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162 comments on DrumBeat: April 29, 2007

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Francois on April 29, 2007 - 10:45am Permalink | Subthread | Parent | Comments top

You are very funny :-)

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HeIsSoFly on April 29, 2007 - 12:05pm Permalink | Subthread | Parent | Comments top

Well, thank you.

But only on Sundays.

My point is serious enough, though: I posted two comments (1, 2) in yesterday's thread, both referring to the same article, that connected a few more dots. For me, at least, I don't think many people understand.

It's clear by now that the housing crisis will ravage the US economy, drag the Dow to new lows and leave millions desolate, unemployed and on the street. However, there always seems to be the hope of a recovery. As every economist knows, the economy moves in cyles of boom and bust, that sort of logic.

What I figured out yesterday is that recovery is impossible in the US for at least the entire next generation. The US loss of its manufacturing base has reached epic proportions in the past 10-20 years. This is justified by "experts" and politicians through the claim that we are moving towards a "knowledge-based economy".

Forget for a moment that there are enormous doubts whether such a thing could even exist, and stick with the numbers: the article states that it's become so expensive to get an education in the US, only 18% of kids finish college, let alone university.

So on our "march" towards that "knowledge-based economy", we are confronted with the fact that we are losing our knowledge base maybe as fast as we are losing our manufacturing base. Ergo: we will have neither a knowledge-based economy, for lack of a knowledge base, nor a manufacturing based economy, for lack of a manufacturing base.

What will we have then?

(I also evoked the Law of Receding Horizons: only an economy with a strong manufacturing base, i.e. a productive economy, is able to offer its children affordable education, which is essential for aquiring knowledge, step 1 towards a knowledge-based economy. In the process of moving from manufacturing to knowledge-based, the economy loses this ability. It is thus a self-defeating process, similar to tar sands, oil shale, ethanol et al)

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westexas on April 29, 2007 - 3:51pm Permalink | Subthread | Parent | Comments top

From Drudge:

http://apnews.myway.com/article/20070429/D8OQ9IMG0.html
Flippers Flop As Housing Market Cools
Apr 29, 9:09 AM (ET)

By RYAN NAKASHIMA

Foreclosure filings across the United States rose 47 percent last month from a year ago to 149,150 - one for every 775 households, according to statistics from Realty Trac Inc., a foreclosure listing service.

And for the third straight month, Nevada's foreclosure rate led the nation when it rose 220 percent from a year earlier to 4,738 filings, or one in every 183 households.

In Clark County, which encompasses Las Vegas, one of every 30 homes began the process toward foreclosure last year.

I wonder what percentage of workers in Clark County (Las Vegas) live off the discretionary spending of other Americans, or work for the government?

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DelusionaL on April 30, 2007 - 12:03am Permalink | Subthread | Parent | Comments top

It seems that housing starts are down, which is followed by completions, and then declining employment. However, this time it appears that employment is not falling like it should. However decreasing shipments of $ to latin america is now the economic indicator of declining employment by illegal aliens who don't get unemployment benefits.

http://www.rgemonitor.com/blog/roubini/190912

If illegals are underemployed, and Cantarell is crashing what are the mexicans going to do? besides go north

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CrystalRadio on April 29, 2007 - 3:04pm Permalink | Subthread | Parent | Comments top

Hi HeIsSoFly,

What will we have then?

I have trouble with the word, economy.

Edit from Merriam-Webster is this definition,

economy: noun:
careful management of material resources

Near Antonyms extravagance, improvidence, lavishness, prodigality, squandering

Antonyms wastefulness

From this it would seem that, What we will have then is Economy. (Just not so good as it used to was)

I too am serious. The commons has been destroyed by the beast with many names, corporatism, capitalism, globalism to give a few. It devours the worlds true wealth including its peoples and defecates dollars in return for the commons. The solid or base economies of markets that sustain have been displaced by hierarchal systems of amassing wealth.

I doubt that tinkering with a false economic sytem will do much good. Not with global warming here and global heating waiting in the wings.

Don't ask me for any realistic solution, I'm just here for the show and the popcorn.

BTW, enjoyed your dying man bit. Keep the punters awake, eh!

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Dryki on April 29, 2007 - 4:35pm Permalink | Subthread | Parent | Comments top

Lately I've been thinking of technology as knowledge applied to resources and exchange - a form of culture almost. So you cannot have technology or culture advanced to a different degree than the resources and exchange can support. Jevon's Paradox seems only to apply within a single congruent mix of those factors; it won't apply to dropping our use of fossil energy so much that technology, culture and exchange change to a different congruent state as well. Oil use would not increase, for example, if only the rich had horses and everyone else walked.

What I'm trying to figure out is whether or not the downslope of technology looks like the upslope or whether radically different mixes are possible. Can one have windmills and semi-conductors with a transport mode of horse-drawn wagons, bicycles and some rail? Will there be any high-speed rail or will trolleys be about the best we can do? We cannot have simply a knowledge based economy; someone has to make the donuts and toilets and they will have to be made locally. My head hurts.

cfm in Gray, ME

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HeIsSoFly on April 29, 2007 - 5:36pm Permalink | Subthread | Parent | Comments top

Today, the Chinese are making the toilets and most of everything else, yes, perhaps even the donut ingredients.

And lo and behold, we wouldn't have any economy left that would merit mentioning if we didn't borrow our money from them. That includes the money we need to educate at leeat the 18% of our kids that still DO get an education. Most of whom will end up as overseeing less-educated burger-flippers.

A knowledge-based economy, and even the very notion and idea of it, is a theoretical monstrosity that kills itself, in and of itself. To put it crudely: such an economy requires the presence of slaves, either domestically or abroad.

Apart from the knowledge based economy or manufacturing based economy, neither of which we will have, what else is there? I see two alternatives:

1/ an agricultural economy, 100 million farmers.

2/ a military economy, with all resources, natural and/or human, directed towards the same goal.

i have a dark feeling about that choice.

Just like the growth economy, the human brain works in one direction only. They are a perfect match.

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TrueKaiser on April 29, 2007 - 6:40pm Permalink | Subthread | Parent | Comments top

such an economy requires the presence of slaves, either domestically or abroad.

i don't think it's the economy that requires slaves.
it's civilization it's self, and we were lucky enough to be born at a time where those slaves were replaced by machines run on fossil fuels.

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CrystalRadio on April 29, 2007 - 9:43pm Permalink | Subthread | Parent | Comments top

TrueKaiser, I think you are right.

i don't think it's the economy that requires slaves.
it's civilization it's self

I remember some of the city born heads in the 60's deciding to go off to the country and be part of nature...they were back after 3 days, shaking. Yet that is where we all came from. I also read an article that talked of how the human mind adjusts to it's surroundings, viewing the familiar as beautiful even if not very nurturing.

We were lucky to be born now but It would have been nice to have been born wise as well. I've thought for a long time this morsel from an earlier age quite apt for ours:Give a peasant a horse(or a technical civilization) and he will ride it to death.

Looks like back to the fields for me. I would like this communication machine to be still around though. For the rest, I am finding, there is very little that I can not make grow or trade for within a days walk that I actually need. And a lot outside, that days walk, that I can do without.

Of course I just bought a wood stove manufactured in a small city/town under 50,000 (energy efficient of course)about two days walk from here and I imagine they did use a lot of imported fossil fuel in its construction, and I didn't walk there and pack it back myself,

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CEOJr1963 on April 29, 2007 - 6:22pm Permalink | Subthread | Parent | Comments top

Here is a scary article about how people react to the housing market.

http://www.forbes.com/feeds/ap/2007/04/29/ap3665826.html

"The day Schwartz reserved his home, the sales staff was raising prices $20,000 after every fifth buyer came inside. The $500,000 house he and his wife were eyeing had shot up to $540,000 by the time they sat down. Somehow, it still seemed like a good deal."

The sales staff were adding value to the home, just because.

Further down in the article it talks about the crazy lending practices where someone was able to put $1,000 down on a $1,000,000 home. This is why the housing market is taking a nose dive off a short cliff. WE did this to ourselves.

Of course we do most things to ourselves, this is just one more in a long line of things that we have done that bite us back in later years.

As the housing market goes through it's corrections, the money lost can mostly be explained as "make believe money" We added value where there was nothing of substance there to begin with, so it is all just paper money gone poof.

What will get hurt the most is the workers making all these houses. As the craftsmen slow to a crawl the lack of funds will trickle down to the rest of the Economy one way or another.

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