Nothing but lies

[Cardboard]

http://money.cnn.com/2010/08/06/news/economy/jobs_july/index.htm

 

The latest jobs report shows a decline, but what really annoys me is that they mentioned that losses in June were mainly due to the end of census temporary jobs. Now according to some, it is the cause again in July?

 

Then here is another one that needs explanation:

 

"DJ US Jun Payrolls Revised To -221K From -125K"

 

Can we rely on the July report? Will it be revised lower again next month? Same thing with the oil in the Gulf. All of a sudden 75% of it has been captured or disappeared... Dispersants are not toxic, the shrimps are good...

 

The bulls and the government are spining this stuff it is nuts. What the U.S. needs is 500,000 jobs created per month. They need to stop the bullshit, QE2 and work on real solutions to foster innovation. They also have to accept that consumers need to repair their own balance sheets and that spend, spend, spend is no longer the solution.

 

What we have had here is a sharp restocking of inventories. It was very sharp on the way down and very sharp on the way up because of just in time inventory with tools such as ERP. Now, people are looking at each other and wondering if new orders will come in or if it was just demand coming back to more reasonable levels from the bottom.

 

Cardboard

[Smazz]

I also wanted to know who would be buying en masse with the "real" data out there?

 

10% unemployment? How good can it possibly get even in 12 months.

 

In addition, all the positive (if you can call it that) numbers of the last quarter can in many ways be attributed to the infusion by the govt.

 

I dont know, I keep shaking my head.

[Guest Bronco]

Don't want to beat this to death, but what we need is tax reform of a major proportion.  Read the JCT's latest report dated 7/22 on income shifting.

 

This is a big no brainer.  Every nation except Japan has a lower tax than the US.  And the US has the most punishing tax laws in the world for income generated outside the US.  Lower the dividend rate to 5 - 10%, corporate tax rate to 20%, and you will have more US jobs, more capital in the US, and more tax revenue than you would know what to do with. 

 

If I keep hearing about all the corporate cash on the balance sheets, I will throw up.  Where is all this cash?  I will tell you - Switzerland, Netherlands, Luxembourg, Hong Kong, etc.  How can the US get jobs and capital investment when we punish the crap out of corporations for bringing capital home? 

 

It is a real shame the country is run by morons.  Complete a-holes.  No doubt about it, no matter how you slice it.  We need a big time reformer, not this academic circus clown and botox babe in the House.

[bookie71]

Remember the three biggest lies:

1)  Your check is in the mail

2)  I'm from the government and I'm here to help you

3)  I forget (getting old)

[rkbabang]

Remember the three biggest lies:

1)  Your check is in the mail

2)   I'm from the government and I'm here to help you

3)   I forget (getting old)

 

3) If only we just vote the right people in we can change things.

 

http://www.youtube.com/watch?v=Cd-SLRyuRq0

http://www.youtube.com/watch?v=sLCEXtpTNYU

http://www.youtube.com/watch?v=Xbp6umQT58A

 

[Viking]

What I wonder is if we are in the early stages of another Great Depression. On the one hand, Buffett talks about not trying to time things too much and to 'bet on America'. Looking at things from an historical perspective the downside risks (to equities) certainly look real. FFH certainly is once again battening down the hatches and they have been remarkably accurate (and usually early). Weave it all together and it certainly is an interesting time we live in! I will happily forgo some return (i.e. hold lots of cash) and let time clarify things a little more... And, yes, all of the spin we are seeing is certainly making it hard to read the tea leaves. 

[Guest dealraker]

As Munger says, "The perfectly obvious..."

 

Our unemployment rate is much, much, much higher than stated by the govenment.  I am an older man and I don't generally awfulize but to me the number of very willing-to-work people who can't find work is a tragedy of unbelievable proportions.

 

 

[Smazz]

Buffett talks about... to 'bet on America'.

I would agree with him here on this one if the players today were those of his generation - but they are not. We have a different society today - those that want it now and pay for it later.

[Packer16]

If not the US where are you going to go?  The more statist economies of the emerging market where you are an outsider?  The slower growth econmies of Europe?  Of the alternatives available the US/Canada/Australia looks the best but not perfect alternatives.

 

Packer

[Cardboard]

1.9% GDP growth in 2011 and 10% unemployment. Is this France? Or Japan? No, it is the U.S.!

 

http://blogs.wsj.com/marketbeat/2010/08/06/goldman-sachs-unemployment-is-going-back-to-10/

 

This notion of nowhere else to go other than the U.S. with a performance like this will stop faster than you may think.

 

Something else that I find completely out of whack in the U.S. is that they have not taxed internet sales yet. Companies like Amazon create very few jobs with no brick and mortar stores and on top of that benefit by not taxing their sales. Some bill has been proposed, but to date nothing has gone through.

 

Ah! Lobbying again. A nice term to avoid saying corruption.

 

Cardboard

[Hawk4value]

The video made an interesting observation which I agree with: Societies that begin with many freedoms and liberties always seem to end up with large, distructive, controlling governments. For example in the US during the 20th Century the size of gov't has exploded. In my opinion the 2 main catalysts were: the introduction of the Income Tax; and the elimination of the gold standard by Nixon. The first allowed gov't to directly confiscate our wealth for its own use; and the second allowed the gov't the unlimited power to print money, debase our currency, and destroy the value of our savings. And it seems like the forseeable future will see much more of the same. Now I ask you: "Are we not on the road to serfdom".

[hyten1]

cardboard,

 

i don't know the entire story regarding internet tax.

 

but i do know that when i buy stuff from amazon (I live in nyc) i do have to pay sales tax

 

hy

[SharperDingaan]

 

Interesting US tidbits from the last few weeks:

(1) Absent the census impact & US employment has essentialy been flat for all of 2010 YTD. Head-count is constant, but retirements & firings are being replaced with part-timers. Most would suggest that is unlikely to change much over the next 6 months.

(2) Since Dec-2009, the total $ of seriously deliquent mortgages have tripled over 2010 YTD. These are mortgages that are in the advanced stages of foreclosure, & which will trigger significant write-offs when they go under.

(3) Municipalities & state governments are starting to enter their 2011 budget processes. Most would suggest that the collective 2011 impact is going to be the widespread use of wage freezes, 4-day workweeks & job sharing to minimize layoffs.

 

All this if there are NO additional economic shocks.

Most would suggest that if there is a shock it can only get worse. Hence it should not be a surprize that the worsening condition is not being broadcast, or that QE2 is increasingly getting traction.

 

SD 

[omagh]

Good summary of US employment here:

http://www.calculatedriskblog.com/2010/08/employment-population-ratio-part-time.html

 

Most political messages re: stimulus are now pointing towards increasing employment.  Introduction of renewed stimulus will be targeted at public works and stimulation of specific industries.  In the graphs you can see that this has been a severe recession for employment.  A significant influence compared to earlier recessions has been reduced labor mobility where workers have negative equity in homes that cannot be sold to move to other parts of the country where potential jobs exist.  Labor mobility will be a limiting factor in employment stimulus.  On the whole, employment seems to have bottomed out absent other shocks.

 

-O

 

(1) Absent the census impact & US employment has essentialy been flat for all of 2010 YTD. Head-count is constant, but retirements & firings are being replaced with part-timers. Most would suggest that is unlikely to change much over the next 6 months.

[Guest ValueCarl]

Our lack of integrity, credibility, humility, accountability, and all around good character are the major reasons for America's disease, a disease so pervasive by our leaders across all walks of life in the business and political spectrums, we will FALL before this story ends.

 

As for Buffett's bet on America, it's nothing but a BET of BIAS with substantial hedges overseas. A bet on nostalgia tied to his homeland with some cognitive dissonance sprinkled on top and established by an earlier generation not fully infected or debilitated at that point in history.

 

Is there a day that goes by that we don't see, hear or experience disgraceful mismanagement of the Peoples money supply like this?

 

http://beforeitsnews.com/story/110/024/Is_There_More_to_Sherrods_Dismissal.html

 

Rome is burning, and the subliminal message to the SHEOPLE in mass is that, "They're all a bunch of crooks" to the extent that, if one had the power to take all of Warren Buffett's marbles away from him, what might he really look like?

 

Additionally, America is suffering from a grotesque case of "white guilt" much akin to "German guilt" which resulted post Nazism.

 

Otherwise, we might start incarcerating men like that frog and damn hypocrite, Rangel.

 

The cause of this disease to be sure, stems from our leaders, and those who empower them via their great "INFLUENCE." Start rooting them out would be the first most important step in seeking a cure. imo

     

 

 

[Packer16]

I agree on an absolute basis but we live in a relative world of choices.  I would rather have my money in the stable free democracies and non-state capitalist countries of US/Canada/UK/Australia than in the state directed economies of China/Brazil/Japan and others.  If you look at history, the state capitalist countries may speed up thier catching up but do not develop the skill for the long-term run.  The firms become dependent upon the state planning.  This has happened to Japan and will also happen to China.  At worst, this approach creates dependence and corruption at best it becomes a large waste of money. The Economist this week has some good articles about this subject - Leviathan Inc. (the state goes back into business). 

 

Packer

[twacowfca]

I agree on an absolute basis but we live in a relative world of choices.  I would rather have my money in the stable free democracies and non-state capitalist countries of US/Canada/UK/Australia than in the state directed economies of China/Brazil/Japan and others.  If you look at history, the state capitalist countries may speed up thier catching up but do not develop the skill for the long-term run.  The firms become dependent upon the state planning.  This has happened to Japan and will also happen to China.  At worst, this approach creates dependence and corruption at best it becomes a large waste of money. The Economist this week has some good articles about this subject - Leviathan Inc. (the state goes back into business). 

 

Packer

 

 

Hear!  Hear!

 

Don't forget Chile!  ;)

[rkbabang]

The video made an interesting observation which I agree with: Societies that begin with many freedoms and liberties always seem to end up with large, distructive, controlling governments. For example in the US during the 20th Century the size of gov't has exploded. In my opinion the 2 main catalysts were: the introduction of the Income Tax; and the elimination of the gold standard by Nixon. The first allowed gov't to directly confiscate our wealth for its own use; and the second allowed the gov't the unlimited power to print money, debase our currency, and destroy the value of our savings. And it seems like the forseeable future will see much more of the same. Now I ask you: "Are we not on the road to serfdom".

 

The state is like a cancer, it may start out small, but it grows and grows consuming more and more resources until it kills the body/society.  It's happened again and again throughout history.  IMHO, We need to find a cure.

 

--Eric

 

[Myth465]

I agree on an absolute basis but we live in a relative world of choices.  I would rather have my money in the stable free democracies and non-state capitalist countries of US/Canada/UK/Australia than in the state directed economies of China/Brazil/Japan and others.  If you look at history, the state capitalist countries may speed up thier catching up but do not develop the skill for the long-term run.  The firms become dependent upon the state planning.  This has happened to Japan and will also happen to China.  At worst, this approach creates dependence and corruption at best it becomes a large waste of money. The Economist this week has some good articles about this subject - Leviathan Inc. (the state goes back into business). 

 

Packer

 

I agree Packer. You guys are hilarious to me. The State has a role and business has a role. The internet would not exist without the state, and that has been the engine of growth for the US in the 1990s and 2000s.

 

The Economist series was very good, and outlined some areas where the state has been or could be useful, and other areas where it has failed miserable (when it tries to pick winners). We should be working to learn from this and should be using both the state and the markets more effectively.

[Packer16]

The one thing about the internet and other "state" inventions though is they were focused on a national defense purpose and thus had a economic reason to exist that was independent of its current use.  Thus it had dual uses.  First as national defense asset and eventually as a backbone for other services.  I was involved in a defense satellite porject that had similar characterisitcs (the waveform was state of the art to protect it from USSR threats and many of the features were later used in cell phones.  Not all these projects can be transferred.  I worked on another integrated circuit project whose substrate was silicon on sapphine (so the chips could withstand a nucluer event and not short out), the chip was produced for its purpose but no commercail applications are known to date.

 

I have yet to see a "state" invention that met its intented purpose and created new industries.  That is why am skeptical of much of "green" energy project money as it is being influenced by "non-econimic" factors and lobbyists.  When you will be better off to hire a lobbyist than to develop a better project or service then the process is in trouble.  Much of that money is picking winners in implementation of projects and providing subsidies for uneconomic sources of energy that will someday be found to be obsolete. It is human nature to want to be right and on the cutting edge of new technolgied but no one is smart enough to pick the winners and you are fool if you believe you can.  I was re-reading Philip Fischer's "Conservative Investors Sleep Well" and he had a great quote (from the mid to late 1970s - when the market for venture captial was limited) - namely "If this does not happen, all that is left is to try to go ahead with what needs to be done in the way that, both here and abroad, has always proven so costly, wasteful and inefficient then - by government financing, with management under the dead hand of beareaucratic officaildom."  People and ideas do not change only those who do not study history are bound to repeat the errors of the past.

 

Packer 

 

[zippy1]

The one thing about the internet and other "state" inventions though is they were focused on a national defense purpose and thus had a economic reason to exist that was independent of its current use.  Thus it had dual uses.  First as national defense asset and eventually as a backbone for other services.  I was involved in a defense satellite porject that had similar characterisitcs (the waveform was state of the art to protect it from USSR threats and many of the features were later used in cell phones.  Not all these projects can be transferred.  I worked on another integrated circuit project whose substrate was silicon on sapphine (so the chips could withstand a nucluer event and not short out), the chip was produced for its purpose but no commercail applications are known to date.

 

I have yet to see a "state" invention that met its intented purpose and created new industries.  That is why am skeptical of much of "green" energy project money as it is being influenced by "non-econimic" factors and lobbyists.  When you will be better off to hire a lobbyist than to develop a better project or service then the process is in trouble.  Much of that money is picking winners in implementation of projects and providing subsidies for uneconomic sources of energy that will someday be found to be obsolete. It is human nature to want to be right and on the cutting edge of new technolgied but no one is smart enough to pick the winners and you are fool if you believe you can.  I was re-reading Philip Fischer's "Conservative Investors Sleep Well" and he had a great quote (from the mid to late 1970s - when the market for venture captial was limited) - namely "If this does not happen, all that is left is to try to go ahead with what needs to be done in the way that, both here and abroad, has always proven so costly, wasteful and inefficient then - by government financing, with management under the dead hand of beareaucratic officaildom."  People and ideas do not change only those who do not study history are bound to repeat the errors of the past.

 

Packer   

 

Even though I agree with your large point, I do want to point out that the silicon on saphire work is related to the slicon on insulator (SOI) work. SOI now is used in many IBM alliance based processes and I think that even the XBOX's chip uses SOI.  Another example is ion implanation. I used to model ion-implantation, which also benefitted greatly from the defense work of the 1950s and 60s, also.

[Packer16]

My main point was the money was spent to get a product (a hard chip that the gov't required) that had a demand and the offshoot is what was commercialized.  Part of the reason was the state of the art requirements of the cold war that pushed the technology to its limits and the gov't was willing to pay for it to fight the cold war.  I do not know of a gov't development project that had developed a commercial product whose end product was a successful commercial product (no defense or other gov't use) which is where alot of the "green" technolgy money is going (subsidies to uneconimic technologies). 

 

Packer

[zippy1]

My main point was the money was spent to get a product (a hard chip that the gov't required) that had a demand and the offshoot is what was commercialized.  Part of the reason was the state of the art requirements of the cold war that pushed the technology to its limits and the gov't was willing to pay for it to fight the cold war.  I do not know of a gov't development project that had developed a commercial product whose end product was a successful commercial product (no defense or other gov't use) which is where alot of the "green" technolgy money is going (subsidies to uneconimic technologies). 

 

Packer

But if some of these "green" energy technology do offer higher cost energy sources, thus uneconomic, wouldn't they also possibly improve US's national security by making US more energy self-sufficient?

Under this case would it makes them more or less fitting your criterion of a product of defnese prupose which has potential later being commercialized?

[Myth465]

Packer I agree, as a value investor I have a contrarian streak. Due to this I doubt that the Green jobs push will work very well. It created a bubble in Spain, and I highly doubt the US will beat every other industrialized nation which is pushing green jobs. What we can do is stop throwing money at the problem.

 

What we should do is probably mandate building upgrades (schools, hospitals, gov / non gov buildings, plus these can't really be outsourced), and help create / mandate an infrastructure for natural gas vehicles using tax breaks and sticks. We should also stop cutting back on college research funding, and should realize that most breakthroughs come from research that was looking for something else. I think Bill Gross talked about this, but you cant demand a return on investment with everything.

 

Government funded innovation (successful) comes in the form of Military, Space / Nasa, and University related Research. Government also funds alot of the medical breakthroughs. It should stick to these items vs. moving into pushing industries (Green Jobs), or winners (Ethanol). I however, think the Government should always have a Manhattan problem going on to solve a long term problem, currently we could use one geared towards energy or climate change.

 

We should stick to little tweaks that the market is missing or can't do. I agree that the government sucks at commercializing things and should leave that to the market. They are good at dealing with externalities, mandating things to solve long term problems (energy, climate change, ect.) , and providing funding for research. We need people who realize this and are willing to try new things geared towards using both the Markets and Government to solve our problems / improve our lives.

[SmallCap]

I know that my current situation must be an anomaly due to all the statistics out there but in reading through this discussion that my own personal experience is so different. At this point I can't think of anyone who wants a job who hasn't got a job and I live in Michigan with one of the highest unemployment rates. I know a couple who are casually looking for a better job but they are currently providing for their family and grateful for what they have.

 

I work a great deal with the local small business community as a small business consultant and I am surprised at how much activity is going on. I picked up 4 new clients in June, 3 in July vs. 0 for the first 8 months of 2009.

 

I know that there are a lot of people out there looking for work but for some reason I can't seem to find them.

 

The only way I can account for this is that it is a fluke within my circle of friends and acquaintances.

 

I have been wondering whether these unemployment numbers are not accurately compared to past unemployment numbers because of the dominance of 2 (or 2+) income households in contrast to say the 1930's when a person being unemployed meant that a household had no income. Today how many households are without any income?

 

SmallCap