|Subject: Economics ?|
Posted Oct 8, 2008 by Bertie
Most things in life are pretty simple.
You work, you earn and you spend.
If you spend more than you earn you have problems.
Can anyone explain to me how the uk can have such a low manufacturing sector, be hugely in debt and still not expect there to be a crunch sometime?
In very simplistic terms, we're in trouble in the U.S. because people insist on living well beyond their means. Uncollateralized mortgages, finances based on fake paper gains, and soon-to-be rampant inflation are going to have to reset to zero before the economy can begin to grow again.
We're being told to expect another Depression. What I wonder is whether the current society has either the will or the backbone to survive it. I also wonder and worry how many people will starve to death because of centralized food production, since almost nobody is self-sufficient anymore. Self-sufficiency saved a lot of lives the last time.
With hope, and the guidance of the generation before mine that lived through the Depression and the War of the '30s and '40s, we'll see our way back. IF they are still speaking to us, that is. I expect we're in for a very bumpy ride.
Easy - if what you produce enables more efficient manufacture or agriculture then you are still in the production chain but you may not actually own a factory.
The person who designs a factory robot is needed by the person who builds a factory robot who is needed in turn by the person who operates a factory who is needed, lastly, by everyone who wants to buy a "thing".
Everyone gets their cut - but the designer gets a cut of every factory robot and thereby gets paid many times for the one piece of work. However that piece of work is probably also the most expert and requires the most testing because every error will be manifested in every one of the gazzilions of artefacts that are produced. There lies the biggest margins and biggest profits and biggest salaries and most demanding timelines and most training but also space for the biggest stuff-ups.
Sounds to me as if a depression could do a lot of good.
Where i live in Norway the sea is full of fish, but mostly when i go fishing in my boat im on an empty sea, the woods are full of mushrooms, my neighbors wont touch wild mushrooms,when i go blueberry picking there is no one in sight; when i visit my local town all the apples are lying on the ground rotting -----
I won't say depression could do a lot of good but a change is as good as a rest.
Economic cycles seem to be the way of things, but i would hope that we learn as we go along and that a consequence of global economic meltdown is global economic reform and regulation.
Some argue that resilience is replacing sustainability as a goal.
There's a generational dynamic at work here. Many of the people who were forced by the Depression to live within their means and save for a tainy day are now dead. Later generations (of which I belong to one) have no real fear. They think stocks are a dandy way to save for retirement. What they are seeing now is the unhappy fact that stocks can implode in a hurry, especially when the owners of said stocks are all heading for the exits at once. If anything good comes of this crash, it will be the end of high government officials proposing that the Social Security Fund be invested in stocks. It should not, in my opinion.
In any event, for the umpteenth time the trees have failed to grow to the sky. This is good news, because there are lots of things in life that matter more than money. Until now, a lot of people have been so focussed on money that they've missed a lot of other worthy things. Oil prices may well decline as industrial activity is hampered by the credit crunch. Those of us who use oil heat in cold climates will be grateful for this.
But there is bad news, too: large numbers of people have had to borrow heavily so that they could attend college. Serious longterm unemployment is going to ruin them, and maybe pull down some of the weaker banks that loaned to them. Will a lot of students who are halfway through college have to forego completing their degree programs? If there are enough of them who do this, will some colleges have to close? Will classes be overcrowded in the colleges that do survive? Since many people (in the U.S. anyway) get their health care coverage through their employees, will high levels of unemployment make the unemployed sicker?
I haven't changed any of my major life plans because of this crash and crunch. Like most of my fellow countrymen, I own stock funds, which I plan not to touch. Warren Buffett, who is widely considered one of the wisest investors in the world, has said that he would be perfectly happy if the stock market closed completely for ten years.
The message here is that, if you have the right reasons for owning shares in a company, you'll be perfectly patient letting it do its work for the longterm.
Sometimes i feel the only things that are truly safe as an investment are the things i can touch.
There seems to be so much "science" attached to shares, endowment policies, sips,and so forth.
It is interesting to note that the "science" attached to the 13,000 drugs prescribed by the nhs largely ignores the side affects leaving only some 300 marked as "safe" by the world health organization.
What am i talking about???
There are three kinds of wealth (I was going to say capital, but don't want to be misunderstood...):
1. Physical wealth such as real estate, precious metals, collectibles, farmland, forests, mines, etc. This is the type that you seem to mean when you talk about things you can touch.
2. Human wealth, which means all the talents that you have, the education that you've had, your skills and your ability to work with other people. Even your name can be a form of wealth, if it is so well-known that it can make money for a company or a charity if they attach it to themselves. Think Walt Disney or Martha Stewart, for example.
3. Paper wealth, such as debt instruments (bonds, money market securities, even IOU's) and shares of stock. Some people would say that the shares of stock belong in the first category, especially if the companies involved are real estate companies or factories. However, if the companies are things like advertising agencies or hairdressing salons, then the actual wealth consists mostly of the talents of the people who work for the companies. So, I prefer to have shares of stock in this category. How many owners of stock have even ever gone to see the h4eadquarters of the companies they own stock in?
Each of these forms of wealth will have its day over a long period of time. When stocks are down, as they are now, prices of gold and silver may rise, as they are doing now, and you would expect residential real estate to be rising as well, except that it's plummeting now. Go figure! Japan in the 1970s, and Ireland in the past decade are illustrations of the second category, since well-educated, mostly young populations were in place to do superior work and provide high productivity.
So, when stocks seem to be in for a long period of poor performance, it pays to invest in yourself by getting all the education and training you can. If you also have a knack for choosing superior collectibles or real estate at attractively low prices, and if you have patience, you can do very well.
Even safe paper investments like U.S. Treasury Bills can be useful for you. This is especially true if your working life is irrevocably over, as it is with most older retirees. Or maybe you're a movie star with no inclination to learn the ins and outs of investing. Groucho Marx was interviewed by someone from the investment community one time, and they asked him where he had his money invested. He told them it was all in Treasury Bills. "But you can't make very much that way!" they protested. Groucho replied, "You can if you have enough of them."
>>>Groucho replied, "You can if you have enough of them."
I've always loved Groucho's quips.
|Subject: Economics ?|
Posted Oct 14, 2008 by Bertie
This is a reply to this Posting.
Some years ago i tried living as a ordinary citizen. I had a mortgage, and borrowed money at the standard rates.
Unfortunately society is so structured that the "elastic band" of business only takes into account those who can "play" the game.
Those who dont want to play because they have better things to do tend to fall by the wayside or find another way -
I didnt really mind being a "slave" to the system, but what i did mind was never making any progress.
Perhaps this is what is really going to cause huge problems if and when the crunch comes. Why should people care when weve had an economic system which keeps us in a limbo no matter what.
The "poor" banks who only looked to the short term future, and still do are reaping what theyve so assiduously sowed.
For many "sucess" is a state of mind and not based on material things.
Me, ive escaped.
I expect that there will be a lot of people who would also like to escape. In any event, what are we looking at in terms of survival? People who can't afford the gas they would need in order to get to work, assuming that they still had jobs? Is the potential loss of six million American jobs realistic? Will it be more? Or less? If enough mortgage-holders lose their jobs, will a huge glut of defaulted houses sit around with no one to live in them? Are we going to see cities or towns (or even states) go into receivership?
I'm just curious.
What's the capital of Iceland?
About 10 quid.
National Bankruptcy - coming to a state near you!
There's a county in Alabama (or is it Mississippi?) that has just gone bankrupt.
In the U.S., one of the candidates for president has been campaigning against his opponent's likely tactic of raising taxes once elected. Meanwhile, with markets slidng every which way, and people worried about whether they will have jobs tomorrow, it doesn't seem likely to me that unemployed people are going to be paying more taxes. What would they pay on taxces on if they have no income?
|Subject: Economics ?|
Posted Oct 17, 2008 by Bertie
This is a reply to this Posting.
its almost as if someone has forgotten the little things, the real things.
In an election year, the real things have to be hidden away until the votes have been counted.
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