Financial topics

[Higgenbotham]

Some articles are seeing zirp as it truly is.

ZIRP Strikes Again: Pension Under-Funding For S&P 500 Companies Hits Record
Submitted by Tyler Durden on 07/17/2012 15:54 -0400

The public pension and retirement 'schemes' are in considerable trouble (as we noted here and here) and now, according to a recent S&P study, private companies are at record levels of pension under-funding. Fiscal 2011 shows that the under-funded level for S&P 500 companies' defined pensions reached an epic $354.7 billion - an increase of over $100 billion from 2010 and surpassing the 2008 record of $308.4 billion - and OPEB under-funding reached $223.4 billion. An aggregate $578 billion or 29.5% underfunding or the $1.96 trillion in obligations is increasing as the rates of return are reduced thanks to yet more unintended consequences of the Fed's ZIRP and perhaps most worrying is there comment that "The American dream of a golden retirement for baby boomers is quickly dissipating; plans have been reduced and the burden shifted with future retirees needing to save more for their retirement. For many baby-boomers it may already be too late to safely build-up assets, outside of working longer or living more frugally in retirement."

Good article. I'm sure you read it.

As I've quoted, Bernanke has stated that ZIRP is the route to "maximum employment", in his words. It isn't, but it may be the route to maximum employment of the baby boomers right now. With the baby boomers holding those scarce job slots, Bernanke is locking the younger generation out of jobs, assuring that the younger generation will not develop the job experience they need, as well as having fewer experienced workers left to train them when they finally enter the work force. The economy functions best when there are a mix of ages in the work force, and people retire at certain ages because that's what works best. He shouldn't try to be a social engineer. No family business would ever be run by 60 year old parents or grandparents while their 25 year old children or grandchildren sit at home and wait for their turn to do something.

[thomasglee]

Ok, here's thousands of jobs gained by "reshoring".

http://beta.fool.com/tdalmoe/2012/04/05 ... ring/3414/

However, GE has been one of the major companies leading the charge to bring manufacturing jobs back home to the U.S or 'reshoring'. Since 2009, the company has created 13,500 new jobs in this country with 11,000 of them in manufacturing. Overall, the United States has added 429,000 factory jobs in the past two years, barely replacing a fifth of the jobs lost during the recession.

************************

Reshoring is taking place for three reasons, twenty years of stagnant wages in the US middle class combined with 20 years of 15% annual wage increases in China have produced a huge shift towards wage parity, rising global instability leading to fear of losing plants due to war and a shift in China towards an anti capitalist sentiment. Most don't seem to realize that the bulk of Chinese "owned" businesses and factories are in fact operating illegally, and the Chinese authorities are beginning to pull the economy back to its Communist origins. All three of these factors are highly likely to contribute to further reshoring over the next two decades.

And it's very important to keep in mind, the jobs lost have been in housing and allied industries primarily, while factory jobs themselves are now a growing segment, not a shrinking one. Factory production is a slow way to get out of a hole, but it's a fairly stable one.

It somewhat appears that manufacturing was moved overseas temporarily, so that we (the US wage earners) could be brought down financially, thereby making it once again more profitable to manufacture in the USA, increasing corporate profits.

Call me a pessimist, but that's how it worked out whether that's what the global elites wanted or not.

[OLD1953]

Oh, that's all the union's fault for overly generous pensions - isn't that the form answer that's served so well over time. Funny that, I was under the impression that the set aside was determined by the board room, not the union steward. Could it possibly be that they would lie about padding apparent profits by overestimating returns from the pension funds? Heaven forfend!

Another way to look at reshoring is this, if housing had actually bottomed out and was beginning to move forwards again, we'd hear about it with trumpets and fanfare every hour on the hour. Since this involves dirty old "rustbelt" jobs, nobody is impressed. It's social conditioning, and that conditioning is why you see the negative articles about jobs moving out of China.

Indeed, quite a few have moved from China to places like Vietnam or the Phillipines, which will figure largely in WWIII. Stupid, but this is again, mental conditioning and inertia of people making decisions on data from 2005 and 2006, not the data from today and certainly not the projections that show the US being cheaper than Asia for manufactures in most cases by 2016. There are a lot of lazy managers making bad decisions out there.

The Chinese bubble was an arbitrage opportunity, and large ones like that are rare, coming along no more than once every fifty years, if that often.

[Higgenbotham]

It somewhat appears that manufacturing was moved overseas temporarily, so that we (the US wage earners) could be brought down financially, thereby making it once again more profitable to manufacture in the USA, increasing corporate profits.

Call me a pessimist, but that's how it worked out whether that's what the global elites wanted or not.

We do know for sure that the global elites wanted and want high profit margins. And the variable that inversely correlates closest with profit margins is wages - low wages = high profit margins. Plus, if you can keep wage pressures under control, you can print a lot more money than otherwise.

[Reality Check]

Ok, here's thousands of jobs gained by "reshoring".

http://beta.fool.com/tdalmoe/2012/04/05 ... ring/3414/

One needs to be careful when reading such articles with confusing partial re-hiring of what had always been American manufacturing jobs during the up-swing portion of a recession-recovery cycle with moving jobs from China to the United States. They are two very different things.

For example, the above article you, OLD1953, quoted was dated: April 5, 2012

It, the above article, claims that over the past two years, that would be two years before April 5, 2012, that:

Overall, the United States has added 429,000 factory jobs in the past two years, barely replacing a fifth of the jobs lost during the recession.

The vast majority of those jobs were just re-hiring a small part of the manufacturing jobs lost in the previous two years during the manufacturing recession, from April 2008 to April 2010. To make the jump in logic that this very weak recovery of a small part of American manufacturing jobs lost should be added to the miniscule number of jobs actually moved back from overseas to the United States is nothing but self delusion. People were hired in manufacturing jobs during the weak recover period of April 2010 to April 2012, but both of the following are true about those hires: 1). These 429,000 jobs were only a small portion of the manufacturing jobs lost in the two years between April 2008 and April 2012, and, 2). They were almost all re-hiring of Americans laid off from American jobs, not manufacturing jobs brought back from overseas.

The following article discusses manufacturing jobs that were "added" during this period, but were clearly not jobs "moved back to the United States", they just represent the small partial re-hiring of Americans laid off from manufacturing jobs during the massive, abrupt layoffs of the worst recession since the great depression. For obvious reasons the Media and the Obama administration would like you to infer that they are jobs moved back from China, or wherever, to the United States, which they clearly are not

http://www.freep.com/article/20110511/B ... ent-levels

[thomasglee]

It somewhat appears that manufacturing was moved overseas temporarily, so that we (the US wage earners) could be brought down financially, thereby making it once again more profitable to manufacture in the USA, increasing corporate profits.

Call me a pessimist, but that's how it worked out whether that's what the global elites wanted or not.

We do know for sure that the global elites wanted and want high profit margins. And the variable that inversely correlates closest with profit margins is wages - low wages = high profit margins. Plus, if you can keep wage pressures under control, you can print a lot more money than otherwise.

Quite true. And by depressing wages here, then moving manufacturing back, they get multiple benefits. They'll get their low wages, they won't have to foot the bill for political bribes (we all know that every major manufacturer that moved to China spent MILLIONS in bribes to Chinese officials), they won't have to pay for shipping, they'll have higher yields due to less losses due to theft, corruption, and stolen secrets; and on top of all of that, they'll benefit from a more productive workforce.

[aedens]

"monetary policy has no permanent effect on real variables." td

Mar 11, 2012: Finite resource management issues and proposed dependant varable drivers are being used as leverage against reality. This is cost factoring upwards and will finish off the rest of consumers already and hopelessly unable to recover and in truth never will. Policy drivers are and will push millions more also it appears.

find value added with all the gray noise, still we move ahead. <---- earlier thread

regression analysis demonstrates

What we learned before will be new. We touched on this here some time back.

Jan 19, 2012 The mechanism is understood. I will reserve comment on the thought of IT "inflation targeting i.e baskets"
in contextual consideration of PE "political economic". I had a thought the other day which will take
some time to assemble. I concur on the premise of stimulation "over" as, lets say, pandering.
We captured the rate of fixed capital consumption I confer as asset strippers "agency" of intent.
It can be defined as creative destruction but that is a unfair assessment to the process of the investor
class predecation "wasting". I think we can convey our fulcrum of GD as a indicator to open source edification.

http://www.zerohedge.com/news/guest-pos ... ves-itself

I do not see the fulcrum being moved in the complexity's we are facing. My daughter called and we had a discussion
on bottum indices we have not seen yet. We are seeing what we noted as consolidations. I will push that thanks to h
as he indicated on modeling to what is being done in scale.

Also to all, as we swim in the deep end at times around here. patience and thank you

[Reality Check]

It somewhat appears that manufacturing was moved overseas temporarily, so that we (the US wage earners) could be brought down financially, thereby making it once again more profitable to manufacture in the USA, increasing corporate profits.

Call me a pessimist, but that's how it worked out whether that's what the global elites wanted or not.

We do know for sure that the global elites wanted and want high profit margins. And the variable that inversely correlates closest with profit margins is wages - low wages = high profit margins. Plus, if you can keep wage pressures under control, you can print a lot more money than otherwise.

Quite true. And by depressing wages here, then moving manufacturing back, they get multiple benefits. They'll get their low wages, they won't have to foot the bill for political bribes (we all know that every major manufacturer that moved to China spent MILLIONS in bribes to Chinese officials), they won't have to pay for shipping, they'll have higher yields due to less losses due to theft, corruption, and stolen secrets; and on top of all of that, they'll benefit from a more productive workforce.

I respectfully suggest that the assumption this is based on is simply incorrect.

A significant number of manufacturing jobs have NOT been moved back to the United States from foreign countries.

Numbers matter. When millions upon millions of manufacturing jobs have been moved over seas and only a few hundred jobs here, and few hundred jobs there, have been moved back, it simply is not significant. Even if a few thousand jobs here and a few thousand jobs there had been moved back it would still be insignificant. Even if a few tens of thousand jobs here and a few tens of thousands jobs there had been moved back it would still be insignificant.

The scope of the net annual manufacturing job movement is the important characteristic here. Any net annual manufacturing job move into the United States, if any, has been "de minimis".

[thomasglee]

Quite true. And by depressing wages here, then moving manufacturing back, they get multiple benefits. They'll get their low wages, they won't have to foot the bill for political bribes (we all know that every major manufacturer that moved to China spent MILLIONS in bribes to Chinese officials), they won't have to pay for shipping, they'll have higher yields due to less losses due to theft, corruption, and stolen secrets; and on top of all of that, they'll benefit from a more productive workforce.

I respectfully suggest that the assumption this is based on is simply incorrect.

A significant number of manufacturing jobs have NOT been moved back to the United States from foreign countries.

Numbers matter. When millions upon million of manufacturing jobs have been moved over seas and only a few hundred jobs here and few hundred jobs there have been moved back, it simply is not significant. Even if a few thousand jobs here and a few thousand jobs there had been moved back it would still be insignificant.

The scope of the net movement is the important characteristic here. Any net manufacturing job move into the United States, if any, has been "de minimis".

If you'll notice, I used "future tense", indicating what I expect to see, and what I "assume" they will seek, in the future. I never stated that the jobs have moved back. That will take time.

[Reality Check]

If you'll notice, I used "future tense", indicating what I expect to see, and what I "assume" they will seek, in the future. I never stated that the jobs have moved back. That will take time.

I am not sure the entire discussion above about manufacturing jobs returning to the United States has been about the future only.

But I do agree with your statement above "that (it) will take time" to see manufacturing jobs actually return to the Unites States ( and they have not returned in any meaningful way yet), but it will also likely take a break down in the global trading system, or a total collapse of the difference in wages between the developing world and the United States for a significant move of manufacturing jobs back to the United States to occur.

The later being something along the lines of a return to a subsistence existence for a large proportion of the American people.

China is not the only low wage location for manufacturing and as long as the global trading system functions and all Americans enjoy such high standards of living, manufacturing jobs will not return to the United States in any significant number. Even those on food stamps and in public housing in the United States are wealthy compared to a subsistence farmer in the developing world.

I personally believe a break down in the trading systems as a result of a crisis war being more likely, but both could happen.