Who stole my cheesy economy? - Eric Janszen

[wayiwalk]

Re: Who stole my cheesy economy? - Eric Janszen

By the way, where's the new thread that discusses this?

[ASH]

Re: Who stole my cheesy economy? - Eric Janszen

By the way, where's the new thread that discusses this?

It is in the membership section, here.

But there's no reason those without access to iTulip Select can't start their own thread in the public fora.

[Sharky]

Re: Who stole my cheesy economy? - Eric Janszen

During WW II, the US built up massive wartime production capacity. The factories were paid for with a combination of taxes and war bonds -- forced savings and investment. Millions of new workers (women) entered the workforce. At the same time, fear from the war and forced rationing of key products like gas and rubber depressed spending.

After the war, factories were converted to peaceful uses. The sudden increase in productive capacity combined with a suspension of rationing and people who started spending again caused the boom of the 50's.

A war now wouldn't fix anything, just as it wouldn't have helped in 1932. Today, we have too much productive capacity and too much debt.

To answer the question of how to cause a similar boom without a war: first, crash the economy for a decade. Then deprive the public of key products for 4 or 5 years through artificial shortages and rationing. Force savings and investment through Draconian laws and fear-mongering. Then suddenly reverse those policies and say that everything will be OK. You'll get your boom.

[D-Mack]

Re: Who stole my cheesy economy? - Eric Janszen

A couple of ex-spooks have their say on the war question:

Will He Sell Himself Into His Own Defeat?

Obama and the Empire

By BILL and KATHLEEN CHRISTISON
Various people have asked recently, “What are the implications of the global economic crisis for US policies in the Middle East, and will Middle East countries lean more or less toward the US as they suffer their own economic crises?” Not simple questions, but here, presented very briefly, are our first shots at them.

Let’s start by discussing what US policies affecting the Middle East may emerge in coming months. A preliminary point that is necessary to make is that present policies inherited from the Bush administration are a mess. Practically everyone of every nationality who lives in the Middle East -- and elsewhere for that matter -- believes that the economic crises now moving in on the world were largely caused by the US’s own extreme version of capitalism with its massive emphasis on privatization and on elimination of regulations that might have provided some protections for ordinary people. At the minimum, there are widespread feelings of Shadenfreude over the pain the US is now suffering, and at a political level there is intense dislike of the US for policies that are seen, correctly, as arising from US and Israeli colonialism and empire-building and that are blamed for the economic woes and inequalities now affecting nations everywhere.

There are two major scenarios of how US Middle East policies may develop in the next year or so. Even now, no one knows enough about President Obama to know which scenario or variation on it might be likely.

Increasingly, though, it appears that in foreign affairs, he is not going to change very much. We hope this is wrong. At least on the central issue of Palestine-Israel, Obama made it clear from the start of his campaign, well before the election, that he will support the right-wing elements of the Israel lobby led by AIPAC. But there still is the question of how strong his support will be.

The first scenario is that Obama will just bumble along, changing as little as he can get away with from Bush’s policies, except for clearing away some of the roughest edges of Bush policies on torture. Obama is expanding the war in Afghanistan and continuing the war in Iraq longer than he said he would. Under this scenario, he will try to keep talking as long as possible over Iran and try to avoid fighting. He will try to keep supporting a civilian government in Pakistan, but would not really oppose a return to military dictatorship in that country, if Pakistan would continue supporting his Afghanistan and Iran policies.

That’s the first scenario. Although its support for empire and colonialism makes it an undesirable scenario, at least Obama would be trying to avoid a major war.

The second, much more militaristic scenario is far worse, possibly involving more wars, but it describes what Obama’s policies in the Middle East may well turn into as the remaining months of 2009 pass by.

Right now Obama is faced with domestic economic difficulties greater than he would have thought, during most of his campaign, could conceivably happen as rapidly as they did. But he is also faced with a military-industrial complex that is now pushing for ever larger military expenditures and more aggressive foreign policies, among other things as a way to help solve US economic difficulties. In addition to this, Obama is faced with the prospect of an Israeli government under Benjamin Netanyahu that is even more right-wing than the present one, supported by that portion of the Israel lobby led by AIPAC. This part of the lobby is probably the strongest ally of the military-industrial complex in supporting more wars and more aggressiveness in US Middle East policies. Obama showed his support for the lobby throughout his campaign and, most recently, did nothing to oppose the lobby’s successful trashing of Charles Freeman, a fine candidate for a senior intelligence position whom the lobby charged with being anti-Israel. Since a majority of US voters generally support Israel without thinking much about it, the disorganized justice and peace movement in the United States is not very effective in opposing either the military-industrial complex or the right-wing Israel lobby.

Obama has by now clearly shown that he does not want to be the American leader who loses the American empire. In general, most European governments, most of the Arab governments, and the Japanese government as well, will not oppose him. Public opinion in these countries, in contrast to the governments, will be somewhat stronger in opposing US policies of empire, but it is doubtful that the publics in these countries will be able to accomplish very much.

So the conclusion that one comes to if this second scenario turns out to be true is that we are facing a very dangerous period in world history. There are indeed forces in both the United States and Israel that want a clash of civilizations and are definitely not against further wars, and these forces are powerful. Obviously, the first nation to be affected by implementation of this scenario would be Iran. At this point it is impossible to know whether Obama will want to, or be able to, prevent these forces from dominating future US policies throughout the Middle East.

Bill and Kathleen Christison have been writing on the Middle East for several years and have co-authored a book, forthcoming in June from Pluto Press, on the Israeli occupation and its impact on Palestinians. Thirty years ago, they were analysts for the CIA. They can be reached at kb.christison@earthlink.net

He doesn't say much about Pakistan which has a border with China, although it looks like it's going there.

U.S. may widen strikes in Pakistan

Christison is one of the people, who doesn't accept the official 911 story so I would expect more in depth stuff of him.
http://patriotsquestion911.com/

And it still surprises me that Russia and China are playing the game and have kept quiet for so long.

[Chris Coles]

Re: Who stole my cheesy economy? - Eric Janszen

He doesn't say much about Pakistan which has a border with China, although it looks like it's going there.

U.S. may widen strikes in Pakistan

Christison is one of the people, who doesn't accept the official 911 story so I would expect more in depth stuff of him.
http://patriotsquestion911.com/

And it still surprises me that Russia and China are playing the game and have kept quiet for so long.

You also need to read this from the Times earlier this week. Rory Stewart is by far the most respected individual here in the UK.
What worked in Iraq won't help Afghanistan

Rory Stewart has witnessed both our major conflicts. Here, in an extract from a speech at Chatham House, he suggests a new way forward

http://www.timesonline.co.uk/tol/com...cle5920064.ece

[Chris Coles]

Re: Who stole my cheesy economy? - Eric Janszen

That's a good point, but to get an effect equivalent to WWII, America would have to ask the rest of the world to knock down their factories with bulldozers. That would be an awkward discussion.

Mind you, I do not myself believe that war is to be wished for, or would prove especially helpful in these circumstances.

Ash, you have missed my point. I am not talking about destroying capacity anywhere but here in the West. In fact, I am not talking about capacity at all either. Everything we have has a finite lifespan. The shortest product lifetime is the newspaper. Purchased in the morning, disposed of before days end. But many things we take for granted, (there for our full lifetime), can and often are replaced. Take a fundamental tenet of accountancy; depreciation. We fully depreciate buildings and plant, but in fact, do not replace the item at that point, but instead, keep the fully depreciated item in service as long as possible. The full cost of replacement is already there in the accounts. So, replace it.

What I am trying to get across is that we do not need anything other than to change our perception of what is possible to be able to generate prosperity.

In my multi-part thread, The Road Ahead from a Grass Roots Viewpoint, I used the example of an old aircraft engine and building a new business around it. It is our perception of the potential that needs retuning, not a war.

[santafe2]

Re: Who stole my cheesy economy? - Eric Janszen

More to come.

The following 5 charts paint a picture of what happens when the US consumer shuts down. We're far enough into this downturn to see how deeply this is hitting most of our basic industries. I can't say I was unhappy about the the pesticides, etc. but that's best left for another day.

07BasicMetals.jpg
08AlumExtrude.jpg
09Plywood.jpg
10IronOreMining.jpg
11PestFertAGChem.jpg

[leegs]

Re: Who stole my cheesy economy? - Eric Janszen

During WW II, the US built up massive wartime production capacity. The factories were paid for with a combination of taxes and war bonds -- forced savings and investment. Millions of new workers (women) entered the workforce. At the same time, fear from the war and forced rationing of key products like gas and rubber depressed spending.

After the war, factories were converted to peaceful uses. The sudden increase in productive capacity combined with a suspension of rationing and people who started spending again caused the boom of the 50's.

A war now wouldn't fix anything, just as it wouldn't have helped in 1932. Today, we have too much productive capacity and too much debt.

To answer the question of how to cause a similar boom without a war: first, crash the economy for a decade. Then deprive the public of key products for 4 or 5 years through artificial shortages and rationing. Force savings and investment through Draconian laws and fear-mongering. Then suddenly reverse those policies and say that everything will be OK. You'll get your boom.

I think that's the best explanation I've read yet as to why WWII helped then, and a war won't help now.

[dloomis]

Re: Who stole my cheesy economy? - Eric Janszen

We have a feeling, more than a hunch and strong enough for us to take some short positions, that this relief rally has run out of gas.

What do folks think EJ is shorting? Financials?

[lakedaemonian]

Re: Who stole my cheesy economy? - Eric Janszen

What do folks think EJ is shorting? Financials?

Can you short average life expectancy?

[ThePythonicCow]

Re: Who stole my cheesy economy? - Eric Janszen

Can you short average life expectancy?

If you expect average life expectancy to shorten, then you might devote more of your time and resources to your own health, so as to resist the trend.

That's what I'm doing. I trust our major medical, drug and food businesses as much as I trust our major financial, political, and media institutions. :eek:

[Guest]

Re: Who stole my cheesy economy? - Eric Janszen

This article is not a war forecast but asks a question. Due WWII world leaders did not have to face the question of how to end a global debt deflation by negotiated agreement. Instead, war spending destroyed capacity, increased employment and demand, and inflated away the debt.

The question is, how will we do this without war? What kind of agreement might possibly come out of the April 2, 2009 G20 summit?

Maybe one "solution" is war after all. Trade war. De-globalization, or at least very limited trade (for things we simply cannot produce enough of, like oil) If the US is currently a trade debtor nation, would the net result of isolationism be

1. decreased capacity
2. increased demand due to having external sources for goods cut off
3. increased employment (required to produce all that stuff)

It would be disruptive and painful, but is it feasible?

[santafe2]

Re: Who stole my cheesy economy? - Eric Janszen

Thanks Fred - and Bart for the additional charts and information. I just spent some time at lunch looking more deeply at the CAP-U components and there is a lot more there for us to understand. I'll find some time tonight to post a link from the Fed and some data we can drill into.

So here are a few more charts I finished tonight from various CAP-U sectors. As you might imagine, food and energy are doing OK but several other more specific sectors are faring much worse. If any readers still have some doubt with regard to the iTulip depression thesis, review these charts and try to explain them in another light than a 'transformational depression'.

The chart below shows that we are producing at 1999 levels. This is hardly the right direction if we're moving toward a more productive economy. Clearly we're still unwinding.
00CAPU_Total.jpg

The next four charts show consumer durable goods and then various areas of consumer goods, household appliances, consumer vehicles and apparel. If you're not sitting down, you should. When the homeowners ATM shut off in 2006, so did the consumer.
01ConsDurGoods.jpg
02HHAppliance.jpg
03ConVehicle.jpg
05Apparel.jpg

More to come.

[santafe2]

Re: Who stole my cheesy economy? - Eric Janszen

Um, weird iTulip hiccup, post #2 showed up like it was posted 5 hours earlier...in any event. Here's the last group of charts from the most recent CAP-U data.

If you thought consumers had cut back, business has simply stopped buying US made vehicles.
04BusVehicles.jpg

12MfgHomes.jpg

Newspapers are dead. This has little to do with this downturn but I wanted to publish this to make sure everyone here understood how few people still pay for a newspaper.
06NewsPub.jpg

And just for fun, unless you happened to have worked in this industry, they don't make motor homes any longer. Since I own a VW Vanagon Westfalia Syncro I'll refrain from gloating...too much...but good ridence.
13MotorHomes.jpg

[santafe2]

Re: Who stole my cheesy economy? - Eric Janszen

Missed this, here's the data link for anyone with a taste for too many numbers. All of my charts come from this link. Have fun lurking for yet more distressing data.

http://federalreserve.gov/Releases/G17/ipdisk/ip_sa.txt