on their way to being permanent US people who make good money here and keep it here (as opposed to western union back to Mumbai, I mean).

What's the answer?

IMO the answer is a well funded third party candidate who can come along with enough money to try and fight off the riff raff and who for some reason cares enough to take a non-status quo approach to things and, once he gets in office, actually act toward bettering the middle and lower class.

Fat chance in hell, unfortunately.

Our politicians are the ones to blame for allowing this to happen.

Concur. The consumers are to blame as are corporations, but on a single basis neither one has screwed anything. The only entity with the power to shape behavior via legislation is the federal government.

Have prices really decreased all that much?

I think so. Even poor people can fill their house with a ton of consumer goods and crap, from clothes to electronics.

 

[manimal]

While I disagree with much of what was said by that guy its time we collectively decide that some of the paradigms of the past are dead or we will have a second depression

supply side economics......dead
global policemanUSA........dead
deregulation=good...........dead
onepartywillkeepyousafe...dead
onepartyisforthepeople.....dead

consumption is king in all markets. If there is healthy demand regulation and taxes do little to curb the appetite of the consumers. Rich people if taxed more still spend money too so the idea that uncertainty keeps the markets unstable is preposterous as well.

BTW those evil regulations keep your water clean, your children's toys safe, your medicine from killing you etc...

Read some Upton Sinclair and see what the unregulated meat industry did....

Deregulation in the 80s was so good right?

 

[soccerballtux]

Very good video on yahoo today. Not sure I agree with everything he is saying, but the general idea I do agree with.



I have been saying this for a long time. Big corporations are what is ruining our country. These corporations are the ones driving off-shoring and other behavior that has crippled the poor and middle class workers.

And Now We're Headed For The GREATEST Depression, Says Gerald Celente

Please save the tears, we [middle class] chose to wipe ourselves out. If we exercised self restraint from purchasing, we wouldn't be loaded up with debt, and companies wouldn't have been able to pay their executives so much (ie, they wouldn't have had such huge profits). If we weren't loaded up with debt, we'd have more cash to spend on things that are REALLY worth the money (ie, real wealth-generating or quality-of-life-improving products).

The corporations just took advantage of the opportunity to milk us; and we allowed the size of our government to get out of hand to the point that no level of taxation will pay for our expensive, unsustainable policies.

The time of reckoning is at hand. I just hope we can shake some of our expensive government off our hands. Then more people can participate in the private sector, and more private sector work means more inventions, and more inventions means more gdp.

Next up is RFID tags on everything at Walmart and an automated scanner that you just walk through. Walmart takes a cut, employs even fewer Americans (only to stock the shelves), and the rest goes to China, which goes back to fund our government debt.