PS It appears Germany’s massive GDP growth has been fuelled by exports (http://www.financemarkets.co.uk/2010/08/13/germany%E2%80%99s-economic-growth-boosted-by-exports/).

Perhaps America should target its economic stimulus package at its manufacturing industry, rather than at hiring census workers…

Jeff

CY –

No, the assumption doesn’t strike me as absurd.

If I owned a widget factory, and I was concerned about the economic outlook, I might well hold fire on expanding my capacity. What would be the point in spending money buying new machinery and recruiting new staff when I’m not currently at full capacity (nor likely to be anytime soon)? Also, I might need that money to keep my business afloat if we enter into a double dip recession.

However, if the economy were booming, orders were coming in thick and fast, and I had customers waiting impatiently for their widgets to be produced, it might be different.

It’s a classic Catch 22.

Jeff

A post from a reader at Ritholtz:

“Like it or not, Covel and Vilgrad have valid points. There is a sense of entitlement to the posts here that I find disturbing…as if making 6 figures was, somehow, and American entitlement. It isn’t. And wishing for the “good old days” or thinking that, somehow, any of this has to do with “policy” is just ludicrous.

This train has been leaving the station for a while now, but it really hit light speed with the advent of the internet. And it isn’t going to change, it’s just going to get worse. There aren’t any “manufacturing” jobs anymore in the way they are romanticized in these posts. Have any of you actually toured a modern car factory? How many people did you see doing manual labor? How many robots? How about stitchers in shoe factories, or are most of those machines software-guided now? How about those assembly lines and robots, software-guided too, aren’t they?

The days of people being paid $30 an hour to tighten bolts at the GE plant are over because, frankly, it’s cheaper to pay someone in China to do it and ship it back here because, you know the job isn’t worth $30 an hour. That was the state that was temporary and artificial. And if that made the middle class than that was the short-term illusion. I saw this coming from when I was a little kid and my grandfather was at GE. At eight years old I couldn’t figure out how these people who couldn’t speak complete sentences were making all that money sweeping the floors. And the truth was it wasn’t sustainable. Period.

So now we have all this talk about middle class, and money. The answer is easy and hard at the same time…it’s to get educated. That is the only way out. But Americans have become so entitled, and so deluded that they belong to a class they don’t, and smitten with the notion that they don’t have to do any real work to get that 5000 sq ft house (as if anyone really needs that) that this gut-wrenching change is going to send most of them back down the ladder because they won’t work hard enough to climb. I see it every day when I teach. The entitlement is just amazing.

None of what was is coming back. Ever. So instead of just pining for the “good old days” why doesn’t anyone attack the real problem which is, how do we prepare kids for more mental-ability jobs and far less hand-ability jobs in the future? How do we, again, instill that hard-work ethic so they study when they are young and reap the career benefits when they grow up? How do we take those kids that aren’t all that bright (yes, they are probably YOUR kids even if you think they’re the smartest thing ever and you force teachers to inflate grades) and get them into well-paying sustainable technology jobs?

Get over it. Hand-based jobs are dying and machines do them better. The internet has made global wage arbitrage a fact of life. Evolve or go extinct. The world works that way.”

***

Jeff, you are on the wrong train.

Michael -

I agree that businesses are in the business of maximizing their profits.

I was simply pointing out that wider economic considerations will influence whether capacity expansion is an sound business decision for a particular company, or a risk which they cannot afford to take. And in turn, whatever decision they take will affect the wider economy.

And I wasn’t whining – as far as I am concerned, it’s for businesses to decide how to spend their money. I was merely explaining why I agree with Mr Nutting re. the Catch 22 he was referring to, ie no investment = no recovery = no investment.

Jeff

CV-

It would make sense for businesses to look at the wider economic situation when making decisions, for the same reason that you might look at the weather forecast when considering a hiking trip.

If you watch CNN and everyone is talking about a double dip recession, you might think ‘Now might not be a good time to invest in extra machinery and staff’.

Jeff

The government should spend money on productive activities, not giveaways.

One last.
Education?
Drivel?
Try reading Prof. Blinder from Princeton, or Prof. Krugman on Say’s Law (ya know, production…), etc.
Really?
Personally, I’ve met more actually intelligent guys who do “hand” work (auto/aviation mech’s, carpenters, computer tech’s, machinists, commercial fishermen) who aren’t cursed with an Ivy League diploma.
They know when they don’t know something to figure it out, & when something doesn’t work, to analyze why, or stop.
Plus, they don’t ask for handouts.

Thanks for stopping by Rex. I don’t know squat because it was pointed out how silly it is to promote a forecaster of the month?

One clarification: I have not declared myself a ‘great trader’, but I have learned from a few.

Jeff: with all due respect, if you’re watching CNN to form your business or trading strategies, you must immediately lie down and take a nap.
Regards, Jack