We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
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Friday, March 2. 2012
Last night, I helped my son prepare an Op-Ed piece for his high school class on Economics and Financial Literacy. He chose the Durable Goods report, and we sat down to dissect and discuss what it told us. As a neophyte, he naturally saw discussion of "Shipments rising" and "Orders increasing" and asked "this means things are getting better, right? We're in an uptrend?" Linear thinking is easy. Being human, we do it all the time.
Yes, I told him, but there's much more to the report. I pointed out that Inventories were growing rapidly, Unfilled Orders were increasing, and while Shipments were increasing, the rate of increase was slowing. None of these are particularly good signs of future activity. More importantly, Capital Goods, the building blocks of future productivity, were declining. At best, we decided, the report was neutral, showing that things may have improved somewhat, but many other signs were indicating a stall or slowdown.
Most importantly, I pointed him to the Inventory-to-Sales Ratio, which is a harbinger of true economic activity. A rapidly climbing ratio does not forebode good times, but rather difficulty with pricing and sales in the future. As consumers, we rarely pay attention to what goes on 'behind the veil' with items like inventories. We like our answers pat, easy and predictable. It's a shame they never are.
The homework discussion occurred after I'd visited my accountant to finish my 2011 taxes. Thankfully, 2011 was a very good year for me, both my wife and I had found a job, something millions of others are still hoping to do. We are, and were, very lucky. I still know many people looking for work. As I sat down to discuss the ounce of flesh I hoped to mitigate, I asked my accountant "What are you seeing out there? Are we really improving?"
He has never, ever, steered me wrong. His firm does both accountancy work, and is a capital investment firm. I only utilize them for taxes, but I know he is aware of much, much more. He raised an eyebrow, coughed and replied as calmly as possible, "I am still not seeing it."
However, he did put this in perspective. He pointed out that he usually does work for middle and upper middle class people in the New York DMA over the age of 35. However, his firm handles payrolls for many foreign firms and he works with many large international firms. He had just gotten off the phone with a foreign bank trying to conform with the new laws on account disclosure the US has instituted.
From his point of view, the problem is people over the age of 35 are undervalued and typically dismissed by employers because they are 'expensive salaries'. He used me as an example, telling how concerned he was at this time last year, prior to my finding work, and seeing how we were starting to struggle. Many of his clients passed the point of starting to struggle long ago.
It could be, as he said, that firms are hiring younger people and simply not paying attention to older, experienced folk. If so, this isn't a sign of recovery, but merely another trade-off in the world of economics. We have a group of people who are a bit more silent in their struggles, people who agonize quietly knowing they are seeking work and the effort is on their shoulders and not the responsibility of the government or society. The value proposition for firms may be youthful vigor.
On the other hand, he pointed out, tremendous lost potential and experience has been sidelined.
Many people view me as a pessimist, pointing out a cloud in every silver lining. I have nothing but good thoughts for our economy and do not wish our president any ill will in this regard. I'd be hard pressed to say "I hope your ideas fail" because I know that means telling many others, and possibly myself, jobs will be lost.
In fact, I'm an optimist. I believe, as Professor Robert Heilbroner once told his class, Joseph Schumpeter's view of The Depression is accurate. One day in the midst of The Depression, a young Heilbroner was attending class, with Schumpeter teaching, and Schumpeter opened class with the line "Gentlemen, a depression is for capitalism like a good, cold douche." Schumpeter, from Austria, was referring to a cold shower and the need to refresh when one is overheating. Clearly the language added a bit of humor to the study of the 'dismal science', but his point is accurate.
As tough as things are, and they rarely get easier, things should improve at some point. I'm convinced that over time Americans, particularly older and experienced Americans, are smart and tough enough to overcome anything, even the barriers to growth erected by the current Administration and its need to coddle citizens.
I remain an optimist because had I stayed out of work long enough, I'm certain I'd have found someone, or many others, with whom to start a business. As the saying goes, "Necessity is the mother of invention."
I remain optimistic because even the clouds I point to do have silver linings. I don't feel they are the great news the MSM paints them to be, but they are something to point to. And we all need hope. Hope may be the last refuge of those the facts have abandoned, but it's always a useful thing to have, particularly if you can cobble together enough facts to support that hope without seeming completely outlandish.
We're a great nation, we're exceptional, we're talented, we're well-educated, and we're individually motivated. That final point may be something Obama and his minions try to kill from time to time to make us more 'socially aware', but in the end, it's what undoes bad policy and undermines governments, tyrants, and fools.
Tracked: Mar 04, 02:30
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Well said. We will survive this. My teeth will be knashed to nibs, but we will survive.
What bothers me lately is the stupidity of so many fellow citizens. Here we are, with a terrible economy made infinitely worse by ham-handed central management of things as picayune as birth control purchases, and yet voters (even my near and dear relations) don't see this for what it so obviously is, a political "hey! Let's change the topic!" attempt. The economy is a flat pancake, at best, and the middle class is getting hammered, but voters are mumbling about buying some 30 year old law student her monthly dose!
If this weren't so tragic it would be hilarious.
Karl Rove should compliment Obama for the birth control issue flare up. It's right up his alley of "controlling the agenda".
It's an intriguing issue, however, if you truly believe the government should be involved in paying for "stuff". At what point do my beliefs allow me to step away and say I don't support that woman? At no point? At some point?
All things considered, that is a silly and stupid sideshow. But, unfortunately, it is important to citizens who are seeking to be distracted from the issues I discussed here. Those issues seem to be out of their control, so people prefer to ignore or avoid them.
Sandra Fluke represents something they believe they can control, even though the reality is they can't. It just seems like they get to have a say in the process.
Teller's article about misdirection and misleading people, posted by BD yesterday, describes this situation perfectly.
First, Bulldog, kudos for helping your son analyze the underlying issues of such reports, be they issued by government or private concerns. The devil IS in the details.
I wish I had Schumpeter's enthusiam for a brisk cold shower to clear our economy of excess baggage, especially when it's being manipulated by power politics and a media who lack the education, experience and/or devotion to serious journalism that is required to flush out those eager to gain control over our Constitutional Republic.
I, personally, have three good friends on my block with families and working spouses who have been wiped out since 2008. These are not uneducated, careless people, but their children no longer have even meager college funds nor do the parents have any hope of ever retiring. One family even lived with us for a few months when they sold their home (at a loss) for the cash to buy health/life insurance, gas and food. No one would rent to them until they found jobs; they finally did and are living nearby in an apartment greatly smaller than their home of 15 years.
This all rolled in on these families like a tsunami brought on by bad government decisions and policy -- an extraordinary rise in the cost of raw materials as the Chinese with their low labor, non-union costs were able to out-bid U.S. companies (husband's job), layoffs in the overnight consolidatio of the banking industry (wife's job), a shutdown in the housing industry (teenage son's repeat summer job), movement of shipbuilding industry to Korea/China/others (recent Master's degree grad's job), plunge in advertising revenue (husband's job)...I can go on and on because I've known some of them for 20 years. It's heartbreaking.
Our retail district of closed-up small businesses is a vast wasteland as consumers continue to cut back on non-essentials, our tourist industry can't afford the gas prices and parking fees, and potential merchants can't afford the increasing rents encouraged by rising property taxes. Gone are all the parttime retail jobs that supported teenagers and stay-at-home moms. Gone are all the customers for local accountants, insurance agents, repair and delivery people, etc.
Meanwhile, certain segments of our society are retiring at 50 with multi-million dollar pensions: educators whose school district can't afford textbooks, municipal bigwigs who ignore their districts necessary services and repairs, union headhonchos who fill their personal coffers with the dues of the worker bees. Execs in the private sector are getting raises while the taxpayer underwrites the company bankruptcy or bailout. The government continues to play entrepeneur, identifying those companies "eligible" for its handouts, and designates who is "to big to fail." Heck, the banks are larger then ever now. Even Europe is acknowledging "green" companies cost jobs in more beneficial industries while also failing to survive without huge taxpayer subsidies.
Meawhile, the family a few blocks away from me lives on food stamps, disabiity, Section 8 housing grants, three meals daily for their school-age children, medical care out the wazoo, utility subsidies and FREE cell phones (the family has one each for the mom and six kids) while watching a giant screen TV with Blu-Ray, $180 Nikes (the teen is bragging about them) and other such stuff some dealer sells off the back of a truck.
The U.S. is not going to go back to a sound economy soon. It will take years, if not a generation, to just to rally from this depression. And then, none of those who have learned since the middle 1960's to live off the largese of the government -- with it's well-tended bureaucracy, highly-paid lobbyists, and the blatant, outright-lying media-- will give up the largese to return to a society valuing individual responsibility.
I glad you and your wife found jobs and seem to be doing well. You well deserve such. So do my neighbors. But I'm very concerned about the world we are leaving to the next generation who won't have the education to even ask what a Durable Goods Report is, much less know how to analyze it.
Shipments rising and orders increasing?
= Increased demand.
= Higher prices.
= Devaluation of currency
= Increased borrowing (credit card)
= Why is everything so expensive?
Many people view me as a pessimist, pointing out a cloud in every silver lining.
No - that would be Zachery. :>)
You're pretty tame compared to him.
the problem is people over the age of 35 are undervalued
That is a good point. Employers don't look at experience unless it is absolutely necessary. Which is kind of interesting when you think about it. I think, and this may sound really outrageous, that it isn't a case of salary or experience, but fear of losing their jobs to somebody who has been there, done that and more than once.
Hit send too early. This was from a few days ago - I follow Maersk only because I have some really good friends who are captains of Maersk vessels - being beached because of poor economies is a lousy way to lose a job, especially for a mariner.
. Grim outlook for Maersk.
A good friend of mine does sales for Maersk. He's been doing well, but nowhere near what he was doing 5 years ago.
Neither the cloud nor the silver lining represents the entire sky.
As much as I carp about the soft tyranny existing in what used to be a free country, each person still has liberty to change the sky above them. The tyranny though, is so comprehensive and comfortable that people don’t move. They might have to give up cable and 1000sqft of living area and eat like college kids used to (now they’re all foodies, it seems) while building anew.
Under FDR and LBJ’s policies, Tom Joad would have died quietly in Oklahoma.