tidbit for Ish and all economics discussers

[Mark Kohut]

Yesterday the Fed was due to issue a revised GDP forecast in the morning.

Blaming 'technical difficulties' it was released after the US markets closed.
On the Friday of a near market free fall.

it was a downward revision.

Some "technical difficulties" might be smart sometimes.

On Sat, Jan 16, 2016 at 7:58 AM, ish mailian <ishmailian at gmail.com> wrote:
> We can agree to disagree here. I don't like the tone the debate has taken
> on.
> It's an incredibly interesting and complex topic. consider that the most
> famous economists in America are debating this for some time now and have,
> essentially, agreed to disagree (Krugman, Summers, Bernanke). Much of our
> disagreement may be down to terms. Like what are elements of Demand and what
> are elements of Supply? I suspect, that at times we are simply arguing the
> same point with different terms. And, once the tone, a difficult thing to
> measure online, seems negative or counterproductive, it's time to toss in
> the towel. We could move on to rates, inflation, policy, trade....but we've
> come to loggerheads on these as well if I recall. I like a good debate, but
> I don't won't waste your time...so....I'm not an economist or an excerpt,
> but I like the dismal science, in part because, it's so complex and so
> controversial, but I don't like fighting and fussing mys friends.
>
>
>
> Another good piece:
>
> The global secular savings stagnation glut
>
>
> http://www.economist.com/blogs/freeexchange/2015/04/puzzles
>
>
>
> On Fri, Jan 15, 2016 at 7:35 PM, Robert Mahnke <rpmahnke at gmail.com> wrote:
>>
>> Three things:
>>
>> 1) Did you mean to "reply all" to the DL?  Seems like others would be
>> interested in what you say here.  If you send to the list, I'll amplify the
>> next two points.
>>
>> 2) I don't see why you think that OECD data shows that demand has
>> returned.  I see anemic growth in most countries in recent years.  In short,
>> not much of a recovery, which is Stiglitz's point.
>>
>> 3) I don't understand your last two sentences, or why you think they
>> explain anything specifically about the last decade.
>>
>> On Fri, Jan 15, 2016 at 1:20 PM, ish mailian <ishmailian at gmail.com> wrote:
>>>
>>>
>>>
>>> On Fri, Jan 15, 2016 at 2:21 PM, Robert Mahnke <rpmahnke at gmail.com>
>>> wrote:
>>>>
>>>> Sorry, but this is absolutely consistent with what I have been saying.
>>>> The global problem is that in the developed world, demand fell off after the
>>>> 2007 shock and hasn't returned.
>>>
>>>
>>>
>>> It's weak.  Some are calling it a "secular stagnation", but demand has
>>> returned. Here, take a look at this useful chart and you can see that demand
>>> has returned.
>>>
>>>
>>> https://data.oecd.org/gdp/gross-domestic-product-gdp.htm
>>>
>>>
>>>
>>>
>>>>
>>>> Hence the weakness in the European and US economies, with the US
>>>> outperforming EU but not by a lot.
>>>
>>>
>>>
>>> The US is much better than Europe, but the US did not have a depression
>>> to recover from. I agree both have experienced very weak recoveries.
>>> European politics snuffed out the recovery that might have been stronger.
>>> In the US, the Fed  was able to offset the fiscal policies that might have
>>> caused an end to the recovery, a recession like the one austerity caused in
>>> Europe, but the recovery, now nearly a decade long, continues.
>>>
>>>
>>>>
>>>> Japan's problems predate 2007.
>>>
>>>
>>> Right.
>>>
>>>>
>>>> Of course, things are not the same everywhere, and the Chinese economy
>>>> was strong for years after 2007, since China's internal growth made up for
>>>> the fall-off in demand from the West.  China's economy is now faltering.
>>>> It's easy to believe that there is "too much supply" in China because of the
>>>> much larger role of state planning.  Market-based economies can have
>>>> bubbles, but state-run economies are less likely to allocate resources well,
>>>> and it's easy to picture Chinese bureaucrats continuing to build more
>>>> factories that will turn out excess goods.  But what's happening in China
>>>> does not change the fact that in the US and Europe, we have never recovered
>>>> from 2007.  Demand limps along, and our political system has not been able
>>>> to recognize the problem or do enough about it.
>>>
>>>
>>>
>>> The politics is the politics. But we have demand and recovery. But too
>>> much supply, too much debt, too many old people, too much government
>>> corruption and incompetence. It's a supply story.
>>>
>>>>
>>>> On Fri, Jan 15, 2016 at 10:55 AM, ish mailian <ishmailian at gmail.com>
>>>> wrote:
>>>>>
>>>>> WORLD  ASIA  CHINA NEWS
>>>>>
>>>>> Glut of Chinese Goods Pinches Global Economy
>>>>>
>>>>> Plants in China keep producing as growth falls, fueling deflationary
>>>>> pressure world-wide
>>>>>
>>>>> A worker loads a truck with tires from Del-Nat Tire, a distributor in
>>>>> Memphis, Tenn., that found itself stuck with high-priced inventory after
>>>>> tire prices declined because of overproduction in China. ENLARGE
>>>>>
>>>>> A worker loads a truck with tires from Del-Nat Tire, a distributor in
>>>>> Memphis, Tenn., that found itself stuck with high-priced inventory after
>>>>> tire prices declined because of overproduction in China. PHOTO: STEVE JONES
>>>>> FOR THE WALL STREET JOURNAL
>>>>>
>>>>> By LINGLING WEI,  BOB DAVIS and  JON HILSENRATH
>>>>>
>>>>> June 1, 2015 10:38 p.m. ET
>>>>>
>>>>> 164 COMMENTS
>>>>>
>>>>> DONGYING, China— Liu Zijun built a thriving tire-manufacturing business
>>>>> when China’s economy was roaring ahead. But when China’s growth weakened, he
>>>>> had to cut prices to keep his business afloat.
>>>>>
>>>>>
>>>>>
>>>>> Now the pain felt by industrialists such as Mr. Liu is reverberating
>>>>> across the globe, showing how China, once the world’s most reliable source
>>>>> of growth, is adding to deflationary pressures world-wide.
>>>>>
>>>>>
>>>>>
>>>>> In the rubber-tree fields of Southeast Asia, planters are scrambling to
>>>>> cut prices for their latex fast enough to keep customers in China happy. In
>>>>> the U.S., tire distributors are marking down prices and some are cutting
>>>>> staff as China floods the U.S. with discounted goods from unneeded
>>>>> factories.
>>>>>
>>>>>
>>>>>
>>>>> “The growing production capacity in China changed the U.S. industry,”
>>>>> said Brian Grant, chief executive of Del-Nat Tire Corp., a Tennessee tire
>>>>> distributor that exited the business early this year after chalking up
>>>>> losses on overpriced inventory it had bought before prices fell.
>>>>>
>>>>>
>>>>>
>>>>> A dozen years ago, low-cost workers from the countryside poured in to
>>>>> China’s factories, helping bring down the cost of everything from T-shirts
>>>>> to tricycles.
>>>>>
>>>>>
>>>>>
>>>>> Then the country’s booming demand for commodities such as oil and
>>>>> cotton helped to reverse that downward inflation trend, as natural-resource
>>>>> prices surged. Now, China’s excess manufacturing capacity and slowing growth
>>>>> rate are changing the equation again, putting renewed downward pressure on
>>>>> prices.
>>>>>
>>>>>
>>>>>
>>>>> Milk producers in New Zealand, coal miners in Australia and sugar
>>>>> growers in Brazil have been forced to cut their prices after finding they
>>>>> had overestimated commodity demand from China. At the same time, Chinese
>>>>> manufacturers, stung by their country’s economic slowdown and excess
>>>>> capacity, are flooding export markets with finished goods such as tires,
>>>>> steel and solar panels.
>>>>>
>>>>>
>>>>>
>>>>> RELATED READING
>>>>>
>>>>>
>>>>>
>>>>> As the China-U.S. Tire Battle Rolls On, American Consumers Pay More
>>>>>
>>>>> How China’s Taste for Milk Actually Hurt the Value of New Zealand’s
>>>>> Cows
>>>>>
>>>>> Global deflationary pressures emanating from China are symptomatic of
>>>>> wider demand issues gripping economies from South America and Europe to much
>>>>> of Asia. China is far from the sole cause of price weakness; others include
>>>>> new crude-oil supplies in North America and sluggish growth in Europe. But
>>>>> China’s sheer size, reach and central role in global manufacturing make it a
>>>>> potent force.
>>>>>
>>>>>
>>>>>
>>>>> Consumer prices for tires in the U.S. have fallen in 23 of the past 32
>>>>> months, by a total of 6.5% since July 2012, after rising steadily a few
>>>>> years earlier, Labor Department statistics show. Prices of all goods
>>>>> imported to the U.S. directly from China have fallen in 20 of the past 38
>>>>> months, by 2.2% in all.
>>>>>
>>>>>
>>>>>
>>>>> For U.S. consumers, that is good news. But for policy makers and
>>>>> corporate executives, declining prices present a real challenge. The
>>>>> declines can sap profitability, deter investment and block wage growth, all
>>>>> of which are needed to help the world break out of its years of
>>>>> underwhelming growth.
>>>>>
>>>>>
>>>>>
>>>>> U.S. prices for services, which are affected by domestic factors such
>>>>> as the cost of labor, are running close to the Federal Reserve’s target of
>>>>> 2% annual inflation. They could move higher still as the job market
>>>>> tightens.
>>>>>
>>>>>
>>>>>
>>>>> But U.S. goods prices, which are more susceptible to global trade winds
>>>>> influenced by China, have been running well below the Fed’s inflation target
>>>>> since 2012, and entered outright deflation in 2013.
>>>>>
>>>>>
>>>>>
>>>>> Inflation below target
>>>>>
>>>>> Overall, the Federal Reserve’s preferred measure of annual U.S.
>>>>> consumer price inflation was 0.1% in April. Soft prices of commodities,
>>>>> particularly oil, and declining import prices have been contributors. This
>>>>> U.S. inflation measure hasn’t been above 2% since early 2012.
>>>>>
>>>>>
>>>>>
>>>>> In Europe, falling consumer prices earlier this year prompted the
>>>>> European Central Bank to embrace aggressive monetary-easing measures as a
>>>>> way to drive growth. In April, European consumer prices were flat.
>>>>>
>>>>>
>>>>>
>>>>> China’s role in weak price growth world-wide is becoming increasingly
>>>>> apparent as the country struggles to absorb all of the plant capacity it has
>>>>> added. Prices at the factory in China have fallen for more than three years,
>>>>> pressuring the People’s Bank of China to ease credit conditions and bring
>>>>> down borrowing costs in hopes of spurring consumption and broader economic
>>>>> growth.
>>>>>
>>>>>
>>>>>
>>>>> Still, PBOC officials worry that such moves could make matters worse,
>>>>> by channeling money to industries that already have excess capacity and are
>>>>> looking to export away their problems. The risk is that cheap money spurs
>>>>> even more expansion of Chinese manufacturing capacity.
>>>>>
>>>>>
>>>>>
>>>>> With China’s slumping construction industry requiring less steel than
>>>>> had been expected, the country has become a massive global exporter of the
>>>>> metal, weighing on global prices.
>>>>>
>>>>>
>>>>>
>>>>> Last year, China exported 94 million metric tons of steel, more than
>>>>> the total output of the U.S., India and South Korea, the world’s third,
>>>>> fourth and fifth largest producers.
>>>>>
>>>>>
>>>>>
>>>>> Too much capacity
>>>>>
>>>>> UBS analysts estimate the world has excess steel-production capacity of
>>>>> 553 million metric tons a year, much of it in China. That is enough to build
>>>>> more than 10,000 modern aircraft carriers a year, or the Eiffel Tower 75,000
>>>>> times annually.
>>>>>
>>>>>
>>>>>
>>>>> The price of a common steel product called hot-rolled coil has dropped
>>>>> by 44% since March 2012, according to McGraw Hill’s Platts unit. Other
>>>>> prices are falling with it, including those for iron ore, coking coal and
>>>>> scrap metal.
>>>>>
>>>>>
>>>>>
>>>>> A fundamental mismatch of supply and demand haunts other industries. In
>>>>> 2013, Chinese authorities named 19 sectors plagued by overcapacity in the
>>>>> country, including cement, aluminum, copper, chemical fiber and paper.
>>>>>
>>>>>
>>>>>
>>>>> “This has happened again and again in markets, but this was on a super
>>>>> scale,” said Daniel Yergin, vice chairman of the Colorado market-research
>>>>> firm IHS Inc. “People invest, but they don’t see what everybody else is
>>>>> doing at the same time.”
>>>>>
>>>>>
>>>>>
>>>>> The troubles in China’s tire industry provide a glimpse of how
>>>>> pernicious deflationary pressures can be.
>>>>>
>>>>>
>>>>>
>>>>> Between 2000 and 2013, China’s tire production soared threefold to
>>>>> about 800 million tires a year as the country grew into the world’s biggest
>>>>> auto market, according to Freedonia Group, a market-research firm in
>>>>> Cleveland. Producers exported many of those tires, occasionally drawing
>>>>> complaints from tire industries in the U.S., Brazil, Turkey, India, Colombia
>>>>> and Egypt that China was dumping its excess supplies on their markets. All
>>>>> six nations imposed tariffs on Chinese tires.
>>>>>
>>>>>
>>>>>
>>>>> The problem has worsened dramatically since 2009. Chinese tire
>>>>> producers expanded rapidly by taking advantage of the easy credit that was
>>>>> part of the government’s post-financial-crisis economic stimulus. By the
>>>>> time China’s economic growth rate slowed to about 7% this year, output was
>>>>> far outpacing demand.
>>>>>
>>>>>
>>>>>
>>>>> According to the China Petroleum and Chemical Industry Federation, the
>>>>> more than 300 tire makers in China operate at 70% of capacity, far below the
>>>>> 85% that economists say is needed to generate profits. Chinese tire exports
>>>>> increased tenfold between 2000 and 2013.
>>>>>
>>>>>
>>>>>
>>>>> Guangrao, a county in eastern China, is home to about 200 tire
>>>>> factories in an area dubbed Rubber Valley. For years, the valley’s skyline
>>>>> was dominated by construction cranes hoisting up new factories.
>>>>>
>>>>>
>>>>>
>>>>> The Guangrao county government, which needs tire companies’ tax
>>>>> revenue, is trying to keep them in business. Doing so saves jobs in the
>>>>> short run. But it also puts off a consolidation that might make the
>>>>> survivors profitable.
>>>>>
>>>>>
>>>>>
>>>>> One manufacturer, Deruibao Tire Co., turned to the Guangrao government
>>>>> for help in arranging a sale that would prevent it from filing for
>>>>> bankruptcy, the Guangrao government said. Helping the company stay in
>>>>> business means little or no capacity will be reduced. Privately owned
>>>>> Deruibao declined to comment.
>>>>>
>>>>>
>>>>>
>>>>> Family-owned Shandong Yongsheng Rubber Group, where Mr. Liu is chief
>>>>> executive, is another local company that has struggled. It began making
>>>>> rubber tubes in 1986 and grew into one of China’s largest tire exporters.
>>>>>
>>>>>
>>>>>
>>>>> Figuring that demand would continue soaring, Yongsheng kept investing.
>>>>> The company spent roughly 1.5 billion yuan ($242 million) to finish two new
>>>>> plants last year, raising its capacity to 18 million tires a year from 15
>>>>> million.
>>>>>
>>>>>
>>>>>
>>>>> It became clear executives had overestimated demand.
>>>>>
>>>>>
>>>>>
>>>>> Del-Nat Tire CEO Brian Grant, seen here in a warehouse, sold the
>>>>> inventory at a loss. ENLARGE
>>>>>
>>>>> Del-Nat Tire CEO Brian Grant, seen here in a warehouse, sold the
>>>>> inventory at a loss. PHOTO: STEVE JONES FOR THE WALL STREET JOURNAL
>>>>>
>>>>> “I’ve been with the company for six months, and the prices of our
>>>>> products have already dropped four times,” Huang Jianning, a Yongsheng
>>>>> salesman, said in February. They now average about 200 yuan, or $32, per
>>>>> tire.
>>>>>
>>>>>
>>>>>
>>>>> Mr. Liu has mothballed two factories to try to keep his business on
>>>>> track.
>>>>>
>>>>>
>>>>>
>>>>> Rubber Valley’s problems have rippled out to other countries, including
>>>>> ones where planters produce the raw material for tires.
>>>>>
>>>>>
>>>>>
>>>>> Rubber trees take about seven years to mature. Planters had to decide
>>>>> in 2007—when China’s gross domestic product expanded by 14.2%—how many trees
>>>>> to plant to meet demand in 2014.
>>>>>
>>>>>
>>>>>
>>>>> When it was time to harvest, the Chinese economic growth rate had
>>>>> fallen by about half.
>>>>>
>>>>>
>>>>>
>>>>> Kampanart Pornpromvinij, a Thai planter, bought 395 acres over the past
>>>>> decade for rubber-tree cultivation. He thought demand and prices would keep
>>>>> rising.
>>>>>
>>>>>
>>>>>
>>>>> Now, more than 316 acres of his trees are maturing. But the price of
>>>>> the milky white sap, called latex, that is processed into rubber is down 60%
>>>>> from its high four years ago. Mr. Kampanart has continued shipping latex at
>>>>> a loss to Mr. Liu’s Yongsheng and other factories, so he can maintain
>>>>> relationships and gain at least some revenue.
>>>>>
>>>>>
>>>>>
>>>>> In the U.S., the sliding prices are a boon to tire shoppers. Gene
>>>>> Endicott, a Memphis gas-station mechanic, said he used his tax refund in
>>>>> February to buy tires priced at $139 apiece for his Dodge Caravan.
>>>>>
>>>>>
>>>>>
>>>>> “When I saw what tires were selling for, I jumped on it,” he said.
>>>>>
>>>>>
>>>>>
>>>>> For some retailers and distributors, though, the deflation has meant
>>>>> losses, layoffs and trade fights.
>>>>>
>>>>>
>>>>>
>>>>> At Del-Nat, prices fell so quickly they began to undermine the Memphis,
>>>>> Tenn., distributor’s business model.
>>>>>
>>>>>
>>>>>
>>>>> Del-Nat had been buying a large share of its tires from Yongsheng,
>>>>> reselling them at a markup. When Yongsheng and other Chinese companies
>>>>> started cutting prices, Del-Nat was stuck with older, higher-priced
>>>>> inventory it couldn’t sell at a profit.
>>>>>
>>>>>
>>>>>
>>>>> “Management had a hard time getting over the fact that prices were
>>>>> going down and to turn the product, they had to reprice it, even at a loss,”
>>>>> said Mr. Grant, a 33-year-old turnaround specialist recruited last year as
>>>>> Del-Nat chief executive. “Instead of minimizing losses, they sat and hoped
>>>>> for a rebound.”
>>>>>
>>>>>
>>>>>
>>>>> Tariff issue
>>>>>
>>>>> Matters grew worse after low-price exports by Yongsheng and other
>>>>> Chinese tire makers caught the attention of the U.S. government last year,
>>>>> triggering a tariff action that led to even more setbacks for Del-Nat.
>>>>>
>>>>>
>>>>>
>>>>> The Commerce Department was getting complaints from workers in U.S.
>>>>> tire factories, who argued that Chinese tire producers benefited from
>>>>> improper subsidies such as tax credits.
>>>>>
>>>>>
>>>>>
>>>>> Commerce zeroed in on Yongsheng, peppering the company with questions.
>>>>> Relations between the Chinese company, which declined to answer Commerce’s
>>>>> queries, and U.S. investigators became so poisonous that Commerce labeled
>>>>> Yongsheng a “non-cooperating party.” The Chinese company “significantly
>>>>> impeded” its investigation, Commerce said in a document explaining a
>>>>> preliminary ruling in November.
>>>>>
>>>>>
>>>>>
>>>>> In that preliminary action, the U.S. tagged Yongsheng with an 81.29%
>>>>> tariff. A final decision is expected this summer.
>>>>>
>>>>>
>>>>>
>>>>> Mr. Liu said his company withdrew from the Commerce investigation
>>>>> because it couldn’t provide “in a very short period” all of the detailed
>>>>> information requested. He said it would ask the department to review its
>>>>> decision next year if it puts in place a stiff tariff, as expected by many
>>>>> in the U.S. tire industry.
>>>>>
>>>>>
>>>>>
>>>>> ENLARGE
>>>>>
>>>>> Recognizing that its tires would probably become uncompetitive in the
>>>>> U.S. because of the tariff on them, Yongsheng stopped shipping orders to
>>>>> America. That left Del-Nat in Memphis without the main supplier for some of
>>>>> its best-selling brands. Losing money already, Del-Nat felt it didn’t have
>>>>> time to find alternative suppliers.
>>>>>
>>>>>
>>>>>
>>>>> “We were done; we couldn’t rebound,” said Mr. Grant, its CEO.
>>>>>
>>>>>
>>>>>
>>>>> He quickly sold the distributor’s inventory in January 2015 at what he
>>>>> calls a “distressed” price of $23 million, or about 85% of what Del-Nat had
>>>>> paid for it. Half of the company’s 52 employees have left or been laid off;
>>>>> the others are looking for jobs from the purchaser of the Del-Nat warehouse.
>>>>>
>>>>>
>>>>>
>>>>> “A tremendous amount of capacity came on line [in China] before people
>>>>> realized it wasn’t sustainable,” Mr. Grant said. “By then, it was too late.”
>>>>>
>>>>>
>>>>>
>>>>> — Wilawan Watcharasakwet contributed to this article.
>>>>>
>>>>>
>>>>>
>>>>> Write to Lingling Wei at lingling.wei at wsj.com, Bob Davis at
>>>>> bob.davis at wsj.com and Jon Hilsenrath at jon.hilsenrath at wsj.com
>>>>>
>>>>>
>>>>>
>>>>> Corrections & Amplifications:
>>>>>
>>>>> Freedonia Group is a market-research firm in Cleveland. An earlier
>>>>> version of this article misspelled Freedonia as “Fredonia.” (June 2, 2015)
>>>>>
>>>>>
>>>>> On Fri, Jan 15, 2016 at 1:50 PM, ish mailian <ishmailian at gmail.com>
>>>>> wrote:
>>>>>>
>>>>>> I respectfully withdraw from the discussion; I can't go round on this
>>>>>> one more time, sorry.
>>>>>>
>>>>>> On Fri, Jan 15, 2016 at 9:54 AM, Robert Mahnke <rpmahnke at gmail.com>
>>>>>> wrote:
>>>>>>>
>>>>>>> If what you're talking about is what's in that Japan Times piece,
>>>>>>> it's nonsense. If not, you haven't tried to explain.
>>>>>>>
>>>>>>> It's easy to explain where the shortfall in demand came from: the
>>>>>>> shock in 2007. Demand has never recovered. If you want to say we have too
>>>>>>> much supply, you need to explain how that could be. One can do this in a
>>>>>>> particular sector (say, cars or housing). But what's your story about the
>>>>>>> global economy?
>>>>>>>
>>>>>>> Sent from an iPhone; pls xcse typos.
>>>>>>>
>>>>>>> On Jan 14, 2016, at 23:28, ish mailian <ishmailian at gmail.com> wrote:
>>>>>>>
>>>>>>> Krugman is shooting away at his favorite target, the idiots on the
>>>>>>> Right who argue, mostly from some puritan ideology and not from any economic
>>>>>>> theory, that belt tightening is the best way to feed the poor. Though he
>>>>>>> sets his favorite theory against their favorite theory, the piece is not
>>>>>>> economics but politics.
>>>>>>>
>>>>>>> And, while he is absolutely correct, his piece has nothing to do with
>>>>>>> what I am talking about.
>>>>>>>
>>>>>>> On Fri, Jan 15, 2016 at 2:06 AM, ish mailian <ishmailian at gmail.com>
>>>>>>> wrote:
>>>>>>>>
>>>>>>>> Yeah, he's right about the war on demand, but I'm not talking about
>>>>>>>> that.
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> On Thu, Jan 14, 2016 at 8:02 PM, Robert Mahnke <rpmahnke at gmail.com>
>>>>>>>> wrote:
>>>>>>>>>
>>>>>>>>> It's a little dated, but this post is still quite relevant,
>>>>>>>>> apparently:
>>>>>>>>>
>>>>>>>>> http://krugman.blogs.nytimes.com/2011/01/24/the-war-on-demand/
>>>>>>>>>
>>>>>>>>> On Thu, Jan 14, 2016 at 4:19 PM, David Morris <fqmorris at gmail.com>
>>>>>>>>> wrote:
>>>>>>>>>>
>>>>>>>>>> That's what I thought.  A very biased author without a story,
>>>>>>>>>> confusing everything in order to attack excess debt.
>>>>>>>>>>
>>>>>>>>>> Thanks,
>>>>>>>>>> David Morris
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>> On Thursday, January 14, 2016, Robert Mahnke <rpmahnke at gmail.com>
>>>>>>>>>> wrote:
>>>>>>>>>>>
>>>>>>>>>>> That piece (the Japan Times op-ed from 2012) is gobbledegook.  In
>>>>>>>>>>> the right circumstances, it makes a lot of sense to talk about a bubble
>>>>>>>>>>> creating over investment in certain areas, leading to an excess of supply
>>>>>>>>>>> over what a market in equilibrium (not a bubble) will demand.  Arguably, you
>>>>>>>>>>> have had this situation in the auto industry, where national governments
>>>>>>>>>>> subsidize their own makers. But to say that this is happening across the
>>>>>>>>>>> global economy is nonsense, a slick label without a story behind it.
>>>>>>>>>>>
>>>>>>>>>>> The author says there is "excess labor"?  What does that mean?
>>>>>>>>>>> Too many people have been born?  Persuaded to enter the economy instead of
>>>>>>>>>>> loafing in unemployment.  You have high unemployment because there aren't
>>>>>>>>>>> enough jobs, which is to say there is insufficient demand for the labor we
>>>>>>>>>>> have.
>>>>>>>>>>>
>>>>>>>>>>> The author also talks about excess capacity.  How does he know
>>>>>>>>>>> the problem is excess capacity instead of absent demand?  "Prices of digital
>>>>>>>>>>> home appliances are going down at an accelerating speed, and a new model is
>>>>>>>>>>> sold at a 50 percent discount within six months of its launch. This is proof
>>>>>>>>>>> that the global economy is in excess supply."  If you think that's proof of
>>>>>>>>>>> anything other than sloppy thinking, I have a bridge to sell you.
>>>>>>>>>>>
>>>>>>>>>>> His third problem is excess debt, and there the reason for this
>>>>>>>>>>> piece is clear.  The author is hostile to fiscal stimulus, and clearly has
>>>>>>>>>>> reasoned backwards to attack the case for it.  The case for stimulus, and
>>>>>>>>>>> what we could do about the secular stagnation, can be another conversation,
>>>>>>>>>>> but the only way to read this piece and to think that it rebuts what
>>>>>>>>>>> Stieglitz wrote is to have started with that as a belief and to have
>>>>>>>>>>> searched for confirmation.
>>>>>>>>>>>
>>>>>>>>>>> On Thu, Jan 14, 2016 at 3:19 PM, ish mailian
>>>>>>>>>>> <ishmailian at gmail.com> wrote:
>>>>>>>>>>>>
>>>>>>>>>>>> Maybe this will help?
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>> http://www.japantimes.co.jp/news/2012/11/05/business/excess-supply-not-lack-of-demand-weighing-on-the-global-economy/#.VpganfkrIb1
>>>>>>>>>>>>
>>>>>>>>>>>> On Thu, Jan 14, 2016 at 5:41 PM, Mike Weaver
>>>>>>>>>>>> <mike.weaver at zen.co.uk> wrote:
>>>>>>>>>>>>>
>>>>>>>>>>>>> It's not really about production, it's about distribution.
>>>>>>>>>>>>>
>>>>>>>>>>>>> On 14/01/2016 22:12, David Morris wrote:
>>>>>>>>>>>>>
>>>>>>>>>>>>> Does the article say deceased demand isn't the cause of over
>>>>>>>>>>>>> supply?  Since I can't read it...
>>>>>>>>>>>>>
>>>>>>>>>>>>> David Morris
>>>>>>>>>>>>>
>>>>>>>>>>>>> On Thu, Jan 14, 2016 at 4:08 PM, ish mailian
>>>>>>>>>>>>> <ishmailian at gmail.com> wrote:
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> OK, but if demand is not declining, the price level is not
>>>>>>>>>>>>>> increasing, the story is supply. That's the story, Gerry.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> On Thu, Jan 14, 2016 at 4:59 PM, David Morris
>>>>>>>>>>>>>> <fqmorris at gmail.com> wrote:
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> Lack of demand is one of the basic causes of over-supply
>>>>>>>>>>>>>>> (glut), and that lack of demand might be caused by any number of things,
>>>>>>>>>>>>>>> like lack of money (liquidity). Overproduction (exceeding demand) might be
>>>>>>>>>>>>>>> another cause.  Cheap money would not be one of its causes.
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> David Morris
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> On Thu, Jan 14, 2016 at 3:42 PM, Robert Mahnke
>>>>>>>>>>>>>>> <rpmahnke at gmail.com> wrote:
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> When demand exceed supply, how do you distinguish between "a
>>>>>>>>>>>>>>>> supply story" and a demand story?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> On Thu, Jan 14, 2016 at 1:31 PM, ish mailian
>>>>>>>>>>>>>>>> <ishmailian at gmail.com> wrote:
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>> Sorry about that; I thought it was a free article. It's an
>>>>>>>>>>>>>>>>> excellent article. And yes, it is focused on China, but the overproduction
>>>>>>>>>>>>>>>>> is not just a China story.
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>> The super capacity that was built to meet the expected
>>>>>>>>>>>>>>>>> super demand of the developing and emerging growth economies, in China and
>>>>>>>>>>>>>>>>> elsewhere, is the story, a supply story.
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>> On Thu, Jan 14, 2016 at 4:07 PM, David Morris
>>>>>>>>>>>>>>>>> <fqmorris at gmail.com> wrote:
>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>> This article is behind a paywall, but if the first two
>>>>>>>>>>>>>>>>>> sentences portend its content, then it seems to be saying that a glut of
>>>>>>>>>>>>>>>>>> Chinese goods is slowing growth.  More demand would be the solution to this
>>>>>>>>>>>>>>>>>> problem.  Lack of demand is its cause.
>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>> David Morris
>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>> On Thu, Jan 14, 2016 at 2:56 PM, ish mailian
>>>>>>>>>>>>>>>>>> <ishmailian at gmail.com> wrote:
>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>> Because it's true.
>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>> http://www.wsj.com/articles/glut-of-chinese-goods-pinches-global-economy-1433212681
>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>> On Thu, Jan 14, 2016 at 3:49 PM, Robert Mahnke
>>>>>>>>>>>>>>>>>>> <rpmahnke at gmail.com> wrote:
>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>> Why do you say that?
>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>> On Thu, Jan 14, 2016 at 12:37 PM, ish mailian
>>>>>>>>>>>>>>>>>>>> <ishmailian at gmail.com> wrote:
>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>> The world is not not suffering from too little demand
>>>>>>>>>>>>>>>>>>>>> but with too much supply and with too much capacity.
>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>> On Thu, Jan 14, 2016 at 3:00 PM, David Morris
>>>>>>>>>>>>>>>>>>>>> <fqmorris at gmail.com> wrote:
>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>> The economics of this inertia is easy to understand,
>>>>>>>>>>>>>>>>>>>>>> and there are readily available remedies. The world faces a deficiency of
>>>>>>>>>>>>>>>>>>>>>> aggregate demand, brought on by a combination of growing inequality and a
>>>>>>>>>>>>>>>>>>>>>> mindless wave of fiscal austerity. Those at the top spend far less than
>>>>>>>>>>>>>>>>>>>>>> those at the bottom, so that as money moves up, demand goes down. And
>>>>>>>>>>>>>>>>>>>>>> countries like Germany that consistently maintain external surpluses are
>>>>>>>>>>>>>>>>>>>>>> contributing significantly to the key problem of insufficient global demand.
>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>> At the same time, the U.S. suffers from a milder form
>>>>>>>>>>>>>>>>>>>>>> of the fiscal austerity prevailing in Europe. Indeed, some 500,000 fewer
>>>>>>>>>>>>>>>>>>>>>> people are employed by the public sector in the U.S. than before the crisis.
>>>>>>>>>>>>>>>>>>>>>> With normal expansion in government employment since 2008, there would have
>>>>>>>>>>>>>>>>>>>>>> been two million more.
>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>> On Thu, Jan 14, 2016 at 1:39 PM, Robert Mahnke
>>>>>>>>>>>>>>>>>>>>>> <rpmahnke at gmail.com> wrote:
>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>> http://www.huffingtonpost.com/joseph-e-stiglitz/world-economy-2016_b_8908560.html?utm_hp_ref=world
>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>
>>>>>>>>
>>>>>>>
>>>>>>
>>>>>
>>>>
>>>
>>
>
-
Pynchon-l / http://www.waste.org/mail/?list=pynchon-l