News What is wrong with the US economy?

[edward]

The efficiency of almost all economic processes grows logistically; i.e. businesses grow more efficient as they increase in size, but the trend reverses past a certain point. There is also the powerful force which drives businesses out of industries they do not a have a comparative advantage in.

But this does not explain why Daimler is doing fine and Chrysler is not. It has more to do with the rapidly fluctuating price of gasoline and the inability of companies to adjust to that change. The fact that the price of gasoline has always been high in Europe may be in Daimler's favor.

Last year when gas was $3.00 per gallon in the USA hybrid vehicles were selling at a premium, ie above msrp. This year even Toyota has an unsold surplus of hybrids.

Gone are the days when Boeing manufactured most of the parts for their aircraft. Contracting parts out (though fraught with some difficulties) has reduced the cost of the aircraft.

The auto industry is outsourcing.

“We are willing to import with the focus on being competitive,” said Tom LaSorda, Chrysler head during the Beijing International Automotive Exhibition. LaSorda also stated that within 6-12 months, Chrysler would point out cost reductions averaging $1,000 per vehicle, a portion of which comes from outsourcing.

And we can't blame it all on the cost of labor. Both Chrysler and Ford have sprawling factories in Mexico. Chrysler's HEMI engine is even made in Mexico.

 

[Astronuc]

The Hershey Company, maker of Hershey's chocolates, has announced that the company will cut its workforce by 1500 (11.5% of that work force), and open a plant in Mexico, possibly Monterrey.

HARRISBURG, Pa. - The Hershey Co., whose name has been synonymous with U.S. candymaking for more than a century, is moving a bigger chunk of its production to Mexico. A day after Valentine sweethearts across the country enjoyed bags of Hershey Kisses, the company on Thursday announced a restructuring plan that will scale back its work force by 1,500 jobs and force some plants to close.

http://news.yahoo.com/s/ap/20070215/ap_on_bi_ge/hershey_restructuring_8

Meanwhile -

- Industrial output falls 0.5 pct. in Jan.

- Housing sales drop in 40 states

 

[ShawnD]

But this does not explain why Daimler is doing fine and Chrysler is not.

Daimler is doing ok because it's generally accepted that Mercedes vehicles are posh and somewhat trustworthy despite the recent quality problems. Chrysler is notorious for making crappy vehicles that cannot be fixed no matter how many times you take them in. Just do a google search for "<company> quality" and see what the first result is, not including pages owned by that company.
Chrysler - "The Truth Behind Chrysler"
Mercedes - "Mercedes, Quality Dropping, Loses Market Share to BMW, Lexus"
Dell Computers - "Dell Quality Control Sucks"
Nissan - "Nissan quality improving, according to J.D. Power"

Interesting.

 

[edward]

Quality is very important and it is the responsiblility of mangement. A CEO can cut corners on quality until sales are down. Then he can fire thousands of workers upping temporary profit and use the opportunity to cash in on his stock options.

 

[russ_watters]

And we can't blame it all on the cost of labor. Both Chrysler and Ford have sprawling factories in Mexico. Chrysler's HEMI engine is even made in Mexico.

That's missing the point. The killer labor cost isn't the current employees, it's the past employees getting pensions and healthcare from underfunded pension funds. That is what makes American cars more expensive than competing foreign cars.

 

[Plastic Photon]

The Gawhar oil field is losing its flow rate up the well-bores, more oil is being burnt to get the oil, raise price, everyone pays.

 

[Astronuc]

The good news - Unemployment Rate Declined in Feb.
http://www.nytimes.com/2007/03/10/business/10econ.web.html?hp - NYTimes, March 10, 2007

Businesses added jobs at a steady pace last month, the government reported today, in the latest sign that the job market is holding up despite other signs of economic weakness.

The Labor Department reported that total nonfarm employment rose in February by 97,000 — slightly more than analysts were expecting. It also revised up previous estimates for employment in January in December to reflect an additional 55,000 jobs.

At the same time, the national unemployment rate fell back to 4.5 percent from 4.6 percent.

Workers’ average hourly earnings continued to rise at a strong pace. The average employee in a nonmanagerial job earned 4.1 percent more in February than year earlier. Hourly pay jumped to $17.16 from $16.49 in February 2006.

The not so good news -

Violent Crime in Cities Shows Sharp Surge - NYTimes, March 9, 2007
http://www.nytimes.com/2007/03/09/us/09crime.html?hp

Violent crime rose by double-digit percentages in cities across the country over the last two years, reversing the declines of the mid-to-late 1990s, according to a new report by a prominent national law enforcement association.

While overall crime has been declining nationwide, police officials have been warning of a rise in murder, robbery and gun assaults since late 2005, particularly in midsize cities and the Midwest. Now, they say, two years of data indicates that the spike is more than an aberration.

“There are pockets of crime in this country that are astounding,” said Chuck Wexler, the executive director of the Police Executive Research Forum, which is releasing the report on Friday. “It’s gone under the radar screen, but it’s not if you’re living on the north side of Minneapolis or the south side of Los Angeles or in Dorchester, Mass.”

Local police departments blame several factors: the spread of methamphetamine use in some Midwestern and Western cities, gangs, high poverty and a record number of people being released from prison. But the biggest theme, they say, is easy access to guns and a willingness, even an eagerness, to settle disputes with them, particularly among young people.

We need guns . . . to protect us from other people with guns?

People being released from prison have a difficult time getting jobs or maintaining employment, so ostensibly, they must go back to doing whatever is necessary to get by, and that often means illicit activity, which is what got them into prison in the first place.

The benefits of the so-called 'strong' economy are unevenly distributed, and that necessarily means some a doing very well while many more are doing poorly.

 

[Astronuc]

Crisis Looms in Market for Mortgages
http://www.nytimes.com/2007/03/11/business/11mortgage.html

On March 1, a Wall Street analyst at Bear Stearns wrote an upbeat report on a company that specializes in making mortgages to cash-poor homebuyers. The company, New Century Financial, had already disclosed that a growing number of borrowers were defaulting, and its stock, at around $15, had lost half its value in three weeks.

This is a significant problem in the financial sector of the US economy. People are issuing sloppy or in some cases false research. They aren't scrutinizing the data, and therefore some/much research lacks integrity.

For the most part - this matter mainly pertains to sub-prime mortgages, but it will affect those with ARMs and home-equity loans.

What happened next seems all too familiar to investors who bought technology stocks in 2000 at the breathless urging of Wall Street analysts. Last week, New Century said it would stop making loans and needed emergency financing to survive. The stock collapsed to $3.21.

The analyst’s untimely call, coupled with a failure among other Wall Street institutions to identify problems in the home mortgage market, isn’t the only familiar ring to investors who watched the technology stock bubble burst precisely seven years ago.

Now, as then, Wall Street firms and entrepreneurs made fortunes issuing questionable securities, in this case pools of home loans taken out by risky borrowers. Now, as then, bullish stock and credit analysts for some of those same Wall Street firms, which profited in the underwriting and rating of those investments, lulled investors with upbeat pronouncements even as loan defaults ballooned. Now, as then, regulators stood by as the mania churned, fed by lax standards and anything-goes lending.

Investment manias are nothing new, of course. But the demise of this one has been broadly viewed as troubling, as it involves the nation’s $6.5 trillion mortgage securities market, which is larger even than the United States treasury market.

Hanging in the balance is the nation’s housing market, which has been a big driver of the economy. Fewer lenders means many potential homebuyers will find it more difficult to get credit, while hundreds of thousands of homes will go up for sale as borrowers default, further swamping a stalled market.

. . . continued

Well, depending on how bad the situation is, it could precipitate a mini-crash. Not that a crash will occur, but don't be surprised if it does.

BTW -

One by one, American industries are finding more fertile ground overseas. In industries from textiles, steel, and automobiles to high-tech electronics and software design, America no longer reigns supreme. And now some worry that America's crown jewel, Wall Street, is on its way out, too.

from Is Wall Street Losing Its Luster?
Markets abroad are making inroads
http://www.usnews.com/usnews/biztech/articles/070304/12wall.htm

Of course, a favorite mantra of business is - "we are overregulated". But then recent scandals involving Enron, Worldcom, Global Crossing, Adelphia, . . . . show that corporations are not over-regulated, but perhaps poorly regulated, and certainly deficient with respect to self-regulation.

 

[Astronuc]

DOW INDUSTRIALS FALL MORE THAN 240 POINTS; DOW, NASDAQ, S&P EACH LOSE 2%

U.S. stocks fall sharply as subprime bites again
www.marketwatch.com

NEW YORK (MarketWatch) -- U.S. stocks sank on Tuesday, sending the Dow Jones Industrial Average down by 200 points, as the rising tide of problems in the subprime mortgage market spurred fear of contagion across the whole financial sector, while weaker-than-expected retail sales confirmed a slowing economic outlook.

The market is gripped by "subprime contagion," said Peter Boockvar, equity strategist at Miller Tabak. "These are the same problems that have been weighing on the market for the last couple of weeks," he said, referring to the downtrend seen ever since the Dow fell 415 points exactly two weeks ago.

. . . .

Tuesday's Personal Finance stories
By MarketWatch
Last Update: 2:30 PM ET Mar 13, 2007

The housing market has been sinking for months, and despite some analysts' contention that things have bottomed out there is much fallout yet to rain down. The latest mortgage-foreclosure and delinquency numbers from the Mortgage Bankers Association show just how radioactive that fallout may be.

Many more homeowners are paying their mortgages late, and the percentage of mortgage loans that entered the foreclosure process hit a record high in the fourth quarter. Although the bulk of the trouble is coming from subprime and government-insured borrowers, the increase in late payments was across the board.

The scary thing is that these increase came when the state of the economy overall was fairly healthy. Job creation and income generation were good in the fourth quarter and interest rates remained low. If homeowners can't cope under those conditions, what is going to happen if the economy, as some predict, sinks into a real recession?

The economy is NOT overall healthy - it is overleveraged. Like internal bleeding and an insidious form of asymptomatic cancer - the patient is ill - and it seems many who should know better - don't.

MarketWatch - REAL ESTATE

New foreclosures at record high

Many more U.S. homeowners were unable to keep up with their mortgage payments in the fourth quarter, the Mortgage Bankers Association said Tuesday, with the rate of homes entering the foreclosure process hitting a record 0.54% and the delinquency rate on U.S. home loans leaping to 4.95% from 4.67% three months earlier. . . . . . more at MarketWatch

Tighter lending standards expected to hit sales, exacerbate inventory glut

Although it's difficult to gauge home builders' direct exposure to the imploding market for subprime loans, none is likely to be immune to the ripple effects resulting from tighter mortgage-lending standards whether they sell to first-time buyers or in the high-end luxury market. . . . . . more at MarketWatch

At a mortgage lender, rapid rise, faster fall

Ruthie Hillery was struggling to make the $952 monthly mortgage payment for her three-bedroom home in Pittsburg, Calif., last summer when a mortgage broker persuaded the 70-year-old to refinance into a "senior citizen's" loan from New Century Financial Corp. that she thought would eliminate the need to make any payments for several years, according to her lawyer. Instead, the $336,000 adjustable-rate loan started out with payments of $2,200 a month, more than double her income. In December, Hillery received notice that New Century intended to foreclose on the property. Then, earlier this month, after a formal demand by the lawyer, New Century agreed to refund all its fees and cancel the loan once Hillery gets refinancing elsewhere. The lawyer, Alan Ramos, says the loan never should have been made. "You have a loan application where the income section is blank," Ramos says. "How does it even get past the first person who looks at it?"

. . . . . more at MarketWatch

These are indications that the economy is fundamentally unsound!

 

[Astronuc]

Houses cheaper than cars in Detroit!
http://news.yahoo.com/s/nm/20070319/ts_nm/usa_subprime_detroit_dc

DETROIT (Reuters) - With bidding stalled on some of the least desirable residences in Detroit's collapsing housing market, even the fast-talking auctioneer was feeling the stress.

"Folks, the ground underneath the house goes with it. You do know that, right?" he offered.

After selling house after house in the Motor City for less than the $29,000 it costs to buy the average new car, the auctioneer tried a new line: "The lumber in the house is worth more than that!"

As Detroit reels from job losses in the U.S. auto industry, the depressed city has emerged as a boomtown in one area: foreclosed property.

It also stands as a case study in the economic pain from a housing bust as analysts consider whether a developing crisis in mortgages to high-risk borrowers will trigger a slowdown in the broader U.S. economy.

. . . .

Steve Izairi, 32, who re-financed his own house in suburban Dearborn and sold his restaurant to begin buying rental properties in Detroit two years, was concerned that houses he thought were bargains at $70,000 two years ago were now selling for just $35,000.

At least 16 Detroit houses up for sale on Sunday sold for $30,000 or less.

. . . .

The economy is certainly uneven.

As for the GDP, if that amount includes financial transactions and transactions based on credit, then it greatly overstates the health of the economy.

 

[edward]

Here is a sign of the times:

Over the last year, the seasonally adjusted rate of new foreclosures increased 12 basis points overall, six basis points for prime loans, 53 basis points for subprime loans, 2 basis points for FHA loans and was unchanged for VA loans.

http://www.mortgagenewsdaily.com/3192007_Delinquencies.asp

Yet there are still companies pushing subprime loans.

 

[Astronuc]

Dissecting a $3 Trillion Federal Budget Plan
http://www.npr.org/templates/story/story.php?storyId=9204350

Morning Edition, March 29, 2007 · A vote is expected Thursday in the House of Representatives on a guideline for next year's $3 trillion federal budget. The Senate passed its version last week. The resolution outlines how to spend hundreds of billions of dollars in tax money on Social Security, Medicare, the military and all other government services.

The federal budget is growing at about 3 times the rate of the US economy, and that means that the tax revenue is falling behind. If Bush is projecting a balanced budget under current trends, he is sadly delusional. Well, we already know that.

Rise and Fall of Subprime Lenders Began on Wall St.
http://www.npr.org/templates/story/story.php?storyId=9248739
by Jim Zarroli

All Things Considered, March 30, 2007 · It all started last November, when a relatively small lender — called Own-It Mortgage Solutions — defaulted on its loans to JP Morgan Chase & Co. Since then, more than 24 subprime lenders have folded, victims of rising default rates — but also of rising suspicions that the entire subprime market is teetering.

One of the nation's biggest subprime lenders, New Century Financial, is expected to file for bankruptcy any day now.

Like a lot of lenders in the subprime market, New Century specialized in zero-down and no-interest loans, which cater to people with credit problems. For years, the company was able to prosper because of the financial support of much bigger Wall Street banks.

But as the housing market has slowed, and regulations have tightened, that support has quickly dried up.

Subprime lending has long been the forgotten, low-rent corner of the mortgage business, touched by a down-market taint. But the image is deceiving, industry analysts say: Subprime lending is based on the support of Wall Street's old-line banking establishment.

Could this be the proverbial hole in the dyke of the US economy? Are there other holes?

 

[Astronuc]

Citigroup, the global banking giant, said Tuesday it would eliminate or reassign more than 26,500 jobs as part of a sweeping overhaul to cut costs and streamline operations. The announcement, which followed a companywide review led by Citi chief operating officer Robert Druskin, detailed plans for more than 17,000 layoffs, with the first pink slips coming this week. In addition, about 9,500 jobs will be moved to locations overseas or around the United States where the cost of doing business is lower. About 1,600 jobs will be eliminated in New York, where Citigroup currently has about 27,000 employees. All five of Citi's major business divisions will face cuts.

from NYTimes Dealbook

Citigroup press release
http://www.citigroup.com/citigroup/press/2007/070411a.htm

Projected Savings of Approximately $2.1 Billion in 2007,
Growing to $4.6 Billion in 2009

itigroup Job Cuts Aimed at Pleasing Shareholders
http://www.npr.org/templates/story/story.php?storyId=9514645
by Jim Zarroli and Steve Inskeep

Morning Edition, April 11, 2007 · Citigroup, the world's largest financial services company, says it will eliminate about five percent of its workforce. That's about 17,000 jobs.

It's part of an effort to increase profits and appease shareholders, who have been unhappy about the company's financial performance. Citigroup projects savings of $9 billion over three years from the reorganization

.

Citigroup Restructures, Eyes Outsourcing to India
http://www.npr.org/templates/story/story.php?storyId=9182470

Day to Day, March 28, 2007 · Citigroup may cut 15,000 jobs as part of a restructuring plan involving the out-sourcing to India of mid- and upper-level jobs in research, investment banking and credit analysis.

Meanwhile - more good news

Legacy of Subprime Lending Hits Midwest Hard
http://www.npr.org/templates/story/story.php?storyId=9501425

All Things Considered, April 10, 2007 · Minneapolis is one of the many places seeing increases in home foreclosures. From 2005 to 2006, foreclosure rates nearly doubled there. Michele Norris talks with Jim Davnie, a state representative for south Minneapolis, about the effects of subprime lending on neighborhoods he represents.


Foreclosures May Weaken Home Prices, Spending
http://www.npr.org/templates/story/story.php?storyId=9501422

All Things Considered, April 10, 2007 · On a national level, rising subprime mortgage foreclosures are sure to have a ripple effect. What the effect will be is a matter for debate — but at least one analyst thinks we've only seen the tip of the iceberg.

Professor Cathy Lesser Mansfield of Drake University Law School has studied default and foreclosure rates in the subprime mortgage industry. Mansfeld tells Michele Norris that she expects more foreclosures and defaults on loans to have a ripple effect on home values in affected neighborhoods — and on the ability of families to pay for other basic needs.

Subprime loans are made to people with less-than-perfect credit. Often, the loans don't require down payments. Some lenders don't even do background checks to verify income. The subprime industry grew enormously in recent years, from $35 billion dollars in the mid-1990s to $625 billion in 2005.

As loan interest rates began to rise — as they have for the last couple of years — many homeowners found they could not keep up with their mortgage payments.

Some two dozen lenders have shut down operations. One of the largest — the New Century Financial Corporation — filed for bankruptcy this month.

And some people do see a bright side to all of this - less expensive homes for those who can afford them. Silly me worries about the lives disrupted and the families stressed out over losing their homes.

 

[drankin]

The blame is two-fold. Folks buying homes they can barely afford in the first place and banks loaning money to folks knowing their income vs debt ratio is on the red line. You can't blame the bank so much as you blame those that borrow beyond their means. Basically, don't buy more house than you need.

As far as work going over-seas, we need legislation that forces work to be kept in our borders. And I would support higher tariffs on produts coming into the US as well.

 

[Gokul43201]

As far as work going over-seas, we need legislation that forces work to be kept in our borders. And I would support higher tariffs on produts coming into the US as well.

You don't think an isolationist/protectionist policy might lead to a loss of competitive edge and hence, a relative decline in quality of life?

 

[drankin]

You don't think an isolationist/protectionist policy might lead to a loss of competitive edge and hence, a relative decline in quality of life?

I agree, there is a balance to maintain but right now we can't compete with over-seas labor as it is. If we made things a little more expensive to bring into the US then we would begin to rely more on our own industry for products.

 

[edward]

You don't think an isolationist/protectionist policy might lead to a loss of competitive edge and hence, a relative decline in quality of life?

It is too late for that anyway. Our factories are gone. We have no edge to lose. Enjoy your Chinese coffee maker.

 

[Astronuc]

The blame is two-fold. Folks buying homes they can barely afford in the first place and banks loaning money to folks knowing their income vs debt ratio is on the red line. You can't blame the bank so much as you blame those that borrow beyond their means. Basically, don't buy more house than you need.

People want to buy homes, and some lenders can be very persuasive.

Probably some could afford the mortgage payments when the interest was a point less or lower. But with ARM's and the prime increasing, it pushed people over the edge.

Looking at recent history, the prime has jumped 2 pts in one year (2005-2006), and 4 pts in 2 (2004-2006):
http://mortgage-x.com/general/indexes/prime.asp
http://mortgage-x.com/general/indexes/prime_rate.asp

Dec 12, 2001 - 4.75
Nov7, 2002 - 4.25
Jun 27, 2003 - 4.00
Jul 1, 2004 - 4.25
Aug 11, 2004 - 4.50
Sep 21, 2004 - 4.75
Nov 11, 2004 - 5.00
Dec 15, 2004 - 5.25
Feb 3, 2005 - 5.50
Mar 22, 2005 - 5.75
May 3, 2005 - 6.00
Jun 30, 2005 - 6.25
Aug 9, 2005 - 6.50
Sep 20, 2005 - 6.75
Nov 1, 2005 - 7.00
Dec 13, 2005 - 7.25
Jan 31, 2006 - 7.50
Mar 28, 2006 - 7.75
May 11, 2006 - 8.00
June 29, 2006 - 8.25

But I agree in principle, that folks should not be borrowing beyond their means.

 

[edward]

People want to buy homes, and some lenders can be very persuasive.

Probably some could afford the mortgage payments when the interest was a point less or lower. But with ARM's and the prime increasing, it pushed people over the edge.

Looking at recent history, the prime has jumped 2 pts in one year (2005-2006), and 4 pts in 2 (2004-2006):
http://mortgage-x.com/general/indexes/prime.asp
http://mortgage-x.com/general/indexes/prime_rate.asp

But I agree in principle, that folks should not be borrowing beyond their means.

The mortgage companies also did a very good job of convincing people that they could have the American dream. I still get junk snail mail pushing mortgages. Housing prices were pushed by speculation. The prime jumped just as the market slumped.

 

[Astronuc]

If one goes down the NPR link - http://www.npr.org/templates/story/story.php?storyId=9501422
Foreclosures May Weaken Home Prices, Spending

one finds - Department of Housing and Urban Development and Treasury Departments' Joint Task Force on Predatory Mortgage Lending
http://www.hud.gov/offices/hsg/sfh/pred/predlend.cfm

and House Banking Committee's
http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr041707.shtml

 

[Astronuc]

John C. Whitehead, who retired as co-chairman of Goldman Sachs in 1984, called current compensation levels at the giant securities firm "shocking" and said he was "appalled" at Wall Street pay in general. In an interview with Bloomberg News, Mr. Whitehead, 85, urged his former employer to curb bonuses, even if it means losing some valued employees. "I would take the chance of losing a lot of them and let them see what happens when the hedge fund bubble, as I see it, ends," he told Bloomberg earlier this week.

Goldman's chief executive, Lloyd Blankfein, took home a $53.4 million bonus last year, breaking the record for a Wall Street chief executive set by his predecessor, Henry M. Paulson Jr. Mr. Whitehead, who spent 37 years at Goldman and became the firm's co-chair, with John Weinberg, in 1976, suggested Goldman was largely to blame for what he considered to be out-of-whack pay levels in the industry. "They're the leaders in this outrageous increase," he said.

from NY Times Dealbook, which links to
http://www.bloomberg.com/apps/news?pid=20601109&sid=aAxIC5SJltFo&refer=news

 

[turbo]

There's another factor to consider. The Iraq war pushed up the prices of construction materials. My cousin and her husband moved into their newly-constructed house last fall, and they had been forced to scale back greatly on the size and the amenities of the house because the increase in the price of basic materials (studs, framing lumber, plywood, etc) drove cost of their original plans out of their budget. This is one reason that the costs of existing homes ballooned. Lots of folks saw prices going up and jumped into the market, assuming that their new property would gain equity faster than the the ARM payments would increase, and that refinancing would be available based on that equity. Bad choice.

 

[Astronuc]

I think the 2004 and 2005 hurricane seasons had a lot to do with the increase in cost of construction materials, in addition to the war in Iraq.

The quality of contruction materials has also declined, and I would not want material form H-Depot or Lowes or other discounters. I have seen mold growing in/on lumber at such places and that would ruin one's house.

One has to be very careful these days. There is a lot of junk out there, and a lot of people who are willing to cut corners for a buck.

 

[Jimmy Snyder]

The economic boom in China has driven up the cost of construction materials as well.

 

[Astronuc]

The economic boom in China has driven up the cost of construction materials as well.

Yeah, in fact, the Chinese are buying cheap low quality steels, and folk in the US who want to buy good quality steel cannot, or cannot afford it, because the raw material is bound for China. Sometimes I think some in US industry are out to make a quick buck without thought to the long term viability of the economy.

 

[russ_watters]

Transportation is a significant part of construction costs, so the rise in oil prices has a big impact there.

 

[Skyhunter]

Sometimes I think some in US industry are out to make a quick buck without thought to the long term viability of the economy.

Sometimes?

I am in the construction industry, and I have worked in other fields as well. Making money above all else is the rule, not the exception. When I find someone actually concerned about more than how much money they are making, I hire them. And I don't have many employees.

 

[Skyhunter]

Transportation is a significant part of construction costs, so the rise in oil prices has a big impact there.

Transportation costs effect everything, however in America labor is the most significant cost of most projects.

I like to mobilize all at once and stay there till finished. Then I can ride my bike to work. Or if I am far away I will just live in a trailer on site, sort of my own security guard.

 

[Office_Shredder]

I am in the construction industry, and I have worked in other fields as well. Making money above all else is the rule, not the exception. When I find someone actually concerned about more than how much money they are making, I hire them. And I don't have many employees.

I am so sorry for you... my mom's an architect, and man, the people she works with. Some of them would kill you to save money if they thought your skin as insulation would pass code (and some would do it either way )

The housing bubble is one of those things that basically supported itself. People bought houses, so prices went up. Prices went up, so people paniced and started buying houses. Then people realized prices were going up so fast because of this, that they could buy houses and resell them for a profit. All this buying, of course, pushed prices up faster, even though there wasn't a true increase in demand for housing (true being used in a very loose sense of course)

 

[russ_watters]

Sometimes I think some in US industry are out to make a quick buck without thought to the long term viability of the economy.

Huh? Since when does a corporation have any responsibility whatsoever over the viability of the whole economy? A corporation's primary (a pure economist would say only) responsibility is to make money. The viability of the entire economy is the government's responsibility.

Companies do often put too much emphasis on short term profits, but only at the expense of their own long-term viability.

Making money above all else is the rule, not the exception. When I find someone actually concerned about more than how much money they are making, I hire them. And I don't have many employees.

It is "the rule" because it is the rule. A company's - and an employee's primary responsibility must be making money. The viability of the company and the employee depends on/requires it. Companies that don't put making money at the top of their priority list don't tend to last long.