Friday, March 19, 2010

Everything I didn't want to know about the American economy

Ponder on this item in the Press. Capture lines for GDI will be naturally slower than for GDP, because of the nature of their constructions. GDP increase needs only pushed Production schedules in the Short-Run, with methodical Hiring practice in the Intermediate Term for Growth. GDP decline can come far more rapidly, with sudden Lay-Offs; but in both instances, GDI must consistently follow because of the labor income paid out. GDI, on the other hand, must see the return of both Profits and Wage Income, along with the issuance of Royalties for Patents and Copyrights. All depend on Production Sales to major degree, while GDP depend only on Production schedules. There are great reasons to stockpile not only Product, but materials for Production under recessionary conditions; it has to do with cheaper Pricing of materials after Sales downturns. Profits, Wage Income, and Royalties are hard to reconstruct without a sustained Period of high Sales. This puts a drag upon GDI, causing some problems for use of the measure as an economic indicator; still, long delay Periods in the GDI will assure long-term reduction of GDP. This later is only a good economic indicator if GDI closely tracks it with at most a delayed Period of two Quarters.

There has been a downturn in American manufacturing for decades, but this evaluation accounts only operating plants, and the entire Production area shows a reversal of fortune which is far from being over. There are several factors contributing to a failure to return to previous Production rates. American business practice makes Work Experience a demerit, preferring to employ foreign subcontract labor for supplying Parts and Production, over a higher-Waged American labor force. American health care has become too expensive for Business to underwrite labor health care; an underlying demand which propels most Wage discussions. American Plant and Technology is Ageing, and Recapitalization follows the cheaper labor. American Business has not introduced good Quality Control measures, so that American Products are again gaining a bad Name; a major factor which had to be dealt with in the mid-1980s. There is finally a disbelief among American labor that Manufacturing is a viable employment future; it all reflects in the quality and speed of their labors.

I will finish with this article from Leonhardt, which has little to do with the previous discussion; except in the general Overview of the issues involved. GDI is not rising, and there is some rationale for expecting it to stay static even after GDP increases. This means that American business must export, or never return to previous Profits. The obvious Option of Choice from all Parties is for Government to replace both reduced Consumption and uncaptured Export. American labor wants the Government to sustain their previous Consumption patterns, and American businesses want their Profits at any Cost. The trouble will come when underwriters of American debt no longer want US Treasuries; a Time not as far distant as Anyone would like. It does not bode well for the future, and I as an old man, can always die!. lgl

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