LEAN is about offshoring and outsourcing at a rate never seen before at IBM. For two years Big Blue has been ramping up its operations in India and China with what I have been told is the ultimate goal of laying off at least one American worker for every overseas hire. The BIG PLAN is to continue until at least half of Global Services, or about 150,000 workers, have been cut from the U.S. division.
The point of this has nothing to do with the work itself and everything to do with the price of IBM shares. Remove at least 100,000 heads, eliminate the long-term drag of a defined-benefit pension plan, and the price of IBM shares will soar.
Hmmm....seems plausible at minimum and I've been telling people the rise of CHINDIA will come at the expense of America. It's a zero sum game.
I have asked the same question to my professors and I have yet to get an honest answer. They are so into the fact that comparitive advantage works, that the only answer I ever got was the gov't is suppose to retrain displaced workers. Well that's grand and all, but what about the jobs left?
here's my opinion. We've got roughly 330 million people. I would surmise we only need about half that. The middle class is a social engine for control. Everyone hopes to get there and hardly anyone makes it out. There are fewer ways to make it into the middle class and they are being wiped out by inflation and debt. The lower classes are doomed as they are in a global labor arbitrage game they can not win since the costs of living are so much higher.
Meanwhile the middle class is getting squeezed like an orange between looking upper class and servicing the debt to do so. In the meantime they are mostly oblivious to the coming disasters. The upper class will always be this way and they are not worried about labor issues as they are now truly global in that many US companies now derive a majority of their revenues from outside this country.
The only snowball in hell's chance is to gain an edge in information and utilize skills that are locally specific. It's hard to say what will happen but planning for what could happen like reduced globalization but you've got to keep in mind paradigmes are resistance to change and we'll find every way to maintain the status quo.
I keep reading posts about the lack of skilled workers in the energy industry in the US. We have spent the last 30 years telling kids the future lays in computer software. What I'm reading tells me all those kids should have learned welding, mechanics, and construction skills instead. There is even a lack of drivers for 18-wheelers. My brother paid for college by working at McDonald's. He worked for 15 years as a systems analyst. His job was outsourced. He's back working at McDonald's.
There's a great 90 day course to learn the skills to work on a land drilling rig through the Midland, Texas community college. I'd bet money that with a little hands-on experience and his computer skills he could get an extremely good job with any number of oil service companies in domestic exploration and production.
The thing that is really scary is that huge numbers of empty shipping containers are piling up in the ports because the US no longer makes much of anything that the rest of the world wants to buy.
Empty shipping containers?????
One of the most accurate measures of the activity of the US economy and consumer/industry spending is rail freight traffic. The first four months of the year show railroad carload traffic down over four percent and intermodal traffic (containers and trailers) down about the same. Those goods from China are not flowing nearly as fast as they were a year ago. Go to www.progressiverailroading.com and hit the news bar and look at May 4th rail news about rail freight traffic.
On Another Note:
Several posters recently made statements that India did not increase its oil consumption and oil imports last year. WRONG! The above article states that India's oil imports were up over 11 percent year over year for 2006. They are on course for more of the same this year.
Shawnott: Not a problem for the companies. The middle class (consumers) are growing rapidly in Chindia. I am always shocked how most Americans are unable to visualize a world economy that is not dependent upon the American middle class consumer.
The one "good" thing I see coming from this is, as the upper middle class and middle class become devalued down closer to lower class, the political majority will swing from corporate / capitalist to liberal / socialist.
I fear the lag time between elections and lag time for americans to realize they are now lower class will be far too long.
Good insight. I argue with some socialist bent friends about this sometimes. I honestly believe at some point taxes will go up to maintain the regime but it will be cast as a necessity against the acsencion of China which is currently fueled by American and other foreign firms investing. When the engine gets started so to speak, does anyone think the Chinese might not take control of their domestic industries once they are built? They will do it in the name of their citizens who will by then reached a middle class status en mass and would be demanding social change...look at this it's starting already....
China faces a looming baby boom as newly-rich couples find they can afford to pay fines incurred from having more than one child.
Upward pressure on the birthrate also is coming from millions of Chinese in their 20s and 30s who are allowed two children under the policy because they themselves were single children, Xinhua news agency quoted China's top family planning official as saying.
I didnt know that one child policy children could have TWO! Guess that was the compromise. Point is...these people will react like humans do and demand a larger share. So the state will either dissolve into something new and more open or it goes the other way once the power is accumulated on a world scale. I've got a whole idea how they could be working on a big plan to take America financially, but this is finals week so I can't put my effort into yet. Hopefully following graduation I'll have some time to put some effort into it.
Imagine how many EV1's they would be selling today.
If your industry is based building machines that run on fossil fuels, and you dont have the common sense to research the future supply of the fuel for the machines you build, then you deserve to become extinct. Every other dam country's automakers caught on YEARS ago.
for some reason this posted in the wrong spot...sorry
"I Have NO simpathy for automakers."
I assume you mean American automakers. Thats too bad considering how many Americans are employed by them. And not all of those employed have a say in what vehicles actually see production.
As for the EV1, which was designed to address Californias' assinine "zero emmission" policy not fuel savings, it FAILED in the market. And cost billions to produce.
"If your industry is based building machines that run on fossil fuels, and you dont have the common sense to research the future supply of the fuel for the machines you build, then you deserve to become extinct. Every other dam country's automakers caught on YEARS ago."
As for researching alternatives to fossil fuels GM and others are spending billions on automotive applications using alternatives as fuel. Unfortunately there are NO suitable alternatives for fossil fuels, each having MAJOR drawbacks.
Also the last time I looked EVERY automaker produces vehicles that run EXCLUSIVELY on fossil fuels. Can you name me one that does not?
<"Daimler Chyrseler makes the GEM.">
The GEM runs off of fossil fuel generated electricty stored in batteries. The sources and ratio of electricity can be found here: http://en.wikipedia.org/wiki/Electricity_generation
<"And Honda makes a compressed natural gas Civic that could be converted (by the owner) to bio-methane.">
Compressed natural gas is a fossil fuel. I haven't found bio-methane at my local gas station yet.
<"BTW: GM spends billions on PR and advertising, NOT on "researching alternative fuels".">
I have no doubt that marketing and advertisings' budget outweighs Larry Burns', here is a list of just a few of the vehicles GM made in their search for alternative fuel applications. And they weren't done on the cheap either! http://www.gm.com/company/gmability/adv_tech/400_fcv/fact_sheets.html
<"And demand exceeded supply for the EV-!.">
Not in the North! Having one die on you on the test track certainly gives one time to ponder that particular vehicles shortcomings. "GM's internal research showed very clearly that the EV1's already perilously low range would be reduced by as much as 50% for use in cold-weather states." See here for more: http://en.wikipedia.org/wiki/EV-1
A Very large market exists where cold weather is rarely or never a problem (and many/most US households have two cars).
US West Coast + Coastal BC
Desert SW
Mexico
US Gulf Coast
Florida
Personally, a majority of my trips are less than 15 miles round trip and it gets below 32 F about twice a year on average.
I see GM research as an extension of their PR department. They are not serious about developing anything (except hiring psychologists to design Hummers for the reptile brain). Small Daimler Benz had their own wind tunnel DECADES BEFORE GM did. Their VOLT has been shown to have just been a publicity stunt (used off the shelf golf cart drive train).
To paraphrase "Engine Charlie", GMs President and Eisenhower's Secretary of Defense; "Wfat is good for GM is bad for the United States".
My first car was ALMOST a Vega (some high school friends did buy that hand grenade of a car). If I had bought it, the financial disaster would have destroyed my working through college and changed the course of my life.
"A Very large market exists where cold weather is rarely or never a problem (and many/most US households have two cars)."
An automotive company cannot make a car that functions exclusively in those areas and climes. Imagine the headlines (not to mention lawsuits) "Family of four perishes driving an EV1 through Rocky mountain snowstorm"
"Personally, a majority of my trips are less than 15 miles round trip and it gets below 32 F about twice a year on average."
That puts you in the front of the line to qualify as an ideal Volt customer!
"Small Daimler Benz" also suffered the same strange malady as did the rest of the Fatherland. NO DOMESTIC SUPPLY OF OIL! WWII ring a bell? I'll bet, back then, they wished they didn't HAVE to have their own windtunnel.
"design Hummers for the reptile brain)."
No argument.
"My first car was ALMOST a Vega"
No comment (see below) :-P
"Worst Hopes for GM"
That wasn't a very smart comment and it belies the error in your thinking. As if you would be untouched should GM go under! But I was thinking more about the two big flaws in your proposing of light rail systems you coveniently overlook:
1. Light rail had a shot in this country and it FAILED.
2. Train stations are excellent targets for terrorists. Try the Madrid bombing and the Tokyo subway gas attack for example. A couple of successful high profile attacks would put the whammy on ridership.
Around the Detroit area a popular bumper sticker reads "Out of a job yet? Keep buying foreign".
Incidentally GM's Bob Lutz was on a local show AUTOLINE DETROIT http://www.autolinedetroit.tv/# (warning long load time)
calling for a "Manhattan type project" to address both fuel economy and global warming. Sounds like he's getting the "word". I wonder if he's read "Twilight" or TOD?
As I said last year, assume that your income drops by 50% and assume that gasoline goes to at least $8 per gallon. How would you change your lifestyle?
If I am wrong about where we are headed, you will have less or no debt, more money in the bank, and a lower stress way of life.
For those who believed, or believe, in borrowing their way to prosperity, we are going to see the emergence of an interesting new voting bloc--the Formerly Well Off (FWO's), who used to own nice debt financed cars and homes. The FWO's who believed ExxonMobil and CERA's pronouncements that Peak Oil was decades away are going to in a very, very pissed off mood.
Hell hath no fury like a FWO who has had his SUV repossessed and his McMansion foreclosed upon.
The last time anything at all like this happened - the 1970s - the thrifty people with "money in the bank" were looted by means of both rampant inflation and the Savings and Loan taxpayer bailout, in order to provide a free ride for the "FWO"s of that day. In the end the FWOs weren't - instead, they made out like bandits by eventually paying off their debts in grossly inflated dollars.
Maybe it will be Different This Time Around. But it's not clear how much to bet on it. So far, the discussion seems to center on the government just giving the potential FWOs the houses they never paid for, and balancing the books by yet again looting the thrifty. So precedent and politics, at least since the mid 20th century, do not particularly endorse thrift. Instead, they say that "money in the bank" is simply flushed down the drain.
You hit on something important. Until recently, being thrifty has not really paid off. Yes, a lot of people are probably going to finally get burned as the music stops, but there are a lot people who have made a lot of money or, at least, have enjoyed a lot of assets during the era of no limits debt.
Presumably, a bunch of people are losing their homes that they couldn't afford in the first place. They will have to make other arrangements, as it were. On the flip side, however, a radical reduction in housing prices will be beneficial for those who are just now getting into the market.
Arguably, if you are going to have trouble paying your mortage, this is the best of times. Since you are now part of a crowd, there is an incentive for lenders to be "creative" in keeping you and everyone else in their homes.
I must admit I have trouble wrapping my mind around this, probably because of my somewhat puritan perspective on debt. I have no debts other than a small mortgage, and that is very much less than I can afford.
Yes it's how the old saying goes, if you owe the bank a thousand pounds, you have a problem, if you owe the bank a million pounds the bank is the one with the problem. Well, together their mortgage lenders owe the bank a lot more than a million, and if they break some they might break a lot more.
It's an interesting question that we have debated at length. Clearly, at the present time, we are see deflationary effects in the housing/auto/finance sectors and inflationary effects in food and energy.
Regardless of whether we end up with Weimar Republic style inflation or Thirties style deflation, or both sequentially, or more likely some combination of the two, reducing your cost of living and energy consumption, IMO, is a very good idea.
The US is going to be forced, whether we like it or not, to reduce our overall consumption, especially our energy consumption, in much the same way that forced energy conservation came knocking on Africa's door last year.
He has some clout in the past since he did manage to muster the strength to call the tech boom, but everyone claims to have done so now. I think on the back end (5 years maybe or more) we see massive deflation as this whole thing pops especially when oil scarcity becomes front and center as opposed to the sidelines it still sits on.
Though interesting, the argument has a certain flaw - the assumption that the Fed can lower interest rates as it pleases, without concern of broader consequences.
As America is in need of constant international capital inflows at this point, the Fed can cut interest rates as it wishes - at the cost of destroying that balancing act.
Deflation is not exactly something that can be avoided - no one can be forced to take credit. And if a speculative bubble stops growing, it collapses.
The Fed certainly can lower interest rates... if they are willing to print the difference instead of borrowing it. This is the classic "monetizing the debt" that the US used in the late 70s to finance its debt then. Reactions like KSA's threatened pullback from the dollar to gold (which is what drove gold over $800 per ounce back then) caused the US to shift gears, leading to Volcker as Fed chairman and his resulting recession in the 1979-1982 time frame. Note that this occurred at the same time as oil production was falling globally but they could have played the other card and hyperinflated their way out of debt.
Ghawar Is Dying The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
>Though interesting, the argument has a certain flaw - the assumption that the Fed can lower interest rates as it pleases, without concern of broader consequences.
In the last week or two, the Fed overnight rate has dropped below its target rate of 5.25%. Repo's are now trading about 5.12 ~ 5.10%. This hints that fed may drop rates, or just let institutional borrowers, borrow below the official rate.
I believe this is because the fed is concerned about mortgage lending issues. I have a hunch that they are far more concerned about failing lenders than a falling dollar. Plus, the Treasury (Paulson) has made a bigger push for China to remove its peg on the dollar. This leads me to believe that fed intends to inflate the dollar, and damn the overseas consequences for now.
If dollar does drop, countries that wish to preserve their US export market will be forced to adapt. This could be in the form of pegging their currencies to the dollar, or lowering their interest rates to make their currency less attractive.
>As America is in need of constant international capital inflows at this point, the Fed can cut interest rates as it wishes - at the cost of destroying that balancing act.
The Fed and the Treasury dept. have been buying the treasuries that have not purchased by investors during auctions. Had they not, the yield on treasuries would have been much higher. The Fed and the Treasury dept. have essentially pegged US interest rates in order to prevent credit from drying up. I can't say how long they will continue this but I don't seem them stopping this practice anytime soon.
The American consumer is standing at a four way intersection, with:
Inflationary 18 wheelers on two sides coming his way: rising food/energy costs and rising health care costs, and
Deflationary 18 wheelers on two sides coming his way: falling real estate values and falling real wages (especially because of increased competition for jobs).
U.S. consumer credit rose a much bigger-than-expected $13.46 billion in March as Americans loaded up on credit card debt and closed-end loans for cars, vacations and education, a Federal Reserve Board report showed on Monday.
Analysts were expecting a $4.5 bln gain. Also, Jan's consumer credit increase was revised up from $6.61 bln to $8.42 bln, and Feb was revised up from $2.97 bln to $5.56 bln.
I got two opportunities to enlarge my debt in the mail today. Its terrible to get a reputation for paying your bills.
I'm remodeling my house in Galveston, but paying the cost out of cash flow. My electric bill was $27.00 at @0.0145 cents per kilowatt hour this month, and I live 4 blocks from good wade fishing. My car gets 33 mpg and has 196,000 miles, and I could pay cash for a new one. My only debts are a student loan of approx. $3,000 left and a mortgage of $568.00 a month, plus insurance taxes and utilities adding about $250.00 a month. I'm a landman, and the late eighties and nineties shore learned me.
The upshot is that WT's advice is excellent. Its real conservatism-the secret to overcoming financial insecurity is spend less than you earn. Real patriotism is conserving, not flag waving. Every person needs to take personal responsibility first, and, THROW AWAY THE CREDIT CARD OFFERS!
One of Charles Dickens persons in one of his novels(can´t remember which) said, if you have an income of 100 pounds, and you spend 101 pounds you live in misery. But if you spend 99 poundes you live in prosperity.
I got two opportunities to enlarge my debt in the mail today. Its terrible to get a reputation for paying your bills.
I'm remodeling my house in Galveston, but paying the cost out of cash flow. My electric bill was $27.00 at @0.0145 cents per kilowatt hour this month, and I live 4 blocks from good wade fishing. My car gets 33 mpg and has 196,000 miles, and I could pay cash for a new one. My only debts are a student loan of approx. $3,000 left and a mortgage of $568.00 a month, plus insurance taxes and utilities adding about $250.00 a month. I'm a landman, and the late eighties and nineties shore learned me.
The upshot is that WT's advice is excellent. Its real conservatism-the secret to overcoming financial insecurity is spend less than you earn. Real patriotism is conserving, not flag waving. Every person needs to take personal responsibility first, and, THROW AWAY THE CREDIT CARD OFFERS!
The FWO will form the basis for a real fascist government in the USA and Canada too. The Neocon adventure was the American "beer hall putsch" and we should be prepared for the real fascist take over when the FWOs vote them in with a much clearer mandate.
"Better-heeled failing home economics too"
As more owners are unable to make higher payments, Deputy Strickland finds himself evicting people in nicer neighborhoods.
Allegheny County foreclosure maps show that foreclosed homes (black dots) can be found in low-income areas (dark blue), high-income areas (pale yellow) and everywhere in between.
I believe that vast expanses of American Suburbia are going to become virtually abandoned in the years ahead. Alan Drake has noted that a good deal of suburbia was so poorly constructed that a lot of it is biodegradable. Alan has outlined how we can go back to what we used to have: electric trolley cars connected to electric light rail lines.
Hell hath no fury like a FWO who has had his SUV repossessed and his McMansion foreclosed upon.
This is my big worry. Someone upthread mused that people might be driven to a more socialistic view of things. I wish I could be so optimistic. How will the middle class react as it crumbles? My fear is that it will sign on to the empire project, saying we need the oil -- let's go get it.
You heard it here first....
http://www.realtechnews.com/posts/4365
Hmmm....seems plausible at minimum and I've been telling people the rise of CHINDIA will come at the expense of America. It's a zero sum game.
The question I always ask is once the outsourcing happens, who's going to be left with jobs to buy the products?
I have asked the same question to my professors and I have yet to get an honest answer. They are so into the fact that comparitive advantage works, that the only answer I ever got was the gov't is suppose to retrain displaced workers. Well that's grand and all, but what about the jobs left?
here's my opinion. We've got roughly 330 million people. I would surmise we only need about half that. The middle class is a social engine for control. Everyone hopes to get there and hardly anyone makes it out. There are fewer ways to make it into the middle class and they are being wiped out by inflation and debt. The lower classes are doomed as they are in a global labor arbitrage game they can not win since the costs of living are so much higher.
Meanwhile the middle class is getting squeezed like an orange between looking upper class and servicing the debt to do so. In the meantime they are mostly oblivious to the coming disasters. The upper class will always be this way and they are not worried about labor issues as they are now truly global in that many US companies now derive a majority of their revenues from outside this country.
The only snowball in hell's chance is to gain an edge in information and utilize skills that are locally specific. It's hard to say what will happen but planning for what could happen like reduced globalization but you've got to keep in mind paradigmes are resistance to change and we'll find every way to maintain the status quo.
The "Great Education Myth" as Sirota calls it.
cfm in Gray, ME
I keep reading posts about the lack of skilled workers in the energy industry in the US. We have spent the last 30 years telling kids the future lays in computer software. What I'm reading tells me all those kids should have learned welding, mechanics, and construction skills instead. There is even a lack of drivers for 18-wheelers. My brother paid for college by working at McDonald's. He worked for 15 years as a systems analyst. His job was outsourced. He's back working at McDonald's.
There's a great 90 day course to learn the skills to work on a land drilling rig through the Midland, Texas community college. I'd bet money that with a little hands-on experience and his computer skills he could get an extremely good job with any number of oil service companies in domestic exploration and production.
The thing that is really scary is that huge numbers of empty shipping containers are piling up in the ports because the US no longer makes much of anything that the rest of the world wants to buy.
Empty shipping containers?????
One of the most accurate measures of the activity of the US economy and consumer/industry spending is rail freight traffic. The first four months of the year show railroad carload traffic down over four percent and intermodal traffic (containers and trailers) down about the same. Those goods from China are not flowing nearly as fast as they were a year ago. Go to www.progressiverailroading.com and hit the news bar and look at May 4th rail news about rail freight traffic.
On Another Note:
Several posters recently made statements that India did not increase its oil consumption and oil imports last year. WRONG! The above article states that India's oil imports were up over 11 percent year over year for 2006. They are on course for more of the same this year.
Shawnott: Not a problem for the companies. The middle class (consumers) are growing rapidly in Chindia. I am always shocked how most Americans are unable to visualize a world economy that is not dependent upon the American middle class consumer.
The one "good" thing I see coming from this is, as the upper middle class and middle class become devalued down closer to lower class, the political majority will swing from corporate / capitalist to liberal / socialist.
I fear the lag time between elections and lag time for americans to realize they are now lower class will be far too long.
Good insight. I argue with some socialist bent friends about this sometimes. I honestly believe at some point taxes will go up to maintain the regime but it will be cast as a necessity against the acsencion of China which is currently fueled by American and other foreign firms investing. When the engine gets started so to speak, does anyone think the Chinese might not take control of their domestic industries once they are built? They will do it in the name of their citizens who will by then reached a middle class status en mass and would be demanding social change...look at this it's starting already....
http://www.breitbart.com/article.php?id=070507090936.m37a86dd&show_artic...
I didnt know that one child policy children could have TWO! Guess that was the compromise. Point is...these people will react like humans do and demand a larger share. So the state will either dissolve into something new and more open or it goes the other way once the power is accumulated on a world scale. I've got a whole idea how they could be working on a big plan to take America financially, but this is finals week so I can't put my effort into yet. Hopefully following graduation I'll have some time to put some effort into it.
I Have NO simpathy for automakers.
Imagine how many EV1's they would be selling today.
If your industry is based building machines that run on fossil fuels, and you dont have the common sense to research the future supply of the fuel for the machines you build, then you deserve to become extinct. Every other dam country's automakers caught on YEARS ago.
for some reason this posted in the wrong spot...sorry
Not to mention their role in deliberately killing off urban mass transit in numerous cities to FORCE people to buy and drive their #%%$# cars .
"I Have NO simpathy for automakers."
I assume you mean American automakers. Thats too bad considering how many Americans are employed by them. And not all of those employed have a say in what vehicles actually see production.
As for the EV1, which was designed to address Californias' assinine "zero emmission" policy not fuel savings, it FAILED in the market. And cost billions to produce.
"If your industry is based building machines that run on fossil fuels, and you dont have the common sense to research the future supply of the fuel for the machines you build, then you deserve to become extinct. Every other dam country's automakers caught on YEARS ago."
As for researching alternatives to fossil fuels GM and others are spending billions on automotive applications using alternatives as fuel. Unfortunately there are NO suitable alternatives for fossil fuels, each having MAJOR drawbacks.
Also the last time I looked EVERY automaker produces vehicles that run EXCLUSIVELY on fossil fuels. Can you name me one that does not?
Daimler Chyrseler makes the GEM.
http://www.gemcar.com
And Honda makes a compressed natural gas Civic that could be converted (by the owner) to bio-methane.
BTW: GM spends billions on PR and advertising, NOT on "researching alternative fuels". And demand exceeded supply for the EV-!.
Best Wishes for the survival of responsible auto companies,
Alan
<"Daimler Chyrseler makes the GEM.">
The GEM runs off of fossil fuel generated electricty stored in batteries. The sources and ratio of electricity can be found here: http://en.wikipedia.org/wiki/Electricity_generation
<"And Honda makes a compressed natural gas Civic that could be converted (by the owner) to bio-methane.">
Compressed natural gas is a fossil fuel. I haven't found bio-methane at my local gas station yet.
<"BTW: GM spends billions on PR and advertising, NOT on "researching alternative fuels".">
I have no doubt that marketing and advertisings' budget outweighs Larry Burns', here is a list of just a few of the vehicles GM made in their search for alternative fuel applications. And they weren't done on the cheap either!
http://www.gm.com/company/gmability/adv_tech/400_fcv/fact_sheets.html
<"And demand exceeded supply for the EV-!.">
Not in the North! Having one die on you on the test track certainly gives one time to ponder that particular vehicles shortcomings. "GM's internal research showed very clearly that the EV1's already perilously low range would be reduced by as much as 50% for use in cold-weather states." See here for more: http://en.wikipedia.org/wiki/EV-1
A Very large market exists where cold weather is rarely or never a problem (and many/most US households have two cars).
US West Coast + Coastal BC
Desert SW
Mexico
US Gulf Coast
Florida
Personally, a majority of my trips are less than 15 miles round trip and it gets below 32 F about twice a year on average.
I see GM research as an extension of their PR department. They are not serious about developing anything (except hiring psychologists to design Hummers for the reptile brain). Small Daimler Benz had their own wind tunnel DECADES BEFORE GM did. Their VOLT has been shown to have just been a publicity stunt (used off the shelf golf cart drive train).
To paraphrase "Engine Charlie", GMs President and Eisenhower's Secretary of Defense; "Wfat is good for GM is bad for the United States".
My first car was ALMOST a Vega (some high school friends did buy that hand grenade of a car). If I had bought it, the financial disaster would have destroyed my working through college and changed the course of my life.
Worst Hopes for GM,
Alan
"A Very large market exists where cold weather is rarely or never a problem (and many/most US households have two cars)."
An automotive company cannot make a car that functions exclusively in those areas and climes. Imagine the headlines (not to mention lawsuits) "Family of four perishes driving an EV1 through Rocky mountain snowstorm"
"Personally, a majority of my trips are less than 15 miles round trip and it gets below 32 F about twice a year on average."
That puts you in the front of the line to qualify as an ideal Volt customer!
"Small Daimler Benz" also suffered the same strange malady as did the rest of the Fatherland. NO DOMESTIC SUPPLY OF OIL! WWII ring a bell? I'll bet, back then, they wished they didn't HAVE to have their own windtunnel.
"design Hummers for the reptile brain)."
No argument.
"My first car was ALMOST a Vega"
No comment (see below) :-P
"Worst Hopes for GM"
That wasn't a very smart comment and it belies the error in your thinking. As if you would be untouched should GM go under! But I was thinking more about the two big flaws in your proposing of light rail systems you coveniently overlook:
1. Light rail had a shot in this country and it FAILED.
2. Train stations are excellent targets for terrorists. Try the Madrid bombing and the Tokyo subway gas attack for example. A couple of successful high profile attacks would put the whammy on ridership.
Around the Detroit area a popular bumper sticker reads "Out of a job yet? Keep buying foreign".
Incidentally GM's Bob Lutz was on a local show AUTOLINE DETROIT
http://www.autolinedetroit.tv/# (warning long load time)
calling for a "Manhattan type project" to address both fuel economy and global warming. Sounds like he's getting the "word". I wonder if he's read "Twilight" or TOD?
As I said last year, assume that your income drops by 50% and assume that gasoline goes to at least $8 per gallon. How would you change your lifestyle?
If I am wrong about where we are headed, you will have less or no debt, more money in the bank, and a lower stress way of life.
For those who believed, or believe, in borrowing their way to prosperity, we are going to see the emergence of an interesting new voting bloc--the Formerly Well Off (FWO's), who used to own nice debt financed cars and homes. The FWO's who believed ExxonMobil and CERA's pronouncements that Peak Oil was decades away are going to in a very, very pissed off mood.
Hell hath no fury like a FWO who has had his SUV repossessed and his McMansion foreclosed upon.
The last time anything at all like this happened - the 1970s - the thrifty people with "money in the bank" were looted by means of both rampant inflation and the Savings and Loan taxpayer bailout, in order to provide a free ride for the "FWO"s of that day. In the end the FWOs weren't - instead, they made out like bandits by eventually paying off their debts in grossly inflated dollars.
Maybe it will be Different This Time Around. But it's not clear how much to bet on it. So far, the discussion seems to center on the government just giving the potential FWOs the houses they never paid for, and balancing the books by yet again looting the thrifty. So precedent and politics, at least since the mid 20th century, do not particularly endorse thrift. Instead, they say that "money in the bank" is simply flushed down the drain.
You hit on something important. Until recently, being thrifty has not really paid off. Yes, a lot of people are probably going to finally get burned as the music stops, but there are a lot people who have made a lot of money or, at least, have enjoyed a lot of assets during the era of no limits debt.
Presumably, a bunch of people are losing their homes that they couldn't afford in the first place. They will have to make other arrangements, as it were. On the flip side, however, a radical reduction in housing prices will be beneficial for those who are just now getting into the market.
Arguably, if you are going to have trouble paying your mortage, this is the best of times. Since you are now part of a crowd, there is an incentive for lenders to be "creative" in keeping you and everyone else in their homes.
I must admit I have trouble wrapping my mind around this, probably because of my somewhat puritan perspective on debt. I have no debts other than a small mortgage, and that is very much less than I can afford.
Maybe I am the one that is the sucker.
Yes it's how the old saying goes, if you owe the bank a thousand pounds, you have a problem, if you owe the bank a million pounds the bank is the one with the problem. Well, together their mortgage lenders owe the bank a lot more than a million, and if they break some they might break a lot more.
It's an interesting question that we have debated at length. Clearly, at the present time, we are see deflationary effects in the housing/auto/finance sectors and inflationary effects in food and energy.
Regardless of whether we end up with Weimar Republic style inflation or Thirties style deflation, or both sequentially, or more likely some combination of the two, reducing your cost of living and energy consumption, IMO, is a very good idea.
The US is going to be forced, whether we like it or not, to reduce our overall consumption, especially our energy consumption, in much the same way that forced energy conservation came knocking on Africa's door last year.
Itulip has it nailed....disinflationary forces just like you describe WT, followed by inflationary hell.
http://www.itulip.com/forums/showthread.php?t=417
He has some clout in the past since he did manage to muster the strength to call the tech boom, but everyone claims to have done so now. I think on the back end (5 years maybe or more) we see massive deflation as this whole thing pops especially when oil scarcity becomes front and center as opposed to the sidelines it still sits on.
Though interesting, the argument has a certain flaw - the assumption that the Fed can lower interest rates as it pleases, without concern of broader consequences.
As America is in need of constant international capital inflows at this point, the Fed can cut interest rates as it wishes - at the cost of destroying that balancing act.
Deflation is not exactly something that can be avoided - no one can be forced to take credit. And if a speculative bubble stops growing, it collapses.
The Fed certainly can lower interest rates... if they are willing to print the difference instead of borrowing it. This is the classic "monetizing the debt" that the US used in the late 70s to finance its debt then. Reactions like KSA's threatened pullback from the dollar to gold (which is what drove gold over $800 per ounce back then) caused the US to shift gears, leading to Volcker as Fed chairman and his resulting recession in the 1979-1982 time frame. Note that this occurred at the same time as oil production was falling globally but they could have played the other card and hyperinflated their way out of debt.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
If?
M3? QED, no?
>Though interesting, the argument has a certain flaw - the assumption that the Fed can lower interest rates as it pleases, without concern of broader consequences.
In the last week or two, the Fed overnight rate has dropped below its target rate of 5.25%. Repo's are now trading about 5.12 ~ 5.10%. This hints that fed may drop rates, or just let institutional borrowers, borrow below the official rate.
I believe this is because the fed is concerned about mortgage lending issues. I have a hunch that they are far more concerned about failing lenders than a falling dollar. Plus, the Treasury (Paulson) has made a bigger push for China to remove its peg on the dollar. This leads me to believe that fed intends to inflate the dollar, and damn the overseas consequences for now.
If dollar does drop, countries that wish to preserve their US export market will be forced to adapt. This could be in the form of pegging their currencies to the dollar, or lowering their interest rates to make their currency less attractive.
>As America is in need of constant international capital inflows at this point, the Fed can cut interest rates as it wishes - at the cost of destroying that balancing act.
The Fed and the Treasury dept. have been buying the treasuries that have not purchased by investors during auctions. Had they not, the yield on treasuries would have been much higher. The Fed and the Treasury dept. have essentially pegged US interest rates in order to prevent credit from drying up. I can't say how long they will continue this but I don't seem them stopping this practice anytime soon.
I've put it this way:
The American consumer is standing at a four way intersection, with:
Inflationary 18 wheelers on two sides coming his way: rising food/energy costs and rising health care costs, and
Deflationary 18 wheelers on two sides coming his way: falling real estate values and falling real wages (especially because of increased competition for jobs).
Meanwhile, the party goes on...
Consumer credit rises $13.46 bln in March-Fed
Analysts were expecting a $4.5 bln gain. Also, Jan's consumer credit increase was revised up from $6.61 bln to $8.42 bln, and Feb was revised up from $2.97 bln to $5.56 bln.
I got two opportunities to enlarge my debt in the mail today. Its terrible to get a reputation for paying your bills.
I'm remodeling my house in Galveston, but paying the cost out of cash flow. My electric bill was $27.00 at @0.0145 cents per kilowatt hour this month, and I live 4 blocks from good wade fishing. My car gets 33 mpg and has 196,000 miles, and I could pay cash for a new one. My only debts are a student loan of approx. $3,000 left and a mortgage of $568.00 a month, plus insurance taxes and utilities adding about $250.00 a month. I'm a landman, and the late eighties and nineties shore learned me.
The upshot is that WT's advice is excellent. Its real conservatism-the secret to overcoming financial insecurity is spend less than you earn. Real patriotism is conserving, not flag waving. Every person needs to take personal responsibility first, and, THROW AWAY THE CREDIT CARD OFFERS!
One of Charles Dickens persons in one of his novels(can´t remember which) said, if you have an income of 100 pounds, and you spend 101 pounds you live in misery. But if you spend 99 poundes you live in prosperity.
I got two opportunities to enlarge my debt in the mail today. Its terrible to get a reputation for paying your bills.
I'm remodeling my house in Galveston, but paying the cost out of cash flow. My electric bill was $27.00 at @0.0145 cents per kilowatt hour this month, and I live 4 blocks from good wade fishing. My car gets 33 mpg and has 196,000 miles, and I could pay cash for a new one. My only debts are a student loan of approx. $3,000 left and a mortgage of $568.00 a month, plus insurance taxes and utilities adding about $250.00 a month. I'm a landman, and the late eighties and nineties shore learned me.
The upshot is that WT's advice is excellent. Its real conservatism-the secret to overcoming financial insecurity is spend less than you earn. Real patriotism is conserving, not flag waving. Every person needs to take personal responsibility first, and, THROW AWAY THE CREDIT CARD OFFERS!
The FWO will form the basis for a real fascist government in the USA and Canada too. The Neocon adventure was the American "beer hall putsch" and we should be prepared for the real fascist take over when the FWOs vote them in with a much clearer mandate.
I wish we could afford the life we are living.
"Better-heeled failing home economics too"
As more owners are unable to make higher payments, Deputy Strickland finds himself evicting people in nicer neighborhoods.
http://www.latimes.com/business/la-fi-evict6may06,0,5268127.story
The ugly face of foreclosure: When foreclosures climb, entire communities can go down.
If it is like this now, imagine what will happen for every one dollar increase in the cost of gasoline.
http://www.energybulletin.net/19420.html
Published on 21 Aug 2006 by GraphOilogy / Energy Bulletin. Archived on 21 Aug 2006.
Net Oil Exports Revisited
by Jeffrey J. Brown
This is my big worry. Someone upthread mused that people might be driven to a more socialistic view of things. I wish I could be so optimistic. How will the middle class react as it crumbles? My fear is that it will sign on to the empire project, saying we need the oil -- let's go get it.
That's fine so long as the next step is to take this gun and go shoot at those guys. It's not going to be my ass fighting for this bullshit.