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TMFDeej (99.47)

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April 04, 2008 – Comments (8)

CNNMoney has a great article this afternoon that describes what is going on in the economy right now.  The piece echos a lot of what I have been saying about the economy lately.  It actually is pretty scary how much on the same page the author and I are.  I'm obviously not implying that the author has been reading my blog, just that he and I may be long lost cousins.  Hold on, I'll check who wrote it, I never look at authors' names.  Huh, Funny enough, I actually have spoken with and provided information to Chris Isidore a number of times in the past, though not in a couple of years.  He's a really nice guy and apparently we have the same view of where the economy is headed.  Here are a few quotes from the story that I completely agree with and in most cases have blogged about lately:

"But the real problem for workers is that slim salary increases may not keep up with inflation, especially with food and energy prices soaring."

"Inflation pressures could intensify further if the Federal Reserve continues to slash rates in an effort to spur the economy. That's because the Fed's rate cuts have been one factor behind the weak dollar."

"Ashraf Laidi, chief foreign exchange strategist for CMC Markets US, said the dollar could lose another 5 percent this year versus both the dollar and the yen as the economy continues to slow. He thinks it will be 'difficult for the dollar to make any recovery' if the Fed keeps cutting rates."

"Auto woes: Not just Detroit any more"

"And the weak economy is starting to hurt overseas automakers like Toyota Motor, which also saw U.S. sales fall in the first quarter."

"Simply put, fewer auto sales could lead to a deeper recession."

What job woes mean to you

Great article.  Check it out.  Do you agree with what it says?  Let me know.

Have a great weekend,

Deej

8 Comments – Post Your Own

#1) On April 04, 2008 at 5:25 PM, mandrake66 (94.90) wrote:

"Ashraf Laidi, chief foreign exchange strategist for CMC Markets US, said the dollar could lose another 5 percent this year versus both the dollar and the yen as the economy continues to slow."

Wow, I knew the dollar was weak, but I had no idea it was slipping against the dollar. That's awful. ;) 

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#2) On April 04, 2008 at 6:37 PM, ATWDLimited (< 20) wrote:

Hey, I have been preaching that US wages are not keeping up with inflation, and that the economy is been on borrowed money for the last 3 years, since I was 13. I have also outlined that is was the real cause of the credit crisis, its that wages are not longer growing fast enough to keep up with inflation so people borrow on credit and it makes the economy boom on paper, but have little substance, hence the soaring 53 trillion debt. And what is driving these wages don, globalization, thats what. If people in the US are to maintain their living style, they have to a borrow, be wage stagnate until the rest of the world catches up or go down a little and than stagnate. Free trade has made US a bazar for foreigners, be it the oil rich, the exporting gurus who use unfair trade policies or the "illegals" who drive down prices.

 Really it is very simple, and everybody knows manufacturing, the power to produce outweighs you countries ability to make well more paper money and credit, thats the problem. The corporations just leave the US for cheaper labor and to avoid the annoying tax code/ regualtion, US jobs leave and don't come back. Factories payed more than service sector and thats what is going on. This is not another revolution, its the hollowing out of what Hamilton, Lincoln, Mckinley, Taft, Rossevelt, harding, Coolidge, etc built, and now its being sacked. 

It's industry that brings technology, infrastructure etc, not office jobs, that does almost nothing to advance the US in terms of skill, technology or ingenuity. I posted awhile back about Free trade in terms of what it means for the US economy, it may have gained short term, it will haunt US forever unless we change course to lower taxes, higher tariffs and smaller government.

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#3) On April 04, 2008 at 6:40 PM, Hezakiah (91.72) wrote:

Ashraf Laidi has also correctly predicted 9 out of the last 5 recessions.

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#4) On April 04, 2008 at 7:11 PM, DemonDoug (98.73) wrote:

c'mon deej, lighten up, the corporate CEO's and big bankers are still driving their Beemers so live is still good.  Everything is fine, it's a shallow recession, buy some financial stocks you'll be rich in no time.

::puke::

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#5) On April 04, 2008 at 7:40 PM, FleaBagger (32.74) wrote:

ATWD -

You almost had me, but then you went on to sing the praises of tariffs and "fair trade." The real problems are entirely caused by interventionist gov't policies, such as overregulation, high taxes, gov't distortion of the market through subsidies (including poverty subsidies and retirement subsidies), and yes, tariffs. Did you not notice that the first staggering blow to the U.S. economy in the GD was struck by Smoot-Hawley?

The reasons behind Smoot-Hawley were exactly the reasons you laid out for tariffs and economic isolationism. And the results, if you were right, would have been the results you envision. But the tariffs devastated businesses that had specialized in one part of a manufacturing process, and wracked the very industry you envision tariffs helping. It would be the same today, because trade strengthens those it allows to specialize.

Yes, there are things going on that are harmful to the U.S., but more involvement from the gov't that created those problems is not the answer. Tariffs are big gov't.

Coming up next... a rant against anti-trust law. (Maybe.)

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#6) On April 04, 2008 at 8:06 PM, Tastylunch (29.93) wrote:

Yeah I do agree with the article with the exception with maybe the assertion that the auto industry is still that important to our economy (still matters a lot but this isn't the early 80's)

Additionally I think we're experiencing far greater job loss than the unemployment figures show. JimJubak had an excellent commentary that I agree with 100%. At least it's certainly been reflected in what I've seen and heard from prominent local businessmen in our local economy here in Columbus 

Here's Jubak's commentary

Jubak’s Journal: Why’s unemployment so low?
Jubak’s Journal: Why’s unemployment so low?

also this guy's story struck really close to home for me

http://money.cnn.com/galleries/2008/news/0803/gallery.real_stories/2.html

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#7) On April 06, 2008 at 9:36 AM, ATWDLimited (< 20) wrote:

Well, in defense of tariffs, name 1 nation that grew powerful an did not us them? None, because they are essential to remaining a strong producer. The reason Smoot-Hawsley, which I do not think was appropriate failed was it  said there would be x dollar tariff on certain goods, but they depreciated in value and so the tariff became a larger and larger percent of the actual products value. the problem was it was a specific tariff, not a % based one.

Tariffs are fie if they are % based and reasonable at about 20%. remember it also allows lower taxes internally on US workers and businesses while building the infrastructure up. It worked for Britain, US, China, Germany, so why argue with what works, when done right. Saying tariffs are bad, because 1 of them was set up improperly is like saying all gamblers cheat because 1 of  them was.

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#8) On April 06, 2008 at 11:23 AM, TMFDeej (99.47) wrote:

Good point mandrake66.  That must have been a typo, though the dollar has been so bad lately I wouldn't be surprised if it was weaker than itself at this point.

Deej 

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