Physiognomy of Economic Depression - Eric Janszen

[metalman]

Re: Physiognomy of Economic Depression - Eric Janszen

Fair enough. But there will be survivors even if the profit is lower. Smart and effecient businesses that supply what people need will exist. What they are and what they do:tbd. In my business, advertising, the pie is smaller but clever new businesses will grow.

The overarching issue of if here is enough productive economy to create escape debt velocity, I say no. So we see waves of inflation versus deflation. At some point it will all reset.

cash flow net of debt repayment...

Lois like ej called it spot on on the next downwave

first bounce, mar 27, 2009...

bounce over, jun 17, 2009...



we shall see...

[mcgurme]

Re: Physiognomy of Economic Depression - Eric Janszen

my guess is it comes in waves... 1st the retailers with not enough cash to weather a few weak months... 2nd the better run retailers who run out of cash after 6 - 9 months. 3rd come the retailers who throw in the towel 'not worth the trouble' after a year of off business.

I know someone who recently threw in the towel for exactly that reason: "not worth the trouble."

They hadn't earned a dime in a few years of business, and just decided life would be simpler without the business. So they returned to being a single income family.

[shiny!]

Re: Physiognomy of Economic Depression - Eric Janszen

"Where are soup lines?"

and

"Unless politicians really foul it up, there shouldn't be soup lines as long as during the 1930s. This is a simple function of technology and productivity - both of which have advanced by leaps and bounds in eight decades."


Today's equivalent of the soup line is Food Stamps. I seem to recall reading that in some states and localities, approx. 10% of the population is on Food Stamps. That would translate into some ginormous soup lines.

Someone earlier in the thread was wondering where the personal anecdotes are. Here's what I see happening around the Phoenix, AZ area. My "View from the Bottom":

Freeway traffic is way down... fewer cars on the road, even at rush hour. I think a lot of it is accounted for by AZ making it harder for illegal aliens to get work here. Many of them have moved on to other states.

Yesterday's Sunday paper had only two pages of classifieds (way down from times past) and NO coupons!

My husband and I are in our early 60's and 50's respectively. He's a Spec. Ed. teacher facing a pay cut this fall. The school district let a lot of teachers go this spring (administrators got to keep their jobs), but Spec. Ed jobs are considered essential for now. He's also a skilled handyman/plumber/jack-of-all-trades and gets side work to help make ends meet.

I work part time for a company that owns mobile home communities, mostly for the 55+ senior crowd, but a few are "all-age" family communities. We live in one of their 55+ communities. Along with some pay I get our rent and utilities comped.

This industry is one of the few growth industries during a housing and economic crash. These are mid-level communities, not fancy, not trashy. Lot rents are about $350/mth plus utilities. About 25% of the homeowners here are year-round occupants. They mostly get by on SS and Medicare, with little in the way of pensions. These old folks are barely surviving now... I worry about how they will fare in the times to come. My husband does home repairs for them at no charge, just to help them out.

The snowbirds come down in the winter and fill the parks up. A lot of them are retired auto workers from Michigan. They're seeing their insurance and retirement pensions evaporating. I'm wondering how many of them will be able to continue owning their winter homes. My neighbor would like to sell his nice Michigan home and live here full-time, but he can't find a buyer.

As long as gas stays low, the RVers will keep coming in the winter. The all-age communities are filling up as families find their mortgage payments and apartments too expensive. But a lot of these people are losing their low-paying jobs and finding it hard to pay their rent.

Personally, we live in a 1986 model 750-sq.ft home that we bought for $3,000 in 2002. It's in good shape but we're cramped for space. We chose to buy a used manufactured home because it never occurred to us to finance a stick-built house on our income. We eat well but live frugally: no Cable TV, cell phones, or expensive toys. Our only splurge is Tivo. We have a little old TV and drive old cars that we bought used for cash.

We have no credit card debt, no mortgage, and property taxes of about $50 annually. We do have medical bills from a major surgery, and a government student loan that my husband will be working to pay off until the day he dies. That student loan helped him get a dual Master's degree in SpEd, with pay so low he can never pay it off.

I built my own computer to save money, and have a little e-commerce business that brings in a few hundred a month after expenses. We had planned to put the profits into our IRAs because we had totally failed to save for retirement. But we cashed out our paltry IRAs last summer to pay the high health insurance deductible, and now use the business income for preps. SHTF preps = "retirement planning." I'm seeing my sales start to decline and wonder if I should order more products or not.

By today's McMansion standards, with people on welfare having Cable and cell phones, we live like poor people. But we've been able to save and prepare a bit for the hard times coming. When it hits, maybe we won't feel a big drop in our living standards (dropping much further would be called "living under a bridge").

This is us, living the American Dream.

Hopefully we'll see a lot of people who lose their overpriced, mortgaged homes moving into our communities, thus keeping me employed with a roof over our heads. Our friends with big new houses and car payments are actually in worse shape than we are.

[mcgurme]

Re: Physiognomy of Economic Depression - Eric Janszen

I was going to post about the "freeloaders" that grapejelly mentioned, then I decided to let it rest. But since you brought it up again, I must respond.

Assuming that all public servants are "freeloaders" is pure BS.

There are plenty of us who work our assess off. I train future scientists while working on solutions for antibiotic resistance. My colleagues work on problems like diabetes, cancer, HIV, and heart disease.

And of our 60+ hour workweeks, we spend an ever increasing portion of our time writing grant proposals, because the neocons have hoodwinked everyone into thinking that we must have "constant competition" to prevent the "freeloaders" from surviving in the system. Sure, this may squeeze a few freeloaders (unproductive tenured profs) out, but it also creates a vast waste of time for everyone, that drags productivity down far more than a few "freeloaders" would have. I spend more time now writing grants than I do working with students or doing science. By all standards, I am considered "productive," yet my productive time is nearly all spent writing grant proposals to assure everyone that I'm still productive. It has become a sick joke.

Let's cut off our noses to spite our faces.

It is like the case of someone I know who worked for the government. They used to allow the use of a credit card in the agency for small purchases. Then someone was caught abusing it. Punishing the abuser was not enough - they decided they had to get rid of all the credit cards, to avoid any potential for abuse. And the end result was that purchasing anything had to go through 3 levels of bureaucracy, wasting vastly more time and money than the previous system where an occasional abuse might slip through. Purchasing a computer consumed 6 months of time and involved a bloated procurement contract system that was seen by all as insane. That is the end result of "leech" paranoia. No individual is going to get away with anything untoward under that system - but they also can't do their jobs effectively. Of course, many here seem to think that no public servant can or actually wants to do their job. How irresponsibly cynical.

Same with teachers. There are a few bad teachers. But the anti-"leech" sentiment is so strong, that we've instituted reams and reams of testing to try to rid the system of these few bad teachers (NCLB). And, again, a few bad teachers and schools may be eliminated - at a vast expense to the education of our children. There is nothing more irksome to me now about the public school system than teaching to a test, which is mostly teaching useless knowledge. So, to avoid the "leeches", the baby has been thrown out with the bath water. We care more about the leeches than our kids' education. It disgusts me when I think about it.

In any system there will always be leeches. It is true of corporations and governments (less true of small businesses, because of close supervision by the owner). Leeches exist. The only question is how to handle them. The prevailing sentiment here seems to be "those leeches don't deserve a cent of 'my money'" and so let's let them starve. Or some such tripe. That is not a solution, because it will not make them go away.

Someone has to pay for the unproductive members of society, unless we want a truly ruthless society (and such ruthless societies have typically devolved to places like Somalia, medieval England, etc). It used to in our country that the very richest would pay their fair share of supporting the very poorest. But Reagan nipped that in the bud. Why should the rich pay their share?

Now, I pay more in taxes than the rich do, and yet I use less of society's infrastructure than they do. Funny that.

It is a nice distraction from this reality to talk about freeloaders. It takes the scrutiny off the people who are really responsible, which are the big leeches (banks and the hyper rich). That's exactly how they want it.

On a more positive note, I don't disagree with your sentiment of slowing down. Too bad I am stuck in a public sector job that will not allow it.

The time is coming when people working in the private sector are going to be considered the "suckers". Working longer hours for less pay while the freeloader class moves smoothly along working 35 hour weeks at a snail's pace. Those that still work. Meanwhile our retired citizens will continue to vote to collect benefits that total more than the average private sector worker makes.

I for one have decided not to play the rat race game anymore. I'm slowing down and working at the pace I want to work. If the customer can't handle that, then too bad. Most don't mind. I'd rather make do with less than kill myself working for that last dollar, half of which ends up paying for the freeloaders anyway.

[shiny!]

Re: Physiognomy of Economic Depression - Eric Janszen

Totally agree with you about the teachers. My husband gets hit with more and more "accountability" paperwork each and every year. He can bring a dyslexic child's reading up 3-5 grade levels in a year, if he has the time to work with that child. But he has to spend hours every day doing paperwork mandated by the Fed and State govt. Mandated by the district that wants to keep getting funded by the gov't.

The US Dept of Education provides 10% of the district's funding, and is the cause of 80% of their paperwork! My husband wants to ask for an aide to teach his class because he's so tied up in paperwork, but that kind of talk at staff meetings tends to bring the label of "troublemaker".

[dcarrigg]

Re: Physiognomy of Economic Depression - Eric Janszen

Assuming that all public servants are "freeloaders" is pure BS.

And of our 60+ hour workweeks, we spend an ever increasing portion of our time writing grant proposals, because the neocons have hoodwinked everyone into thinking that we must have "constant competition" to prevent the "freeloaders" from surviving in the system. Sure, this may squeeze a few freeloaders (unproductive tenured profs) out, but it also creates a vast waste of time for everyone, that drags productivity down far more than a few "freeloaders" would have. I spend more time now writing grants than I do working with students or doing science. By all standards, I am considered "productive," yet my productive time is nearly all spent writing grant proposals to assure everyone that I'm still productive. It has become a sick joke.

As a fellow public sector "freeloader" working double the 35 hours that they pay me for, I must say...

A true observation about grants - not only for academia - but for government agencies as well. "Block and Formula" grants require a vast amount of paper - or at least .pdf - for funds that are earmarked for a specific jurisdiction.

Every municipal government with a population over 35k now nows this well, and the smaller ones will follows as states disburse stimulus funds.

This is what happens when the Federal share of the pie (by pie, I mean the amount of available funds for local work - think of your university or 501c(3)) grows against the Private, State, and Local.

We now have massive transparent data being generated everywhere - a constant rush to write more and more grants - and a need to report on them more often and in more detail.

This is another trend that I do not see slowing down.

There are 117 grant related jobs open in the Boston area on Monster.com right now - and while that piece of anecdotal evidence doesn't mean too much, it is illustrative in a time of growing unemployment. By the way, there are only 96 restaurant jobs posted in the same area.

I only wish I had back data, because I am certain that this is abnormal.

-- --

[grapejelly]

Re: Physiognomy of Economic Depression - Eric Janszen

I know lots of people who work hard in the public "sector." But they get paid more generously, have a much harder time being fired, and have much more vacation time and more generous benefits than do their opposites in the private sector. There is no comparison.

[ASH]

Re: Physiognomy of Economic Depression - Eric Janszen

Someone earlier in the thread was wondering where the personal anecdotes are. Here's what I see happening around the Phoenix, AZ area. My "View from the Bottom":

Thanks for the anecdote, shiny!

[Jim Nickerson]

Re: Physiognomy of Economic Depression - Eric Janszen

Thanks for the anecdote, shiny!

Yes, shiny, I too appreciated your post, what did you call it "View from the Bottom?" Seemed to be a lot of candor there which is not always how people communicate, and I like candor.

Whatever is "The American Dream" I have never understood. Anything to do with living life based on "dreams" has always struck me as bullshit. You play the cards you are dealt, or either "cheat" in some sense of the word.

I think what most struck me about your post is that you appear to be making do with the problems you and husband face without a lot of moaning, groaning, and looking for someone to blame--not that a whole lot affecting the US today is not due to some serious errors in judgement by some of the poplulace as well as the government.

Good post, and thank you for putting it up.

[ASH]

Re: Physiognomy of Economic Depression - Eric Janszen

What impresses us most is how unimpressed many appear to be about the seriousness of this depression. They ask why many restaurants are still booked up and why many malls are still busy, even if apparently the shoppers in them are buying less. Where are soup lines? Where is the high crime rate?

We remind them that we are only one year in to a multi-year process.

The average man or woman does not change his or her behavior until years after an economy has changed around them. No one likes change, even positive change but especially negative change. The tendency is to ignore change as long as possible, and hope it goes away and "normalcy" returns. Meanwhile, change goes on.

The lag between circumstances and behavior feels surreal to me. The local malls are still busy, and rush hour traffic seems the same. This in the state with the second highest unemployment rate. Maybe there are a few more pan-handlers at the highway on-ramp. But nothing looks as dingy as I (dimly) remember from the early 80's. So far, the new depression is apparent only in the handful of local retail chains which have gone out of business in the last year... perhaps in the sprouting of "for rent" signs in my neighborhood. Nothing much has changed there yet, but we put in a burglar alarm system -- trying to stay ahead of events.

On the positive side, orders at Triquint Semiconductor (manufactures cell phone chips) are up, and this week they re-hired some of the temporary workers they let go last fall. My friend who is leaving a job there for a science policy fellowship in DC says the quality of interviewee has gone way up. Staff at the custom circuit board/digital logic house we subcontract FPGA work to still seem busy. Not everything is withering on the vine.

[Jim Nickerson]

Re: Physiognomy of Economic Depression - Eric Janszen

The time is coming when people working in the private sector are going to be considered the "suckers". Working longer hours for less pay while the freeloader class moves smoothly along working 35 hour weeks at a snail's pace. Those that still work. Meanwhile our retired citizens will continue to vote to collect benefits that total more than the average private sector worker makes.

I for one have decided not to play the rat race game anymore. I'm slowing down and working at the pace I want to work. If the customer can't handle that, then too bad. Most don't mind. I'd rather make do with less than kill myself working for that last dollar, half of which ends up paying for the freeloaders anyway.

flintlock, I surmise that you are a self-employed electrical contractor. If that is correct, you still very much work for someone (as opposed to the often heard concept of "I work for myself.") and if you worked for me and it was my sense that you were slowing down and there was anything I was paying you for that had to do with productivity, then I would fire your ass and look for someone else to work for me.

My wife doesn't sweat, and in very hot weather 10 days or so ago, our fan went out on our airconditioner. So happens a HVAC guy, who owns his own business, lives just down the street from me and I called him, and he immediately returned the call from another job he had going with his gang, and in 30 minutes was at my house, and in an hour went and got a new motor and in 1.5 hours had my a/c running. I didn't offer him any extra to work efficiently; I assume he may have charged me for that, but I have no comparison. I have recommended him twice since since then, and he already has had a call from one to whom I recommmeded him--again coming out immediately for what was an after hours call.

I have always thought that you cannot get a worker, including myself, to do some job better solely by paying them more. Given two people whom one has observed working, assuming the finished work was the same, I'd always re-employ the one who was most efficient.

How many people do you know who actually have killed themselves working hard? Maybe worrying hard will kill some, but seldom from hard work in my experience have I seen or heard of people dying. Maybe not working hard if it means putting food on the table has killed some people.

If you employ and pay two people both of whom can do the task you give them, but one does it with greater efficiency and then is ready for another task, while the other is still "working at his own pace because he thinks he isn't getting paid enough" and push comes to shove in your business which guy will you keep on? If you need both of them, which guy would you promote to greater responsibility?

Good luck with your work.

[cjppjc]

Re: Physiognomy of Economic Depression - Eric Janszen

How many people do you know who actually have killed themselves working hard? Maybe worrying hard will kill some, but seldom from hard work in my experience have I seen or heard of people dying. Maybe not working hard if it means putting food on the table has killed some people.

This is the truth. It is the thinking, and associated tension that comes from it, that lead to dying. Hard work, even very hard work done properly is a liberating thing.

[shiny!]

Re: Physiognomy of Economic Depression - Eric Janszen

Yes, shiny, I too appreciated your post, what did you call it "View from the Bottom?" Seemed to be a lot of candor there which is not always how people communicate, and I like candor.

Whatever is "The American Dream" I have never understood. Anything to do with living life based on "dreams" has always struck me as bullshit. You play the cards you are dealt, or either "cheat" in some sense of the word.

I think what most struck me about your post is that you appear to be making do with the problems you and husband face without a lot of moaning, groaning, and looking for someone to blame--not that a whole lot affecting the US today is not due to some serious errors in judgement by some of the poplulace as well as the government.

Good post, and thank you for putting it up.

I'm glad I didn't bore you. My view from the bottom comes from living "low on the hog" in a "high on the hog" society. I also "look up" to all of you who post at iTulip. Compared to you, my level of understanding is definitely at the bottom! Most of what I read here is way over my head, but the effort to understand it has been well worthwhile, and keeps my brain from turning into mush as I get older.

I grew up in the "American Dream": a nice house in the suburbs on an acre of land, Dad worked in the family business, Mom stayed home. Vacations to the beach in the summer, a pair of brand new 1965 Pontiacs in the garage. I didn't know it at the time but my parents lived greatly beyond their means. Every day my Dad would come in with the mail and say, "More bills". I kept asking who "Bill" was. The "Dream" came unraveled in the '70s, my parents divorced, and my mother had to enter the workforce.

I broke off from my family when I was 17. At various times in my life I've been sick, broke and homeless but I've never felt "poor". "Poor" was other people; I was just without money. Maybe it's my upbringing, but I would be ashamed to take charity or be on public assistance. At the lowest time of my life, sick and sleeping on friends' sofas, I did yard work and cleaned houses just to bring home money every day to pay my way. I sold some possessions, invested in materials, and went into business for myself.

I was pretty liberal at that time. Now, I feel like if I could do it, then most of the people on the public dole could do more, too.

Because I've lived through real hardship, I'm grateful for what I have. We actually have it pretty good, maybe not by USA standards, but by World standards. All I have to do is look at how much of the world lives with no food or running water, no education, no shoes, picking through trash, to know that we live like Kings!

A few years ago I was standing in a long line to buy textbooks at a Community College. The line was moving really slowwwwwly and people were grousing and complaining. I mentioned out loud that I thought we were lucky to be able to stand in line to buy our books, because all over the world there were millions of people who had never even owned a book, who would give anything to get an education, but couldn't. People actually took it in and stopped complaining.

When I first saw "Lifestyles of the Rich and Famous", I thought it was going to make a lot of people feel envious and want to live above their means, just to keep up with an impossible standard. When I first saw "Jerry Springer" I saw it as a celebration of self-disrespect, and believed it was going to lead to a coarsening of our society.

Unfortunately, I was right on both counts. Now both these trends are mainstream and there's a generation that can't remember how things were before. I don't know enough about economics to compare this depression with 1980 or 1930. But I do know that peoples' expectations of themselves, of others, and of government were very different in those eras. If for no other reason, I fear that this is going to get very ugly.

[metalman]

Re: Physiognomy of Economic Depression - Eric Janszen

The lag between circumstances and behavior feels surreal to me. The local malls are still busy, and rush hour traffic seems the same. This in the state with the second highest unemployment rate. Maybe there are a few more pan-handlers at the highway on-ramp. But nothing looks as dingy as I (dimly) remember from the early 80's. So far, the new depression is apparent only in the handful of local retail chains which have gone out of business in the last year... perhaps in the sprouting of "for rent" signs in my neighborhood. Nothing much has changed there yet, but we put in a burglar alarm system -- trying to stay ahead of events.

On the positive side, orders at Triquint Semiconductor (manufactures cell phone chips) are up, and this week they re-hired some of the temporary workers they let go last fall. My friend who is leaving a job there for a science policy fellowship in DC says the quality of interviewee has gone way up. Staff at the custom circuit board/digital logic house we subcontract FPGA work to still seem busy. Not everything is withering on the vine.

the stimulus... it's working!

[ThePythonicCow]

Re: Physiognomy of Economic Depression - Eric Janszen

Now, I feel like if I could do it, then most of the people on the public dole could do more, too.

For many of us in America this last sixty years, yes. Unfortunately, we've been living beyond our means.

The time has come to pay the piper.