The Big "R" word

[Darth Rock&Roll]

yes and it is stupid. If a business cannot float, then it shouldn't be in business . the end.

[chud]

Are you saying we should let our banking, insurance, housing, and big auto (and its related industries: steel, glass, plastic, etc) die because it's their own incompetence and greed that brought them to their current state of collapse?

Yes, let them die.

[Darth Rock&Roll]

And yes, I agree. Let them die. Those ones in particular who willfully participated in the ginormous clusterfuck that was created.
The businesses and banks etc that did not play that stupid game of hide the bad loan will function because they are proper businesses.

the others should just be left to die.

[Teazer]

No, no, wait, -- we haven't heard from Teazer yet!

LOL. The chances of the NBER not calling a recession are quite remote at this stage!

BTW the 2 quarter decline in gdp is an indicator but technically neither required nor sufficient for a period to be labeled a recession.

[chud]

LOL. The chances of the NBER not calling a recession are quite remote at this stage!

And just like that, Teazer changes his tune...

[Teazer]

Same tune, just a little later on.

[DeusTrismegistus]

Darth,

I agree with your general sentiment.

However according to economists, which I really don't think economics is a very good science. I even told my Honors Macroeconomics prof in college that economics was useless and pointless. Somehow I still passed. But anyways, the reason the outsourcing occured is very simple. Businesses go wherever they can keep their costs the lowest. So its a tradeoff, they can manufacture here and pay higher wages but avoid other costs, or they can locate in another country and make things cheaply but be subject to those other costs, they do a cost benefit analysis and go wherever is cheaper.

The reason the govt allowed this is because the economists told everyone that outsourcing was in our best interests. This is because the economists model says that the dollars we used to inefficiently make those widgets, will be spent making something we are more efficient at; AND we will be able to get our widgets cheaper. In reality nothing gets cheaper, the dollars aren't spent more efficiently, and we suffer.

IMO this is really a flaw with economics. They do their best to model the way the world works but they cannot model 100% of human behavior, and on top of that it is impossible to have a true experiment. All economic models are based on observable phenomena.

So the best way for the govt to make these manufacturers stay in the US is not to make a law saying they have to, but to use tariffs to make it the cheapest option, or lower corporate taxes in the US to make it the best option. Most companies that outsourced predicted a 30% or so cost reduction but because of unforseen costs thay usually experiences only about a 10% cost reduction. That is easy enough to fix between tax cuts and increased tariffs.

[qiphlow]

the outsourcing happened (and continues happening) because the US govt is populated with corporate CEOs at its top levels, and because corporations are giving generously to the 2 major political parties.