Yeah, yeah. That's the mantra of the TV reports about financial markets.Originally Posted by Schmedlap
It's a short-term phenomenon, might last for probably two years, maybe as few as six months.
The USA simply has no such lever to ruin the real markets global economy.
It would seem
That the ultimate determination of this statements reality would be found not so much in the numbers but rather in whether all those countries you refer to would be confident enough in its validity to allow the US to economically flop.
Or if instead they would do anything they could to stop it from happening.
Might be a couple of good examples from recent past
Any man can destroy that which is around him, The rare man is he who can find beauty even in the darkest hours
Cogitationis poenam nemo patitur
Given the level that the majority of the major economies in the world are connected and interconnected, I'd say it would be "bad" if ANY of them took a major nosedive. US, EU, whatever.
"On the plains and mountains of the American West, the United States Army had once learned everything there was to learn about hit-and-run tactics and guerrilla warfare."
T.R. Fehrenbach This Kind of War
How many countries has the United States bailed out in the last 100 years, and how many countries have bailed the United States out? Go ahead shorten to 50 years so WW2 isn't in the equation. How many countries rely on United States military? Industrial gimme' contracts? And, provide the reciprocal agreements.
Sam Liles
Selil Blog
Don't forget to duck Secret Squirrel
The scholarship of teaching and learning results in equal hatred from latte leftists and cappuccino conservatives.
All opinions are mine and may or may not reflect those of my employer depending on the chance it might affect funding, politics, or the setting of the sun. As such these are my opinions you can get your own.
This thread is becoming bizarre. I'm not sure what the point of it is anymore. What got everything really going was the question of "economic power" (which I think is a highly subjective concept) and whether the US has it or not because it's economy is increasingly "service" (another variable term that has a lot of problems) oriented.
Fuchs,
While an interesting discussion so far, I'm not really sure what your point is. It seems you are saying that the US lacks "economic power" because the US economy is becoming more "service" based. I disagree with that general conclusion along with many of your supporting arguments, which I won't spend the time to belabor here, but more importantly, I think we probably fundamentally disagree on what "economic power" is.
Long ago, agriculture was economic power. With the industrial revolution, industry became the primary source of economic power. My view is that we are in the midst of another revolution - one that won't be complete for quite some time. Industry remains relevant, but grows a bit less important each year. At some point, maybe in a century, industry will probably look a lot like agriculture does today - highly efficient, automated and therefore requiring very little labor. If this is indeed the case, then where are people going to work? How are they going to earn a living? They'll have "brain" and service jobs.
And that's really one source of the so-called "decline" in industry and manufacturing. In real terms, both have actually increased fairly steadily in the US during the last 50 years, not decreased. What has decreased is the labor required. Like agriculture before it, the amount of labor required has dropped and is continuing to drop. That labor has to go somewhere and the simple fact is that much of it goes to the service sector. Many of the graphs here may be instructive. The fact that those huge increases in productivity allow growth in other areas is a strength, not a weakness, IMO.
You seem to hold China up as some kind of industrial powerhouse. I suppose if your measure is plastic toys, clothes and toaster-ovens (as opposed to aircraft engines, for example) you might be right. However, if the global economy collapses tomorrow, I think it will be much easier for the US to go back to making it's own toasters than it will be for China to make it's own jet engines. So while your comparison of industrial capacity by various measures may be true on a macro level, its irrelevant in terms of "power" unless other factors are considered.
Your argument also neglects raw material and energy dependency - the EU, for example, is highly dependent on imported energy and raw materials to make steel - much more so than the United States. One might therefore argue that the US steel industry is more resilient than EU's when all factors are considered.
All this isn't to suggest that all is well in the US. The decline in Americans studying science and engineering is much more worrisome to me than not being the best in steel or shipbuilding or most anything else you and others have mentioned.
Hey, I just thought it was a fun map
eh dang canuckians stirring up trouble... You from Quebec ?Hey, I just thought it was a fun map
Sam Liles
Selil Blog
Don't forget to duck Secret Squirrel
The scholarship of teaching and learning results in equal hatred from latte leftists and cappuccino conservatives.
All opinions are mine and may or may not reflect those of my employer depending on the chance it might affect funding, politics, or the setting of the sun. As such these are my opinions you can get your own.
Me tooHey, I just thought it was a fun map
Speaking for Texas, I am happy
What about Canada, Rex?
I understand demand well enough to notice that your statement is untrue without a very important assumption:
There must be an existing demand in order for lower prices to stimulate a broadened base of customers. If people do not demand the goods, then lowering the price doesn't do much. China sells us black berets. If we stop buying black berets, then I doubt that the excess supply in China will stimulate a fashion trend of Chinamen sporting French headgear. And as other countries feel the pain of doing less business with the US, they will have less disposable income, so China will not be well-poised to market their wares in other countries as an alternative.
Also, what you wrote works poorly in the short run, which I think you acknowledge, and not at all in the long run, which directly contradicts your assertion of "a short-term phenomenon." Profits will fall because the production capacity that was serving a Chinese and US market now only serve the Chinese market. In the near term, jobs in the export industries will pay less and there will be layoffs. In the long-term, businesses will shut down and look for new ways to invest their capital - many of which will fail. I think that you are excessively confident when you assert that it would be a "short-term phenomenon" that "might last for probably two years, maybe as few as six months." If anything, the short-term would be the endgame.
I think that just about anyone in the macroeconomics field would disagree. For example, the IMF has been sounding the drumbeat for about the past year of a coming global economic slowdown, in direct response to the US economic slowdown. Their forecasts seem to be about right and follow from the belief that the US economy has a significant influence upon the global economy.
I don't talk about exotic Giffen goods or other exceptions from the rule. The standard theory is that lower price = more sales potential. All else would not be modern economic theory.
The black beret example doesn't work well because a black beret factory could easily change its production portfolio - that's why I wrote repeatedly about a time of adaption.
A factory usually being owned by companies that have a strong interest to make profit. They won't simply stare at the USA and close the factory because Americans don't buy their goods anymore. They would seek other markets and adapt their production.
You seem to ignore consequently that the current model of exports in exchange for bare promises is much less reasonable than producing for those who actually add the value.
And the IMF has - like the World Bank - a record of being useless in economic theory. Too much agenda and ideology.
Plus; it's a human trait to be risk-averse. Most are. That's why so many people are conservatives. The want to preserve because they fear changes. That's already enough to explain why some sound the drumbeat.
Btw; I didn't mean or intend to assert that it would be nice if the USA broke down economically. The adaption phase would be unpleasant. But the present system is unsustainable and will go away anyway (or is about to do so). It's not the only system that can work fine, and in fact it's not really doing so anyway.
The dependency of Europe is certainly too small to be hurt badly. A loss of growth for a short time followed by a recovery (because growth depends on other factors in the long term anyway) is the most that the USA could do to Europe with an economic crisis.
The PRC would be be influenced much more. Not necessarily badly, though. They need to reduce their trade balance surplus and increase their domestic consumption faster than before anyway (not the least to keep internal peace).
No, I'm not ignoring something. I've simply fallen into the trap of conversing with Fuchs, playing whack-a-mole as you throw out an idea, it gets whacked, and then you just toss out another, and then return to tossing out the original idea, and on, and on.
Yes, but the all-important word "potential" makes that statement different from your original statement that "Excess supply = lower prices = broadened base of customers." But I guess that I'm wrong for not reading your mind and assuming that you meant something other than what you typed.
Indeed. And I repeatedly wrote that if economic calamity befalls the US then the disposable income of other countries suffers and they have less money with which to purchase alternate goods. Go ahead and ignore this and repeat yourself again. Maybe if I smack my head against the wall a few times than I will make the mistake of repeating my rebuttal yet again.
And again.
This hand-waving dismissal, like your earlier inane remark about what "the mantra of the TV reports" tell us is highly subjective and vague, to put it mildly.
I'll leave you to subjectively interpret what is and what isn't. I give up.
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