OT:Manufacturing Stimulus

?Yesterday, Jim, the head of Caterpillar, said that if Congress passes our plan, this company will be able to rehire some of the folks who were just laid off,? Obama said today in Peoria.

But when asked today if the stimulus could do that, Owens said, ?I think, realistically, no. The honest reality is we?re probably going to have more layoffs before we start hiring again.?

Kinda sums it up !

DB

-------------- This is indeed a *SERIOUS* problem.

Even with the limited data I have been able to accumulate, as to the economic sectors that generate the most gdp per dollar input, the most wages per dollar input or the most jobs per dollar input, there appears to be no rime nor reason as to why certain SIC/NASIC sectors got the nod, other than personal interest of an influential politician, or possibly those two infallible sources of information and data "everyone knows" and "they say."

Even the "efficiency" [always a popular criteria] of the aggregate economic sectors expressed as "total value added"/"total industry output" based on BEA data does not appear to correlate with any of the sectors emphasized. [send me an email if you would like this data in xls format] FWIW Category numbers and names shown are I/O codes. A listing of the SIC/NASIC->I/O code aggregation [69 total categories] is available.

The highest ten highest "efficiency" sectors are:  493 Warehousing and storage 0.794  5415 Computer systems design and related services 0.782  487OS Other transportation and support activities 0.758  531 Real estate 0.711  5411 Legal services 0.709  GFE Federal government enterprises 0.691  621 Ambulatory health care services 0.683  713 Amusements, gambling, and recreation 0.663  42 Wholesale trade 0.663  521CI Federal Reserve banks, credit intermediation, and related activities 0.661

The ten lowest were  326 Plastics and rubber products 0.319  321 Wood products 0.317  322 Paper products 0.306  313TT Textile mills and textile product mills 0.304  483 Water transportation 0.297  331 Primary metals 0.264  311FT Food and beverage and tobacco products 0.246  3361MV Motor vehicles, bodies and trailers, and parts 0.206  525 Funds, trusts, and other financial vehicles 0.150  324 Petroleum and coal products 0.122

It is however clear from the most recent [2006/2007] OECD and Canadian data [comparable to the US] I have been able to access, "manufacturing" in the aggregate remains one of the top sectors in all three "bang for the buck" categories for, i.e. for a given dollar amount input, the most GDP value generated [i.e. value added], the most wages paid, and the greatest numbers of people employed.

A caveat: I/O analysis shows what happened. There is no guarantee that "injecting" additional funds into that sector will produce the same [or any] results, as there is the considerable problem that while additional goods/services might be generated, these will not be consumed or cannot be sold/exported, i.e. GM/Chrysler cars. It should however still be better than the "influence peddling", Tarot cards and I Chang that apparently was used.

Both the "rescue" packages on one side, and the stimulus packages on the other are totally opaque as to their methodology/assumptions, and on the rescue side, even the amounts encumbered/expended remain a "state secret."

What should be clear by now, even to the "doffeses" in Washington is that the production and export of a billion dollars of wheat or corn does *NOT* offset the importation of a billion dollars of cnc controllers, machine tools, automobiles, consumer electronics, computer chips, etc., [and we not even doing this].

What is clear is that policy is being made by politicians and economists expert in the 18th century economic dialectics/hermeneutics, but totally ignorant, or in denial, of the progress that has been made since then. If these were physicians, they would be bleeding people with fevers, and curing broken legs by cutting them off [without anesthesia].

A second major problem seems to be the total misreading of the problem. In general the problem is NOT a shortage of credit for most people, but simply a glutted market because of both over production and over capacity. Currently 1 in 9 new houses is vacant because these cannot be sold because nobody want a new house, even though credit is available for qualified borrowers at very good rates. The response? build even more houses, condos, apartments, etc.

Same thing for cars. Chrysler currently has > 6 months unsold inventory in the pipe line, with GM a close second, and Ford in slightly better shape. New vehicle purchse credit is avaible for the 60% of the US population with a FICO score over 740. People simply don't want/need a new car, and there is at least the capacity to produce 2, and now 3 cars domestically for every one that can be sold, thus killing utilization. When global capacity is netted against the global market 4 or more cars can now be produced for every one that can be sold. Our response, build even more production capacity.

"Build it and they will come" was a movie title, not a business plan.

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

It comes out of a special hole in the wall, just like hot and cold water does.

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

If the government is bumping certain kinds of manufacturing and not bumping others, aren't they technically controlling what a country builds? Basically changing our society? Changing our culture? etc...

--------------- Indeed. Welcome to the "Brave New World Order."

However this has been going on since day one [of the US republic].

From an economic standpoint, the US civil war was not fought over slavery [although this made a good excuse/rationale] but rather the continuation/expansion of an agricultural economy/society [Southern elite and Jeffersonian ideal] or the imposition of a manufacturing economy [Northern elite ideal] with high import duties to protect the home [mainly northern] industries.

The north won, and industrialization became the new norm.

Sometime in the 1960s, the national elite began to become aware that there was money to be made by externalizing manufacture and import, starting with steel. It was sort of like eating a bag of potato chips, first one sector and then another until the bag is empty [in 2009]. This was easy because the people were occupied with the Vietnam war. [Busy their giddy minds with foreign quarrels?] This may also apply to later administrations.

It can be argued that the underlying reason for the current economic situation is that the elite have sold off all the US markets and there is nothing left to sell [that anyone wants -- i.e. how much would you pay for Chrysler, Citigroup or AIG?] My cousin's 1 employee wig shop in Fayetteville, Arkansas made more profit and paid more income taxes that all three of these corporations combined, and 2008 was a down year for her ...

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Of COURSE these are the "lowest efficiency sectors"! They're all things that require skill, and real, long term investment in equipment, people, land, and more. And they involve risks precisely because of the size of the investments needed, and the time it takes to pay them off and profit from them. Even the "financial vehicles", as described, sound like real money - actual wealth accumulated beyond what's consumed, so that it can be invested productively.

Making real wealth is HARD! If we ONLY do the easy things, the short term things, the "high efficiency" things, then we're no better (read secure or competitive) than anybody else on the planet. Our jobs and businesses HAVE to move where the cost is cheapest, if everything else is equal. But things are only equal if we're looking for fast and easy, just like everyone else. If we dare to do what's difficult, what's slow, what's fundamental, then our traditions of productivity, our wealth of natural resources, and our ability to focus large amounts of money and make large investments, put us miles ahead of any other society that's ever existed.

Hasn't anybody in Washington ever read the story of the Three Little Pigs??

KG

----------- This appears to be a "western civilization" or first world problem, not just a US problem.

---------------- Europe's industrial base may never recover from crisis The European Commission has issued a red alert over the unprecedented collapse of industrial production, warning that EU states are running out of money for rescue packages.

By Ambrose Evans-Pritchard Last Updated: 7:38AM GMT 13 Feb 2009

Factory output plunged by a record 12pc in December year-on-year. Spain suffered the steepest fall of countries in the Eurozone with a 20pc drop. Among non-euro countries, the biggest declines were led by Latvia (-21pc), Sweden (-18pc) , and Romania (-17pc).

"What's completely new is the extent and speed of this crisis. The credit crunch is a reality, and even member states are having trouble financing their debts," said industry commissioner Gunther Verheugen.

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Article is long and detailed, and well worth reading if you have an interest in the economic future.

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Sure is if you can only use AutoCRAP and have no clues about CNC controls that make editing a pleasure to do.

Suggest read the Jon Banquer blog and get some clues.

Jon Banquer San Diego, CA

F. George McDuffee wrote in news: snipped-for-privacy@4ax.com:

LOL. I'm truly afraid that they have given it no further thought than that.

"vinny" wrote in news:gn81a8$vif$ snipped-for-privacy@solani.org:

Yup. But they could have closed the loopholes in the tax laws that make offshoring a better deal than making it here. They could have given investment tax credits. They could have lowered the corporate tax rate. They could do lots of things that don't favor one industry over others, but just improve conditions for manufacturers here vs. the rest of the world.

Dave B wrote in news:6ltep4dtlpgpgrtjsn2g34ovur0ct547ea@

4ax.com:

The untold part of that story is that Jim wants the free trade agreement with Columbia to go through. The new administration stands in the way, so a little tit for tat was in order.

Now upon further review Obama will realize what a brilliant agreement it is and will readily sign it when it gets to his desk.

I can't imagine why "one would think' that Dan. Manufacturing employment represents a small percentage of the work force and a proportionately small number of jobs lost or soon to be lost.

JC

==============

I just came across this Pat Buchanan article

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Semiconductors and electronic component producers lost 42 percent of their jobs. Communications equipment producers lost 48 percent of their jobs. Textile and apparel producers lost, respectively,

63 percent and 61 percent of their jobs.

As a source of American jobs, manufacturing, for the first time in our history, fell below health care and education in 2001, below retail sales in 2002, below local government in 2006, below leisure and hospitality, i.e., restaurants and bars, in 2008.

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It appears that the reason manufacturing is not getting much stimulus money is because manufacturing is no longer generating the jobs (at least in this country).

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

"John R. Carroll" wrote in news:sViml.17931$ snipped-for-privacy@nlpi065.nbdc.sbc.com:

Subtract manufacturing from GDP and have a look see at what you have.

The title of the bill had to do with economic recovery and reinvestment. Not jobs.

BTW, if this was such a big crisis, why did BO take four days off before signing the damn thing?

OTOH, I did miss the part where they extended the section 179 tax credit. So not totally without merits, but a small piece of a three trillion dollar pie none the less.

F. George McDuffee wrote in news: snipped-for-privacy@4ax.com:

It's still 14-15% of GDP. So it ought to be worth 114 billion or so of the

787 or whatever the number is...

========= Apparent addage is "feed success, starve failure."

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

You have the twenty three auction notices and 3 BK filings that have come across my desk since the first of the year Dan. I even had tio buy my own inventory back once.

The USA Patriot Act had very little to do with "patriotism".

The initial target date was the sixteenth Dan. When was the last time you saw government get anything done on time? This is the first I can remember. It's also worth noting that he's gotten more of his legistlative agenda passed in a month than his predecessoers did in an entire term. In some cases - two terms. That's a pretty good trick even if you don't agree with the agenda involved.

Investing in new equipment makes sense without the deduction Dan so 179 is a waste of money. I'd rather see the deduction for hand tools and education brought back for individuals. That would encourage kids to get into the skilled trades. Manufacturing might even reverse itself and become an increasing portion of GeeDeePee.

JC