Economic Recovery

*WhoWee*

Label this post IMO.
I'm familiar with dozens of unemployed manufacturing and construction workers (OH/PA). Most are/were union members and have previously enjoyed the best benefits. The extended unemployment benefits have been helpful - but are also a deterrent to accepting an available job at a lower pay rate and limited or no benefits. Unless a cash payment is offered for a day job (maintenance/construction) - these folks aren't planning to work until all possible benefits are exhausted and the "good" jobs come back. Some of these people have actually gone through 2 or 3 cycles now of (Gov subsidized) "re-training".

On a personal level, I understand their anger and dismay - why should an experienced machine operator stock shelves for minimum wage at the $1 store (selling imported junk from China)?

Astronuc

Employers add no [or few] net jobs in August, while unemployment rate was unchanged at 9.1 pct.

http://finance.yahoo.com/news/Employ...252098583.html

mheslep

Quote by Astronuc

...
Hayek Is Wrong, And So Is Bernanke: The Coming Recession Will Be Deflationary
http://news.yahoo.com/hayek-wrong-be...225018903.html

Thanks Astronuc.

Quote by Forbes, Hayek is Wrong ...

Srinivas thinks it’s time for more fiscal stimulus, not less

Srinivas Thiruvadanthai is apparently a real, working economist, but I think this recommendation is the definition of insanity: repeating known actions and expecting a different result. It seems to me one could look to Japan for a well known decade long case of fiscal spending starting in the mid 90's and it got them this.

And here:

A Hayekian decline,” the economist says, “will destroy the social fabric ..."

Holding forth on what will or will not economically destroy society sounds like the words of the central planner, so it is no doubt that he's unaligned with Hayek, the ultimate critic of central planners everywhere. I really wish these guys would cease skipping back and forth between economic standard fare and philosophical pronouncements on the "social fabric", as if their expertise extended from one to the other.

Astronuc

Tough Times in the Second City
http://www.nytimes.com/2011/09/05/op...cond-city.html

. . . greater Chicago. Forty-five percent of mortgaged single-family homes are underwater, meaning people owe more on their mortgages than their homes are worth. Foreclosure epicenters like the Austin and West Englewood communities are checkerboarded with abandoned and decaying properties, many stripped bare by vandals for scrap. Joblessness among African-Americans exceeds 20 percent — almost 50 percent among black youths.

http://www.gao.gov/new.items/d1193.pdf

*WhoWee*

Quote by Astronuc

Tough Times in the Second City
http://www.nytimes.com/2011/09/05/op...cond-city.html

http://www.gao.gov/new.items/d1193.pdf

I wouldn't worry too much about Chicago. With President Obama's re-election campaign based there, Rahm Emanuel serving as Mayor, the Jackson's fully vested, and a strong union presence - their problems can't possibly be more than a speed bump - can they?

mheslep

There are several ideas on the table for improving the economy that do not include more spending stimulus: some from the various GOP Presidential candidates, some in bills already passed by the House, others proposed by center-right economists.

Streamlined regulation:

Quote by USN

...Perry and Romney ... both favor changes to the 2002 Sarbanes-Oxley accounting reforms (signed into law by President Bush, after the Enron and Worldcom meltdowns) that would exempt smaller firms and spare them loads of paperwork they often lack the staff to complete. Some of the Dodd-Frank reforms could have similar unintended effects on firms that had nothing to do with the 2008 financial crisis.

Romney has proposed a set of reforms including deadlines for the approval of various types of business permits and a fast-track process when safety or public health aren't an issue. ...

Eliminate corporate tax deductions, lower the corporate tax rate. The deficit committee, that was commissioned by Obama who then ignored its recommendations, came up with the same proposal:

Quote by USN

...General Electric, for example, earned more than $14 billion in 2010, but paid no U.S. tax on that income because much of it is parked overseas. GE's tax department alone, with a head count of nearly 1,000, is bigger than 99 percent of all U.S. businesses.

Virtually all the GOP candidates favor a lower corporate tax rate, and while Herman Cain's call for a 9 percent rate is probably too low to gain widespread support, Romney's preferred rate of 25 percent rate is more plausible. ... If done right, corporate tax reform would encourage U.S. multinationals to bring more of their overseas profit back home and invest it here, while giving other firms an incentive to set up shop in the United States instead of heading for other countries.

http://www.roadmap.republicans.budge...map2Final2.pdf

Quote by Ryan Road Map on business taxes

...The overwhelming majority of America’s competitors rely to some degree on consumption based taxes, which, according to World Trade Organization rules, can legally be rebated
on products leaving a country for export and imposed on products entering that country. The United States happens to be the only major industrialized country in the world thatdoes not use a similar tax system and therefore cannot engage in the same practice.Hence, when Milwaukee-based Harley-Davidson makes a motorcycle it plans to selloverseas (to Japan, for example), the motorcycle is taxed once in the U.S. before beingshipped, and once again when it reaches the Japanese border. In contrast, when a Hondamotorcycle is shipped from Japan to the U.S., the Japanese government lifts the tax onthe motorcycle before export, and it arrives in the U.S. essentially tax-free.

Cut spending, balance the budget, as deficit spending equates to future taxes which people anticipate and react to today. Some Paul cuts:

Quote by USN

Ron Paul's plan calls for eliminating 5 of the 15 cabinet agencies (Housing and Urban Development, Interior, Energy, Commerce, and Education) while slashing the budgets of most of the others. Such severe cuts are probably a non-starter in Washington, since those agencies all protect entrenched interests, including dozens of members of Congress who sit on oversight committees and direct spending toward favored constituencies. But Paul's general bent toward consolidating government has merit. At least new 5 Cabinet agencies have been created since 1945, and institutions that always grow and never shrink become bloated and inefficient by nature.

As a private-sector analogy, consider General Motors. For years, its leaders insisted that it needed all 8 of its divisions—an unwieldy and redundant structure that contributed to GM's descent into bankruptcy in 2009. In the aftermath, GM sold or killed half of its divisions—and is now nicely profitable [actually no it is not but the point is valid]...

Repeal and replace Obama Care. Employers fear additional health costs and/or compliance costs and consequently do not employ.

Jobs/economic bills already passed by the House of Representatives and blocked or likely blocked by the Senate:

Quote by The Hill, Oct 29

...overwhelming bipartisan House passage Thursday of legislation to repeal the requirement that governments at all levels withhold 3 percent of payments to government contractors, a bill that has White House support.

Quote by The Hill, Oct 29

...The 15 bills include measures that mandate a major expansion of offshore drilling and faster permitting; block several recent or upcoming Environmental Protection Agency regulations; and thwart the Federal Communications Commission’s “net neutrality” rules, among other proposals.

List of bills passed by the House on jobs/economics:
"The Reducing Regulatory Burdens Act" (H.R.872)
"The Energy Tax Prevention Act" (H.S.910)
"The Clean Water Cooperative Federalism Act" (H.R.2018)
"Consumer Financial Protection & Soundness Improvement Act" (H.R.1315)
"Protecting Jobs from Government Interference Act" (H.R.2587)
"Transparency in Regulatory Analysis of Impacts on the Nation" (H.R.2401)
"Cement Sector Regulatory Relief Act" (H.R.2681)
"EPA Regulatory Relief Act" (H.S.2250)
"Coal Residuals Reuse and Management Act" (H.R.2273)
"Restarting American Offshore Leasing Now Act" (H.S.1230)
"Putting the Gulf of Mexico Back to Work Act" (H.R.1229)
"Reversing President Obama's Offshore Moratorium Act (H.R.1231)
"The Jobs and Energy Permitting Act of 2011" (H.R.2021)
"North American-Made Energy Security Act" (H.R.1938)
"Disapproval of FCC's Net Neutrality Regulations" (H.J.Res.37)
"3% Withholding Tax Repeal" (H.R.674)

*WhoWee*

The market continues to sort out the mess.

http://www.insurancejournal.com/news.../10/223680.htm

"The Charlotte, North Carolina-based lender faces many lawsuits over its disastrous 2008 acquisition of Countrywide, once the largest U.S. mortgage lender. Analysts now estimate that the $2.5 billion purchase has cost Bank of America more than $30 billion, including legal costs and writedowns."

Astronuc

Rather poor recovery in parts of the nation.

http://realestate.yahoo.com/promo/st...reclosure.html

Many of the states with the highest foreclosure rates experienced the worst of the housing crisis. However, analysis by 24/7 reveals that the primary driver of higher foreclosure rates is a lengthy foreclosure process.

Nearly all of the states with the highest rates also have the longest foreclosure periods. The average foreclosure process for the nation is 140 days. The average foreclosure process for the eleven states with the highest foreclosure rates is 220. As a result, many homes foreclosed in 2011 in these states were actually at the end of a process that began more than a year ago. New York, one of the states with the worst foreclosure rates, has an average processing period of 445 days.

. . . .

OmCheeto

Spent some hours looking at sepia colored maps.

Found the reference to the source. (boring as all get out)

Did some crunching on the above source, and the only thing that jumped out at me were Tortilla manufacturing and Tree Nut farming numbers. (ref. GDP by Industry. Numbers in millions)

OmCheeto

One of my facebook friends posted the link to the letter; "To the Shareholders of Berkshire Hathaway Inc."

So I skimmed through it.

One thing caught my eye, which was contrary to what I'd read from a previous annual report from another company a while back, so I made the following post:

Quote by OmCheeto

GE should hire Buffet to write their annual report.

Buffet; "In total, our entire string of operating companies spent $8.2 billion for property, plant and equipment in 2011, smashing our previous record by more than $2 billion. About 95% of these outlays were made in the U.S., a fact that may surprise those who believe our country lacks investment opportunities. We welcome projects abroad, but expect the overwhelming majority of Berkshire’s future capital commitments to be in America. In 2012, these expenditures will again set a record."

Immelt; "At December 31, 2010, $94 billion of earnings have been indefinitely reinvested outside the United States. Most of these earnings have been reinvested in active non-U.S. business operations, and we do not intend to repatriate these earnings to fund U.S. operations."

Unless of course, I don't understand what all of this means.

Help me to understand this, financial wizards! Help me!

It's been 30 minutes now......

Am I missing something?

Am I really as naive as people claim I am?

JonDE

Quote by OmCheeto

One of my facebook friends posted the link to the letter; "To the Shareholders of Berkshire Hathaway Inc."

So I skimmed through it.

One thing caught my eye, which was contrary to what I'd read from a previous annual report from another company a while back, so I made the following post:

It's been 30 minutes now......

Am I missing something?

Am I really as naive as people claim I am?

I'm not really sure what your confusion is, could you elaborate? Also could you post a link to Immelts comments, I feel that there should be more to what he said that would clarify his position a little better.
I can break it down fairly simply based on the above quotes. Bershire hathaway does a lot of their business through investments and securities. They feel there are plenty of businesses that they can invest in inside the US and turn a profit.
GE does many different things. They have taken some of their profit from inside the US and used it to invest in their business (or acquire businesses) outside the US. If they were to bring this profit back to the US (repatriate) they would have to pay taxes on all of it. A substantial portion of GE is in manufacturing, and the company probably feels that there are other places that it would be cheaper to do manufacturing in, then in the US.

Edit: the above post is mostly IMO. It is tough to say what exactly the reason(s) is that GE doesn't want to repatriate the money.

OmCheeto

Quote by JonDE

I'm not really sure what your confusion is, could you elaborate?

The confusion arises from BH re-investing 95% of its funds in America, and GE investing none.

Also could you post a link to Immelts comments

GE Annual Report, page 65.

, I feel that there should be more to what he said that would clarify his position a little better.
I can break it down fairly simply based on the above quotes. Bershire hathaway does a lot of their business through investments and securities. They feel there are plenty of businesses that they can invest in inside the US and turn a profit.
GE does many different things. They have taken some of their profit from inside the US and used it to invest in their business (or acquire businesses) outside the US. If they were to bring this profit back to the US (repatriate) they would have to pay taxes on all of it. A substantial portion of GE is in manufacturing, and the company probably feels that there are other places that it would be cheaper to do manufacturing in, then in the US.

Edit: the above post is mostly IMO. It is tough to say what exactly the reason(s) is that GE doesn't want to repatriate the money.

As I said, I've been accused of, and am apparently quite naive, so I'd really like some guidance on how to invest my five hundred million dollars over the next four years.

I read GE's annual report last year, and sold all of my stock in the company.

I read today's BH letter, and wanted to go find and hug Warren.

Astronuc

The US economy is still recovering:

Stocks Suffer Year's Worst Day on Jobs Report
http://news.yahoo.com/stocks-suffer-...l-finance.html

Apparently earlier job numbers (for March and April) were revised downward.
http://www.marketplace.org/topics/ec...ays-bad-report
http://www.marketplace.org/topics/bu...ay-jobs-report

The DOW finished today at 12,118.57 a change of -274.88(-2.22%). The DOW opened at 12,221.19 on Jan 3, 2012.

http://www.nytimes.com/2012/06/02/bu...te-at-8-2.html

Astronuc

Dow is vacillating/oscillating these days, however

on a more positive note - Beyond the Tried-and-True: Generating Cash in Later Life
http://finance.yahoo.com/news/beyond...040100367.html

I don't plan on retiring because there is too many interesting projects to do in the world. I just like working on challenging and interesting things.

OmCheeto

Quote by Astronuc

Dow is vacillating/oscillating these days, however

My #1 stock oscillated up >50% today.
no 'however' necessary

on a more positive note - Beyond the Tried-and-True: Generating Cash in Later Life
http://finance.yahoo.com/news/beyond...040100367.html

I don't plan on retiring because there is too many interesting projects to do in the world. I just like working on challenging and interesting things.

Do you plan on starting your own business?

Astronuc

Quote by OmCheeto

Do you plan on starting your own business?

Possibly.

Astronuc

America's Bad Economy is Biggest Foreign Policy Threat
http://news.yahoo.com/americas-bad-e...-politics.html

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Astronuc Admin	Employers add no [or few] net jobs in August, while unemployment rate was unchanged at 9.1 pct. http://finance.yahoo.com/news/Employ...252098583.html

WhoWee	The market continues to sort out the mess. http://www.insurancejournal.com/news.../10/223680.htm "The Charlotte, North Carolina-based lender faces many lawsuits over its disastrous 2008 acquisition of Countrywide, once the largest U.S. mortgage lender. Analysts now estimate that the $2.5 billion purchase has cost Bank of America more than $30 billion, including legal costs and writedowns."

OmCheeto Recognitions: Gold Member	Spent some hours looking at sepia colored maps. Found the reference to the source. (boring as all get out) Did some crunching on the above source, and the only thing that jumped out at me were Tortilla manufacturing and Tree Nut farming numbers. (ref. GDP by Industry. Numbers in millions)