U.S. Politics 29

[Former Lord of Winterfell]

So FLOW, whatcha think?

I think that's exactly right. Except I think it should include U.S. businesses along with U.S. consumers.

[14th Dragon]

Ok I learned something new today, the Economics and Statistics Adminstration is part of the Comerce Department, but a search of Comerce department website does not link to ESA reports. For future reference.

I still have not found the 26% percent number, but do have this report.

According to a survey by the National Association of Business Economics, 38 percent of firms had increased their capital spending during the fourth quarter of 2010 (in comparison to the previous quarter), and only 6 percent had cut back on their capital spending. Furthermore, 62 percent of firms indicated that they plan to increase capital spending this year. Small businesses are also increasingly willing to make capital outlays. According to the National Federation of Independent Businesses, 22 percent of small firms are planning a capital expenditure during the next three to six months. While still low by historical standards, this series has been trending-up from a post-recession low of 16 percent last August and is at its highest level since August 2008.

more from that report

One of the biggest winners over the past year (the dot at the top right of the charts) is primary metals. A 22.6 percent surge in shipments from the fourth quarter of 2009 to the fourth quarter of 2010 led to an 11.3 percent boost in aggregate hours. This boost came as more than 20,000 steelworkers returned to work and the average workweek grew by 2.1 hours to 43.3 hours.

[\quote]

Another good way to go is have existing workers work longer weeks. Not increase in productivity but you do increase output. Not that there is anything wrong with that.

[14th Dragon]

You're always going to get a boost in capital spending a few years after the start of a downturn because equipment replacement, upgrading, etc. was put on hold during the downturn. You've got to make some capital investments just to replace shit that has worn out that wasn't replaced over the last few years. The reason for the unprecedented gap right now (26% v. 2%) isn't that the capital investment rate is abnormally high, but that the pace of hiring this far into a downturn is unusually low. That doesn't mean that there has been some widespread, unusual investments in labor-saving systems that have put people out of work.

It is not putting people out of work but it is allowing buisness to continue to produce without the need to hire new individuals. It is not about firing person X and putting in a robot, but if you make the upgrades, you never have to hire X.

[Former Lord of Winterfell]

He's probably right on both counts, but he's got some very strange ideas about what's going on. Shit like this:

It's like "spending is down and the economy is in the shitter. Business won't expand because the demand isn't there. That's why Americans need to belt-tighten more!". Which is odd unless he's refering only to what American consumers rationally think the should do and not what America as a whole should be doing.

There's alot of bitching about Washington not knowing what to do (or just not doing it) but not real indication what he thinks they should do. Other then "Like Japan’s banks, Washington policymakers are doing everything they can to forestall rational economic adjustments." which I'm not even sure constitutes a policy suggestion.

Shryke, you may want to focus on this part of that article:

With fiscal and monetary policies on unsustainable paths, households know that these life support efforts are temporary, at best. That means they need to take matters in their own hands.

What he is saying is that consumers (and I believe businesses as well) believe that our current fiscal and monetary policies are unsustainable. That concern about unsustainability is affecting their current behavior. So even though you personally believe that the deficit is a long-term problem only, and that we really need to spend our way out of this, most consumers (and I believe many businesses as well) disagree with you, and are voting with their pocketbooks. And whether they are right or wrong, their belief and voting with their pocketbooks make it a self-fulfilling prophecy.

So, if he is correct, then government cutbacks that significantly reduce the deficit will increase consumer (and business) confidence about the long-term, and as a result, they will loosen their purse strings a bit and help the recovery along.

[Former Lord of Winterfell]

It is not putting people out of work but it is allowing buisness to continue to produce without the need to hire new individuals. It is not about firing person X and putting in a robot, but if you make the upgrades, you never have to hire X.

Yes, but the data doesn't support the conclusion that the capital spending being made is a substitute for hiring. There are a great many things constituting capital investments that you can do that don't result in hiring fewer people. For example, you may just be replacing crap that has worn out, or buying new software because that's what's being sold as a "replacement", etc. The President's statement made it sound as though companies are embarking on some particular plan to expand capacity via automation without hiring more employees, and there just isn't the data to support that, whether it's Ann Curry feeding him the softballs or not.

Now, on the margins, some of that is always happening. But assume the President is correct for the moment. For his point to have any relevance, the investment in labor-saving devices must be out of the ordinary compared to what has been going on for centuries. Otherwise, it would already be built into the labor numbers and what we normally see coming out of recessions.

And if that is true, then next question to ask would be "why"? Why would businesses be taking extra pains to avoid hiring more employees, and investing in equipment instead, over and above what is common?

[Shryke]

Shryke, you may want to focus on this part of that article:

With fiscal and monetary policies on unsustainable paths, households know that these life support efforts are temporary, at best. That means they need to take matters in their own hands.

What he is saying is that consumers (and I believe businesses as well) believe that our current fiscal and monetary policies are unsustainable. That concern about unsustainability is affecting their current behavior. So even though you personally believe that the deficit is a long-term problem only, and that we really need to spend our way out of this, most consumers (and I believe many businesses as well) disagree with you, and are voting with their pocketbooks. And whether they are right or wrong, their belief and voting with their pocketbooks make it a self-fulfilling prophecy.

So, if he is correct, then government cutbacks that significantly reduce the deficit will increase consumer (and business) confidence about the long-term, and as a result, they will loosen their purse strings a bit and help the recovery along.

Except we already went over this and despite your continued assertions, not even businesses themselves claim that's an issue. Plus, we can just have a gander over at Jolly Old England and learn that the Confidence Fairy is not real. Austerity does not create business or consumer confidence. (It often does the opposite, as you'd expect from basic economics)

But you keep propping up that corpse FLOW. He'll come back to life some day.

I do love how you claim it's my personal belief even though. Is this that thing where you accuse the other side of exactly what you are doing to get people to ignore that there is no data whatsoever supporting your assertion other then you claiming it's true?

[14th Dragon]

For some more recent data, (stupid quarter system)

From the The Duke/CFO Business Outlook Survey -

Capital spending plans have weakened, with a planned increase of 9 percent on average over the next 12 months. Although this is below last quarters planned growth of 12 percent, it is still higher than the long-run average of 5 percent.

So the recent economic shocks are effecting the capital investment

but on a sour note.

Overall, there is pent-up demand to increase workforce, but firms continue to hold off due to a generally weak economic environment and an inability to find the skills they need.

Which I have heard a pretty good deal about lately from multiple sources. Which is going to take some sort of retraining to sort out. (Finding a good machinest is not as easy.)

[TrackerNeil]

Actually, it does. It is disputed by loonies. By definition.

I guess this works if you base your rhetorical choices on what lunatics think. Similarly, I might hold that the notion that 2+2=4 is disputed because the guy at 15th & Market wearing panties around his ankles and hitting himself in the head doesn't think so. I'm not sure where that fine distinction gets you.

This is interesting.

[Former Lord of Winterfell]

Except we already went over this and despite your continued assertions, not even businesses themselves claim that's an issue.

That's not true. The only survey you cited in support of that was a simple ranking of issues that didn't exclude anything..

Plus, we can just have a gander over at Jolly Old England and learn that the Confidence Fairy is not real. Austerity does not create business or consumer confidence. (It often does the opposite, as you'd expect from basic economics)

Then fine, you don't agree with the guy's claim that consumers are nervous about the deficit. That's why I say said "If", and even did the courtesy of underlining the word for you. You can accuse him of being wrong in making that assumption, but you cn't accuse him of inconsistency.

I do love how you claim it's my personal belief even though. Is this that thing where you accuse the other side of exactly what you are doing to get people to ignore that there is no data whatsoever supporting your assertion other then you claiming it's true?

Uh, no. I said your personal belief that the deficit is only a long-term problem, which I think you just doubled-down on. So how did I mischaracterize your position at all?

[14th Dragon]

Yes, but the data doesn't support the conclusion that the capital spending being made is a substitute for hiring. There are a great many things constituting capital investments that you can do that don't result in hiring fewer people. For example, you may just be replacing crap that has worn out, or buying new software because that's what's being sold as a "replacement", etc. The President's statement made it sound as though companies are embarking on some particular plan to expand capacity via automation without hiring more employees, and there just isn't the data to support that, whether it's Ann Curry feeding him the softballs or not.

Maybe, I am still sifting through the data. But it clearly shows that companies are investing in capital without hiring new employees.

Now, on the margins, some of that is always happening. But assume the President is correct for the moment. For his point to have any relevance, the investment in labor-saving devices must be out of the ordinary compared to what has been going on for centuries. Otherwise, it would already be built into the labor numbers and what we normally see coming out of recessions.

And if that is true, then next question to ask would be "why"? Why would businesses be taking extra pains to avoid hiring more employees, and investing in equipment instead, over and above what is common?

I would say since aggrate demand is still very low. Consumer spending is still way down. The uptick in capital goods has not even come close to meeting the shortfall in consumer demand.

Also the problem of mismatched skill sets. I need to do some more digging into that one.

A few more tidbits from the report:

About 59 percent of capital spending is targeted to replace existing equipment, such as machinery that is obsolete or worn out. The remaining 41 percent will be spent on new investments.

CFOs were also asked how long, if ever, it will be before their firms return to pre-recession employment levels: 37 percent of companies say they have already returned to pre-recession levels, while one in five firms says they will never return to previous employment levels. Another 43 percent say they will eventually return to pre-recession employment levels, but not until sales revenue increases by another 40 percent.

[Shryke]

That's not true. The only survey you cited in support of that was a simple ranking of issues that didn't exclude anything..

Then fine, you don't agree with the guy's claim that consumers are nervous about the deficit. That's why I say said "If", and even did the courtesy of underlining the word for you. You can accuse him of being wrong in making that assumption, but you cn't accuse him of inconsistency.

Uh, no. I said your personal belief that the deficit is only a long-term problem, which I think you just doubled-down on. So how did I mischaracterize your position at all?

So again, you have absolutely no evidence of what you claim. Alright then, we'll move on. Again.

[Former Lord of Winterfell]

Maybe, I am still sifting through the data. But it clearly shows that companies are investing in capital without hiring new employees.

You have to invest in capital just to maintain the stuff you have. Investing in capital is not the same as expanding capacity. Buying the latest antivirus software doesn't reduce the number of people you hirer. Plus, in looking at the data, I didn't see anything stating that these capital investments were being made in the U.S. Looks to me like it would include capital investments made overseas by U.S. companies as well.

[14th Dragon]

You have to invest in capital just to maintain the stuff you have. Investing in capital is not the same as expanding capacity. Buying the latest antivirus software doesn't reduce the number of people you hirer. Plus, in looking at the data, I didn't see anything stating that these capital investments were being made in the U.S. Looks to me like it would include capital investments made overseas by U.S. companies as well.

Sorry, I just went back a post to edit and add some more info. You are right about 60% of the capital investment is going into maintence but 40% is going to new investments. The report clearly breaks things down between US, Asia, and Europe but I do not know if American firms expaning in China are counted on which side of the ledger. I will continue to dig. (Sometime, not today as my lunch hour is up.)

[Shryke]

Anyone remember that ginormous pallet of money that went missing in Iraq?

Well, it's looking like, yes, it was stolen and not just misplaced through accounting or the like:

For the first time, federal auditors are suggesting that some or all of the cash may have been stolen, not just mislaid in an accounting error. Stuart Bowen, special inspector general for Iraq reconstruction, an office created by Congress, said the missing $6.6 billion may be "the largest theft of funds in national history."

http://www.latimes.com/news/nationworld/world/la-fg-missing-billions-20110613,0,4414060.story

I'm imaging some random former-fork lift operator now living on his own private island.

[Former Lord of Winterfell]

Anyone remember that ginormous pallet of money that went missing in Iraq?

Well, it's looking like, yes, it was stolen and not just misplaced through accounting or the like:

http://www.latimes.com/news/nationworld/world/la-fg-missing-billions-20110613,0,4414060.story

I'm imaging some random former-fork lift operator now living on his own private island.

That may be. But so much cash is just bulky as hell. I'd still bet on the vast majority of that missing sum being the product of people not keeping proper records and then denying any contact with the funds so they don't get busted for poor record-keeping. Since everyone who might have touched it (and should have kept better records) is disavowing it, theft becomes a plausible alternate theory.

We were doing an awful lot of passing out cash to buy favors during that period, and I'm betting that a lot of the folks involved just didn't keep the records they should have because they were busy with other things. Still, it's ridiculous -- there should have been a specific group in charge of that much money with responsibility for signing it out to subordinate commands, etc.

[Former Lord of Winterfell]

As the NY Daily News put it, "Things are going from drag to worse for Anthony Weiner."

http://www.nydailynews.com/news/politics/2011/06/15/2011-06-15_anthony_weiner_photos_emerge_showing_congressman_in_bra_and_pantyhose.html

[DanteGabriel]

Right wing PAC puts out ad in California Congressional race that makes the old Willie Horton race-baiting seem... quaint by comparison.

Really, it's the worst political ad I've ever seen, and that's saying a lot. Must be seen to be believed.

http://tpmdc.talkingpointsmemo.com/2011/06/in-ca-36-democrat-calls-for-blanket-condemnation-of-stunning-new-web-ad-video.php?ref=fpblg

The Republicans continue to maintain their magic touch with the common man... and demonstrate an amazing ability to self-parody.

[Shryke]

Oh god, I saw that earlier. It is at once the worst and the most offensive and the most stupid political ad I've ever seen.

This is the kind of shit The Onion would refuse to print for being too crass and not believable.

[Swordfish]

Right wing PAC puts out ad in California Congressional race that makes the old Willie Horton race-baiting seem... quaint by comparison.

Really, it's the worst political ad I've ever seen, and that's saying a lot. Must be seen to be believed.

http://tpmdc.talkingpointsmemo.com/2011/06/in-ca-36-democrat-calls-for-blanket-condemnation-of-stunning-new-web-ad-video.php?ref=fpblg

The Republicans continue to maintain their magic touch with the common man... and demonstrate an amazing ability to self-parody.

And by 'ad' you mean 'youtube video'. Or was this thing actually broadcast anywhere?

Here's a link to the PAC.

The Huey camp has already condemned it, as has the official Republican party leadership in CA.

[Shryke]

It's still a political ad. God knows who the fuck "Turn Right USA" actually is though.