Tim Duy: Not So Bad?

Tim Duy gives and answer to Brad DeLong’s question: 

Not So Bad?, by Tim Duy: Brad DeLong is puzzled. Earlier this week, defending Greenspan-era monetary policy,

Now we are not yet out of the woods. If the tide of financial distress sweeps the Fed and the Treasury away–if we find ourselves in a financial-meltdown world where unemployment or inflation kisses 10%–then I will unhappily concede, and say that Greenspanism was a mistake. But so far the real economy in which people make stuff and other people buy it has been remarkably well insulated from panic at 57th and Park and on Canary Wharf.

Today Delong adds:

I still do not understand why the real side of the economy is doing so well in relative terms. The worst financial distress since the Great Depression ought to trigger the worst downturn in demand, production, and employment since the Great Depression. It hasn’t–at least not so far.

Good questions; I think economic activity has surpassed most peoples’ expectations. My answer to DeLong’s question comes in three parts:

1. The nature of the expansion defines the nature of the following contraction. The post-tech bubble expansion was anemic by most measures, and never gained much traction until the housing bubble arose. The primary channel through which housing supported the economy was via consumer spending, generating a tepid growth dynamic compared to the equipment and software investment boom of the 1990’s. The tepid upside suggests a tepid downside. I would be more worried if the chart for equipment and software:

 

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looked like the chart for residential investment:

 

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And given trends in new orders, I am hoping it won’t:

 

duy7184.gif2. The impact of the consumer slowdown is partially offshored, a point which I think deserves greater attention. This shifts job destruction to an overseas producer. In fact, as spencer at Anger Bear shows, the recent improvement in the real trade balance has less to do with rising exports, which continue to follow recent trends, than the sharp slowdown in real import growth. Note too that exports are not falling as they were in the 2001 recession as the global economy has held up better than expected. 

3. Perhaps most importantly, however, is the massive liquidity injections from the rest of the world, or what Brad Setser calls “the quiet bailout.” In the first half of this, global central banks accumulated $283.5 billion of Treasuries and Agencies, something around $1,000 per capita. This is real money – I outlined the likely implications in January. Foreign CBs are happily financing the first US stimulus package; will they be happy to finance a second? Do they have a choice? Their accumulation of Agency debt is also keeping the US mortgage market afloat. Do not underestimate the impact of these foreign capital inflows. If the rest of the world treated the US like we treated emerging Asia in 1997-1998, the US economy would experience a slowdown commensurate with the magnitude of the financial market crisis. The accumulation of US assets is also forcing an expansion of foreign CB’s balance sheets, creating global monetary stimulus that allows the rest of the world to decouple from the US economy, supporting continued US export growth (see point 2 above).

Ideally, the slowdown remains moderate, allowing for a rebalancing as we expand export and import competing industries domestically, narrowing the current account deficit and eliminating the necessity of foreign official financing. This means accepting a period of time with suboptimal domestic demand growth and structural adjustment. Excessive fiscal stimulus risks testing the willingness of foreign CBs to continue to accumulate US assets. Moreover, I believe that excessive stimulus will eventually foster a more damaging inflationary dynamic, but such a process would likely build over a long period of time – the seeds for the 1970s were planted in the 1960s.

In short: External dynamics play a significant role in explaining the relatively mild US downturn. As long as foreign CBs are willing to accumulate US debt, the US government is willing to issue debt, the Federal Reserve is willing to accommodate the debt with low interest rates, we will avoid the most dire deflationary predictions.

 


 

Originally published at Economist’s View and reproduced here with the author’s permission.

5 Responses to "Tim Duy: Not So Bad?"

  1. Guest   July 26, 2008 at 9:55 pm

    I despise MEDIA which lies. Your "Not so Bad" – lies to an educated readership. Below, was my earlier reaction to PBS Public Broadcasting System, and WSJ Wall Street Journal, when they both lied to their audience. —From: Walter Nodelman Date: Mon, 13 Aug 2007 00:12:30 -0400To: , "LouDobbs@cnn.com" , Subject: PBS Newshour. Walter Nodelman (of CT) to Judy Woodruff, David Brooks and Mark Shields – Friday August 10, 2007 on PBSI am reacting to Newshour of Friday August 10th.Below is transcript of David Brooks and Mark Shields – being less than truthful about the condition of the American economy, — doing that for reasons which are not yet obvious to me. Their twisting of the truth angers me. (Economy is strong, productivity high, unemployment low, consumers confident, economy is growing. I count 5 lies times 2 Analysts.)When both gentlemen are doing rosy economic window dressing, it makes me wonder who ordered this?Further below that transcript — I offer you my earlier reaction to author David Wessell of the Wall Street Journal, when in May 2006 Mr. Wessell also committed that same offense. He lied in massive quantities to his well educated readers. I offer my reaction to the WSJ — here, to Judy Woodruff, to David Brooks, and to Mark Shields. I also offer my opinion to trusted and respected co-journalists. Same subject matter. The economy of the former superpower, the United States of America. Same offense – journalism which is filled with so many lies — it reaches the level of a felony wrapped up in a 3 party conspiracy. Walter A Nodelman walter521@aol.com 860 521-8029 8/13/2007//////////////////////////////////////////////http://www.pbs.org/newshour/bb/politics/july-dec07/sbelection_08-10.htmlOriginally aired: Friday evening August 10, 2007JUDY WOODRUFF: And to the analysis of Shields and Brooks. That’s syndicated columnist Mark Shields and New York Times columnist David Brooks.Gentlemen, thank you for being here this Friday night. It’s good to see you.The financial markets, way down, way up, down again. They ended up a little bit down today. The Federal Reserve pumped in billions of dollars. Effect on policy and effect on the body politic, David?DAVID BROOKS, Columnist, New York Times: It depends on the spillover. I mean, I think if it’s just the financial markets, as the two financial experts we had on earlier in the program seem to suggest, it won’t have a broad effect on the body politic.And the reasons for that are that the world economy is phenomenally strong, as they said. For those of us who are not professional economists, the number I always look at is just productivity, because that’s really about the underlying health of the economy. And the latest productivity numbers were, I think 1.8 percent, 1.9 percent growth, which is not fantastic, but OK. (Is David Brooks talking about “world” productivity being “phenomenally strong” and is David measuring Communist China manufacturing products to be sold to Americans in the USA? Or, is David talking about genuine USA productivity such as measuring Ford Thunderbird assembly lines and Pan Am passenger seat/miles? “Phenomenally strong” 1.8 percent GROWTH can not possibly be referring to the American “Rust Belt” or the output of the “Ninth Ward” in NEW Orleans.) So I think what we’re seeing is a basically healthy economy with this housing market and all that, without a lot of spillover, at least in the abstract, on the electorate. But that is not to say there’s not a lot of economic anxiety out there.And to me one of the crucial questions of the 2008 election is that economic anxiety tied to broader anxiety about the war and about the state of the country, or is there something new going on where you could have economic anxiety while we have decent economic growth?(Is David Brooks referring to this type of “American” economic growth? . . . http://seattletimes.nwsource.com/html/businesstechnology/2003819246_hainan03.html Airline route Seattle – Beijing. Airline service by new CHINESE Airlines. Service non-stop, round trip, and HOURLY, 23 flights a day by 2012. Hooray for the hard(ly) working American workers. David Brooks would probably label this as American economic GROWTH. Here, I would label this news as — disembowelment of the former American superpower.) JUDY WOODRUFF: Could that be what’s going on, Mark?MARK SHIELDS: Well, I’m not sure, Judy, but I do think that this is the last pillar of the Bush administration has been the good economy that David described. I mean, it’s been — even critics have to concede it’s been low unemployment, low inflation, low interest rates, high corporate profits.(Is Mark Shields talking about the USA “low unemployment” with the typical 95% of all Americans fully employed? That number would be a LIE even if the numbers were transposed.Low inflation – more humor. We typical unemployed High Tech types with multiple college degrees and with decades of experience, — we today struggle to keep $6.00 worth of gasoline in the fuel tank. Is it “low inflation” where the cost of electricity [in Connecticut] is rising a dime a Kwh every quarter year. (See Page 1, Sunday 8/12/07 Hartford Courant news story). Health insurance premiums are no longer an affordable luxury. Low inflation – my behind. ) And if, in fact, this is a real shaking of that, with everything else, the immigration bill gone, no prospect of a domestic agenda, the Iraq war being enormously and conspicuously unpopular, then it really does have political anxiety and political impact.I think there is not a human face on what’s happened so far. I mean, it’s not private equity or hedge fund managers or whatever. But I think when the human dimension of people losing their homes, and then those homes going unsold once they’re repossessed because of the softening of the market — and this is an economy that’s rested very much on consumer confidence — then housing values in the neighborhoods affected where the houses are repossessed go down, I think that’s going to have a ripple effect that has both political and economic implications.(“Softening of the market” is cute terminology. It sounds so harmless.Most of us think of it as simply Americans who have no jobs, and can not financially retain their homes, and others who don’t buy homes because of that same single reason. An absence of paychecks by both spouses simultaneously — influences a lot of decisions. “Consumer confidence” is another lie. Confidence in what ?American consumers who now don’t want to buy Pet Food with Rat Poison, and who won’t risk brand name toothpaste or cough medicine with lethal Chinese diethelene anti-freeze, or worry about grains ingredients containing toxic Melamine [added for protein enhancement during measurements of quality], or fish containing banned anti-biotics which makes Americans drug-resistant for later anti-biotics, or tires which are missing gum plies. Don’t forget over 80 Fisher-Price toys slathered in deadly Chinese Lead Paints. Consumer confidence hovers today between imaginary and none.If syndicated columnist Mark Shields received remuneration for his PBS Newshour analysis Friday evening, — in my opinion, PBS should stop-payment on that paycheck first thing Monday morning. ) JUDY WOODRUFF: We saw one mortgage company go under and laid off hundreds of people, but broadly speaking that hasn’t happened yet.(Shame on Judy Woodruff, saying that “broadly speaking that hasn’t happened yet” with “that” referring to (only) “hundreds of people” “laid off”? Judy needs to go check out the truthful details described in http://www.toraw.org ) DAVID BROOKS: Right. But if it did, it would have some impacts. As I said, I don’t think that’s happened. I think the broader issue is, do people feel more economically insecure, even while unemployment is low? Do they feel their wages are stagnating?(What is David talking about . . . “wages are stagnating” ? Who still has wages ? Read … http://www.aea.org/ ) And then the crucial debate, which I think is shaping up between Republicans and Democrats, Republicans believe that wages may not be keeping up with productivity, (Truth is Republicans fought against a Minimum Wage improvement in the 50 states. All productivity today takes place in the 51st state.Walk into any retail establishment in any state. Pick up any manufactured product offered. Show me one “Made in USA” on any item. Count the “Made in China” labels. Keep score. ) but the system fundamentally works. If you get educated, if you get people better educated, they will see their incomes go up. ( Read “Got a B.A.?” ) A lot of people on the left think, no, the system is now so fundamentally broken even with skills and education they will not see their incomes grow up. And that leads to radical consequences.PBS Online Privacy Policy Copyright ©1996-2007 MacNeil/Lehrer Productions. All Rights Reserved./////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////I (Walter Nodelman) am reacting to the article in WSJ of May 19, 2006. The one which blames abysmal paycheck dollar numbers on every possible excuse, except the real reason – OFFSHORING. I refer to . . . http://www.seacoastonline.com/news/05192006/biz_nati/103629.htmBelow is what was written by David Wessel, and my reaction to it.—-Got a B.A.? Good luck getting a raise .By David Wessel The Wall Street Journal 5-19-2006 Having a college degree doesn’t guarantee (a job or) a raise these days. For the typical American worker with a bachelor’s degree, surging U.S. productivity isn’t showing up in his or her paycheck. (Where does the Wall Street Journal see surging U.S. productivity? In the Oldsmobile factories? In Eastern Airlines? America’s most productive 51st state today is China. China creates products for Americans while China ignores all of the laws, rules, ethics, and taxes which every other competitor has to meet. I will not purchase any product which is not clearly labeled "Made in USA". Wal Mart lost every sale to me before my vehicle drove off my driveway. You have to be without a paycheck for years before you can comprehend.) The average hourly wage of workers with bachelor’s degrees, but no graduate degrees, was $24.67 in 2005. That was only 1.3 percent higher than in 2000, after adjusting for inflation, according to an analysis of monthly government data by the Economic Policy Institute, a liberal think tank. That’s not a partisan calculation: President George W. Bush’s latest Economic Report of the President displays a different set of government numbers showing that average annual earnings of college-degreed workers fell 5 percent between 2000 and 2004, adjusted for inflation. Perhaps this is one reason Mr. Bush gets so little credit from a U.S. economy that is growing fast enough to push down unemployment — (Amazing. Three lies inside of a single sentence."U.S. economy that is growing" is FICTION. Lie one. President getting "credit" for fictional growth is humorous. Two. [Did President Warren Harding get full "credit" for the Stock Market Crash and the Great Depression ? ]Ask the 30,000 GM employees being fired in the 14 plants being padlocked here, and re-built in Mexico and Communist China. The same treachery is happening at Ford. Chrysler is already a German company. "push down unemployment" is also humorous for the 30,000 soon to be newly unemployed General Motors workers. Only Dow Jones could write such comedy.3,000,000 Americans fired plus "average annual earnings" falling 5% is what the President should be held accountable for. It is not something to brag about. When GM’s earnings fall, who celebrates? The investors? The workers? I [Walter Nodelman] have an undergraduate and a graduate degree, plus skills from 3 decades of experience in my high tech Information Technology field. I have worked for some of the biggest and most successful organizations. United Technologies Corporation in aerospace/defense. Con Edison in Power Utilities. Verizon in Telecommunications. The Hartford in insurance. I have worked in Lower Manhattan, in Connecticut, and in Boston, – all three by commuting. I have been SEEKING work continuously since 9/11. Over 239 weeks since my last paycheck. The feeling is ANGER which is WHITE HOT AND MOLTEN.) and one reason Republicans worry about voters turning against them in November’s U.S. congressional elections. Workers who play by the rules and still don’t enjoy (jobs or) raises would seem more likely to turn on the party in power. (The demise of the Republicans in November is predictable — until the election rides on the results of Jeb’s state, or the state of Ohio. Then the packed Supreme can be brought into play, and the outcome is steered. The media is bought, controlled and compliant.)That’s not to say that college is a waste. Wages of workers with bachelor’s degrees averaged 75 percent more than those of high-school grads in 2005, a reward for schooling that has grown in recent decades. (Why should any American in year 2006 take on $40,000.00 worth of education debts to earn degrees, when there are no High Tech ENTRY level jobs at the conclusion of that costly process. ALL entry level jobs today are given to H-1B’s who work cheap and are being trained by experienced American workers (under duress of loss of severance, and possible loss of vested pension). The visa holders then take the jobs to Asia. The paychecks get cashed in Asia. The High Tech Americans become unemployed. We might as well tear down Harvard University and Rutgers and NYU and pave them all flat for parking. Then, we can build Wal-Marts in the center of each. Wal-Marts will be filled with stuff made in Communist China. Everything will be cheap enough to be sold to the unemployed, unskilled, uneducated, cash starved Americans.Selling out one’s country to it’s [economic] enemies in war time for money is treason. That is as true for OFFSHORING as it is true for TREASON. Both are not NEW trends. Treason goes back to the days of Benedict Arnold, before my country was a country. Both deeds are still despicable deeds. I abhor both deeds. The Wall Street Journal regularly defends one.) And there are a few caveats: No single statistical snapshot can tell the complete story. Choosing an inflation gauge other than the Consumer Price Index to measure whether wages are beating prices can alter the picture a bit. And many employers are spending more on health benefits, leaving less money for wages. (The issue is not whether wages are beating prices. Nobody is receiving wages. The issue is jobs being stolen from the USA by greedy executives of MULTI-national corporations. NBC tells us that Connecticut alone has already lost 70,000 jobs. NBC’s numbers are provable. That 70,0000 number for Connecticut’s current or already lost jobs is supplied by INS (United States Immigration and Naturalization Service) Statistical Yearbooks, and reported by http://www.toraw.org . Here is the Connecticut 6 year history of Non-Immigrant Visas Issued Annually. It represents the selected multiple categories of H-1B for high technical Information Technology, the H1C for Registered Nurses, the H2 and H3 for temporary Agricultural, the alpha O for extraordinary achievement in Sciences, Art, Education, Business, or Athletics, the P for Athletes, Entertainers, Artists, the Q for Cultural Exchanges and finally the R category of visas for Religious Occupations. As I stated, these numbers are Connecticut only. Every single person on this count represents a Connecticut job that was removed from availability to a Connecticut citizen.H-1B Temporary Workers year 1997 2,979H-1B Temporary Workers year 1998 2,979 H-1B Temporary Workers year 1999 3,826 H-1B Temporary Workers year 2000 4,310H-1B Temporary Workers year 2001 4,663H-1B Temporary Workers year 2002 4,835 Six Years Total 23,592L-1 Intra-Company Transferees 1997 5,711L-1 Intra-Company Transferees 1998 5,711L-1 Intra-Company Transferees 1999 6,708L-1 Intra-Company Transferees 2000 7,918L-1 Intra-Company Transferees 2001 8,693L-1 Intra-Company Transferees 2002 8,609 Six Years Total 43,350Grand Total Connecticut Jobs Lost 66,942NBC 30 reported Connecticut Jobs Lost 70,000 Difference (overstatement) 3,058 This 66,942 only represents those jobs which were stolen from real Americans in Connecticut by foreign workers who arrived here to work. The number does not count jobs taken by spouses or young adult children of that visa holder. Multiplied by 50 states, that calculates out to 3,347,100 jobs lost across the country, so far.In addition to these 66,942 stolen jobs from Connecticut, there are the "OFFSHORING" situations where the USA job itself was sent to India or elsewhere, rather than bringing the foreign worker to Connecticut. Furthermore, these numbers are the damage which has been done to us through Dec 31, 2002, These numbers do not consider the damages from years 2003, 2004 and 2005. ) Still, there remains something of a mystery. It’s easy to understand how technology, (ILLEGAL) immigration and competition from abroad are eroding wages of low-skilled U.S. workers, the 40 percent who haven’t gone beyond high school, and perhaps even the 30 percent who have taken some college courses but not earned a B.A. But why aren’t the 20 percent of workers who have finished four years of college (but not gone on to graduate school) doing better in a growing economy? One explanation boils down to “just wait.” A similar lag in wages marked the “jobless recovery” of the early 1990s (of President 41), but then wages picked up (during the Bill Clinton years with the elimination of "welfare".). Average hourly wages of four-year grads rose just 2.5 percent faster than inflation from 1991 to 1996, then zoomed 15 percent from 1996 to 2001. (The prosperous Bill Clinton years.) Maybe that surge is just around the corner if Federal Reserve Chairman Ben Bernanke will keep his foot off the interest-rate brake as Alan Greenspan did in the late 1990s. Early indications from surveys by the (the biased) National Association of Colleges and Employers are that starting salaries for the Class of ‘06 are up from last year. (Fiction. Very few students of the Class of ’06 have even found employment.)A second is that changing technology is making skills ever more valuable and that only some college grads have the skills in hot demand. Surveys of starting salaries show that a class of ‘05 graduate with a bachelor’s in chemical engineering was offered $56,549 on average, nearly 70 percent more than a history major. Back in 1990, starting salaries for chemical engineers averaged 56 percent more than history majors. (The only open jobs out there today are Project Managers, DBA’s, supply chain managers, and similar middle management positions. Not High Tech. People pushers. Corrugated shipping box chasers. Why are those the only jobs seeking Americans? Because they are 24/7/365 responsibilities with Pagers and Cellphones and Blackberries and WiFi Laptops. The sun NEVER sets on those new world wide networks and global operations. The manager is never "Off Shift." Those around-the-clock responsibility positions are marriage wreckers. Nobody accepts them any more.The issue for the worker is not merely the halving of wages [as in GM and Delphi]. The real larger issue is the destruction of the American Middle Economic Class. But that is never written up in the Wall Street Journal. Forrester, Gartner, Mckinsey, Deloitte, and Citi would object. Dow Jones is gutless against those powers.) But these factors don’t explain the whole puzzle. At least two other factors are at play. Anxiety about losing one’s job to India and (Communist) China, once limited to factory workers, has spread to U.S. college grads, and employers are exploiting that. “Workers just don’t have any bargaining power,” says Frank Levy, an MIT economist. “They’re very afraid of outsourcing and offshoring. (OFFSHORING is so despised, — those engaging in this crime hide behind constant renaming and rearranging. There is "off-shoring", "Out-Sourcing", "Off Shoring", "Asia Sourcing", "OFF-Shored", "Out-Sourced", "Near-Sourcing", "Offshore Outsourced", "Remote Sourcing", "OFFSHORERS", "Outsources", "OFFSHORES", "Out Sourced Offshore", "Near Shoring", "Offshore", "Overseas Sourcing", "OFFSHORER", "Outsourcers", "Offshoring", "Onshore Offshoring", "BPO" and the newer variation "KPO", "Global Sourcing", and this month’s newest entry – "Homeshoring".OFFSHORING means India and Communist China. India is not productive. Red China is known worldwide for their respect for Trademark and Patents ownership, and their respect for Human Rights, and their respect for Intellectual Property Rights.Even the United States Navy crew of an EP-3 patrol plane is familiar with China’s respect for International laws, International air-spaces, and the International Borders near Hainan Island. OFFSHORING is a crime against Americans, and it is disaster after disaster for corporations. The Wall Street Journal writers are obviously forbidden to write about it.Companies which transfer their businesses to foreign ownership, and/or the work to India or Communist China are proving their lack of judgment in multiple RISKS. With OFFSHORING, there are the quality software code RISKS, and/or intellectual missed opportunities RISKS, and/or engineering RISKS. Congressional penalties RISKS (federal loans ineligibility), goodwill losses, and public flight from their logo – RISKS, patent and trademark RISKS, and intellectual property leakage RISKS, international terrorism with blackmail and beheadings and slit American throats RISKS, war and turmoil and corruption and arson and truck bombs and assassinations and looting RISKS, time zone aggravations, language barriers (English accented Hindi), cultural differences, globe-spanning broadband communications breakdown RISKS, encryption RISKS, climate risks (112 degrees Fahrenheit in Hyderabad), electrical infrastructure RISKS, even legal liability RISKS such as privacy violations when mined database information is sold on the streets of Calcutta. Charles Schwab and Merrill Lynch and Quick and Reilly all RE-issueing 1099-DIV Tax Forms SIX TIMES in 6 weeks to their angry (fully IRS filed) customer stockholders during a recent TAX Season. That national fiasco was because outsource software personnel proved to be incompetent, and incapable of doing the 1099-DIV software tasks correctly the first 5 attempts. It was embarrassing to Merrill Lynch. Check out The Detroit Free Press . . . http://www.freep.com/money/business/tompor10_20040310.htm Intel corporation is another fine display of OFFSHORING in the recent years.Intel corporation, rushing into India and Communist China has now been FAILING on dozens of projects [cancelled Tejas, and Timna, recall on Grantsdale, recall on Pentium III with no re-release, cancellation on 4 gig Pentium IV, cancel on Alviso, on Prescott, on Dothan, and crashing in flames on LCoS Liquid Crystal on Silicon for digital flat screen TV’s]. — All of that failure happening in a single corporation, and because of OFFSHORING. Microsoft, rushing into India, has just missed two important deadlines. One ship date for a new Operating System [hacker-proof "Vista"], and the other for a new Microsoft "OFFICE 2007". In March 2006, Microsoft announce that they will miss the start of the school year fall season which is still 5 months forward. They will also miss the holiday retail shopping season which is still 9 months forward. Retailers [snakes who buy all their other merchandise from Communist China] are furious when India fails on new software. Microsoft did not fail when they were an American company. Recently, Bill Gates was in Vietnam collecting hugs and kisses.United Airlines is repeatedly teetering on the brink of bankruptcy, trying to scrape off its Pilot’s Pensions. Northwest Airlines is enduring a strike, hiring lowest bidder aircraft maintenance, and in bankruptcy. Delta Airlines is in Bankruptcy. U S Air with employee morale in the dumps from repetitive pay cuts, went through an embarrassing holiday season fiasco with mountains of luggage lost and thousands of customers abandoned across half of the USA. Every former customer vowed to never book U S Air and never lose their vacation again.) If an employer offers minimal raises and readjusts benefits to your detriment, the main alternative is to get another job. But right now people are afraid to do that. ” It will take more than a few months of low unemployment to turn that around. (Our government wants us to believe that 94% of Americans are employed. That is a lie, even if the numbers were transposed.)And American attitudes seem to have changed in the past quarter-century. In workplaces of all sorts, there’s less pressure to share the goodies; giving the bulk of the raises to already well-paid workers, including the chief executive, is more socially acceptable. (Among the long term unemployed, I could believe that some day soon lynchings of MULTI-National CEO’s will also become socially acceptable.)Among college grads, the bottom three-quarters haven’t enjoyed raises large enough to beat inflation in the past five years, but the best-paid have, says Harvard economist Lawrence Katz. College grads who earn $30,000 a year aren’t keeping up with inflation. Those who make more than 90 percent of college grads, the ones earning roughly $90,000 a year, have seen an average raise of 6 percent after inflation. The U.S. politics of inequality are hard to decipher. (Not true). When their own fortunes are improving, Americans don’t tend to be class-conscious, jealous voters. The question for this fall is how voters, particularly those who believed that earning a college diploma would put them on the up escalator, will react if they don’t see economic good news showing up in paychecks. (What is about to happen behind those closed Voting Curtains is not hard to decipher. Incumbancy will be a NEGATIVE for every ineffective Democrat and voters will not reinstall incumbants of either party. Being labeled Republican will be a defect causing defeat as well. What will decide this coming election will be the hot button issues of OFFSHORING crime, the ILLEGAL immigration, religious Pedophelia coverups, Gasoline at $5.00 a gallon by Labor Day, and the Abortion issue.). Send comments to capital@wsj.com. WSJ.com subscribers can see Q&A next Thursday at WSJ.com/Capital. Copyright 1999 – 2004 Seacoast Newspapers, a division of Ottaway Newspapers Inc., all rights reserved./////////////////////////Walter A Nodelman to David Wessel of the Wall Street Journal.I see anti-American pig slop journalism. Here is an example of the journalism profession as the job is done by a hero of my country.http://www.enquirer.com/editions/2004/09/23/biz_dobbs23.htmlWhen was the last time WSJ journalists received a standing ovation by 1,000 admiring fans ? From my perspective, OFFSHORING is a crime. What is my perspective ?I am a High Tech American (Mainframes) unemployed due to TERRORISM (my employer’s facility in the WTC burned on the evening of 9/11) and I am a victim of OFFSHORING since that crime. I have more than one college degree and more than one decade of High Tech IT experience. (UTC, Con Edison at Union Square NYC, Verizon in Lower Manhattan, etc).I suspect that if the calendar on my wall were today to read February 16, 1778, — you would be worrying about the attrition due to frostbite of the Redcoats.http://www.ushistory.org/valleyforge/washington/letter.htmlI suspect that if the calendar on my wall were today to read December 10, 1941, — you would be concerned about the recent losses of the pilots returning to the home islands. Regrets to their distressed families. I suspect that if the calendar on my wall were today to read December 22, 1944, — you would be worrying about the attrition caused by the lack of nutritional hot meals for the turret gunners in those Tiger Tanks.http://www.thedropzone.org/europe/Bulge/kinnard.html Robert Hanson, formerly of the FBI was not the only American Traitor. Today, there are CEO’s who are doing more damage to the USA than Hanson ever did. Hanson cost the lives of a dozen of America’s intelligence operatives. OFFSHORING is wiping out 3,000,000 Americans, with 70,000 in Connecticut alone according to NBC. http://www.nbc30.com/nbc30/2190071/detail.html Pro-OFFSHORERS are constantly concerned about COSTS. Typically costs to the CEO’s who hired the workers of India and Communist China who are creating a Third World Economy in my country. CEO’s who I think are committing a crime of international proportions. (Enron cheated investors, electric power customers, electric power creators and sellers, and many employees out of jobs and pensions, and Enron still did not reach 3,000,000 victims. Yet, Enron executives have been jailed, with more trials underway. Tyco CEO is jailed. Adelphia CEO is jailed. Worldcom CEO is jailed. OFFSHORERS deserve equal treatment.)If there is an American Flag flying high above the front entrance of your administration building – I think that that is disgraceful. America’s jobs are being given to foreign workers who can barely read English. They often can not write or speak with acceptable English grammar. They require EXTENSIVE repetition. They typically follow instructions accurately and with no capability to think for themselves. They are rarely educated with High Technology, BUT they do work CHEAP. Extremely. No competence for no costs. Only slaves in chains work at lower costs. Treasonous "American" companies today will hire an inexperienced "worker" who lives in a village which the American hiring company could not even find on a map (because it is halfway around the globe and mapped in Hindi or Urdu). They will hire a person who "graduated" from a COLLEGE whose name that hiring company never even heard of. They will hire a person educated at a "college" perhaps having school ACCREDITING credentials, and perhaps not having school ACCREDITING credentials. Education and competence is never the issue. Accuracy, skills, and quality is not the issue. CHEAP, is the driving issue. So what, if you have to spell "Connecticut" to them four times. That worker, unknown, unproven, possibly incompetent, will get employed and trusted with software internals, or research work, or HIPAA data, or the payroll of the State of Florida. Meanwhile, the American born, English speaking, suit and necktie attired or pantsuit attired, American graduate student or fully experienced worker remains unemployable. Why? Because of a term called "globalization" — which you approve of.Citibank and Mphasis have shown us that the India workers run off with money from the Citibank customer’s accounts. Sun newspaper of England has shown us that the personal and private account Information of "customers" can be bought on the streets of India. Transcriptions for medical records hear phlebotomy in the head-phones and type "flea bite on knee."They type "baloney amputation" when they hear "below the knee amputation." But they do work cheap.OFFSHORING is a crisis which is about to destroy this country, with or without media acknowledgement. The McKinsey Global Institute, the Anti-American research consultancy, released a detailed study in June 2005 which offered hard numbers on the potential for offshoring engineering jobs. It concluded that (COMMUNIST) China has a pool of almost 1.6 million young "engineers" with less than seven years’ experience and India another 528,000. The United States has only 667,000 young engineers, one-third the total of the two "rising" Asian powers. Simply by adding the word "young" to their statistic, McKinsey is admitting to violation of the Federal law on Age Discrimination in my country. Why only count the age 22 through 28 as "engineers"? Why does McKinsey not count the Senior Citizens in their Golden Years at age 29? McKinsey deemed only 159,000 Chinese (not 1,600,000) and only132,000 Indian engineers (not 528,000) are qualified to work in multi-national companies. (The others are FULLY DEGREED, but STILL INCAPABLE and INCOMPETANT. MOSTLY, THEY CAN NOT SPEAK, READ, OR WRITE ENGLISH).I am sure that you know that with the OFFSHORING of all of America’s high tech jobs and America’s manufacturing jobs, and America’s state government jobs, there is no Federal Withholding Tax going to my government. No employer Social Security fund payment (although OFFSHORERS still expect to collect Benefits). No Medicare funding. No Unemployment Compensation tax. No employee Group Health Benefits. No Workmen’s Compensation coverage. No OSHA. No EOE. No ADA. No vacations. No Minimum Wage. No Minimum Age. No Sick Leave. No Unions. No Family Leave. No environmental protections for clean air and clean water. No overtime on the 41st hour. No state income tax on payroll, when there is no payroll. Anybody who writes that there is no damage to my country from OFFSHORING — has applesauce for a brain. Anybody who worries about the stock price or the earnings ratios in the corporations which are my economic enemy, – deserve to be treated as TREASONISTS by the impacted citizens of my country. TERRORISM and OFFSHORING have been the cause of my unemployment. I know that you favor OFFSHORING. I do not know if you also favor bloody slit throat anti-American TERRORISM. When I hear a Callcenter talker from India, I instantly DEMAND that my account be closed. You would understand if you were 239 weeks since your last paycheck. The vile businessmen who are selling out my country and my countrymen are displaying a lack of patriotic duty. Those CEO’s and CIO’s are trampling on my flag solely to line their own pockets with wealth. They are committing a crime which is causing the economic demise of my country, and others (UK). In my opinion companies are NOT doing OFFSHORING to stay competitive. The corporate goal here is greed, concentrated high into the corporate command structure. What many corporations are frequently doing is paying barefoot 15 year old girls with manure between their toes to work making their products in the back alleys of Calcutta or villages in Communist China. American corporations are working those girls hard in Tin Roofed Dirt-Floor shacks. It’s being done solely because those girls work CHEAPER than Americans under USA Federal Wage Laws. Whatever the job is, – callcenter talkers, or shirt collar sewers, or Injection Molders for plastic toys- CHEAP is the key driving force, but the goal is not to lower prices for consumers. Same price of product and cheaper costs results in more profit. Greed is the driving subject matter. You (journalists) favor sending America’s jobs to Communist China and India. You are pleased when sending all of America’s paychecks to pay for those jobs to Asia. Obviously that wealth stays in Asia. It never returns to wallets in the USA. Un-employ almost all Americans except perhaps a few hairdressers, and retail cashiers. In return, import millions of huge cargo boxes of Wal-Mart stuff which is not legal tender, and which becomes American land-fill in 2 years. Low COSTS for Negligible SKILLS is NOT a bargain, from my viewpoint. I see American jobs which vanish. Media’s concerns are always "Costs" and "Dollars" and "Revenue". Job security in my country, and the security of my country is NOT increased by anything which involves OFFSHORING. Job security is decreased. Unemployed Americans are the result of OFFSHORING.Patriotic Americans including many of today’s 3 million long-term unemployed typically say as I say that when they do not see the words "Made in USA" — they do not make a purchase. Wallets remain in pockets untouched. Companies are NOT more competitive. Companies are ruled out of the market competition in one instant of decision by the non-buying former customer. All 3,000,000 of us. Those companies ultimately go out of business. Especially the retailers selling solely non-American made merchandise. Bradleys, Lechmere, Sound Playground, Montgomery Ward, Weathervane, Caldor and fifty others – all were retail chains, and all were driven out of business by an absence of customers making purchases. Nothing inside a Sound Playground ever was marked "Made in USA." More examples – Oldsmobile components made by NAFTA Mexico. Americans and Mexicans stopped purchasing Mexican Oldsmobiles. Oldsmobile is gone. Ford Thunderbird parts made by NAFTA Mexico. Thunderbirds vanished from the showrooms. Chevrolet Equinox made in Communist China and are now being ignored by Americans. Investors notice that. GM stock prices reached a record lows. Bankruptcy is close, and GM CEO’s evil goal is dumping of the Pension Liability onto the government and the taxpayers. Equinox and NAFTA helped to make it possible. You applaud. Closed factories are cuts in costs. I would be embarrassed to park a Communist vehicle in front of my garage door. It will never happen. OFFSHORING, especially of engineering design work, does NOT create the buzzwords world class products – it creates massive safety RECALLS. Fords which catch fire in their owner’s garages at 3:00am and burn down the residence. 559 complaints of spontaneous fires, 253 of them in unrecalled models, is one example of shoddy design done by a lowest-bidder, likely in a NAFTA contract, or in Asia.Ford SUVs with collapsing roofs during rollovers which kill their passengers (former customers).Ford announced a RECALL because the gasoline tanks fall off of a few million cars. Bad design on the tank retaining straps. The recall will probably be blamed on their Volvo engineers, or their Aston Martin engineers.There are the Bridgestone Japanese tires which disintegrate on ambulances. Volkswagon Air Bags which explode in the driver’s face without impact cause. Due to EZ-Pass Toll reader’s Energy Beams getting into un-shielded air-bag sensor electronics. Components being designed by the lowest bidder. Lowest typically means Asia. Recalls are costly and embarrassing.Hondas with failing Ignition switches at unpredictable times. Failures having potentially deadly consequences. Numerous vehicle brands with catastrophic Ball Joint failures. Save a dollar on a "commodity" "generic" "lowest bidder" Ball Joint by modifying and cheapening the unit. Some vehicles have 8 Ball Joints per vehicle. That is 8 dollars per vehicle of saved cost times millions of vehicles. However, deadly when Ball Joint failure happens on a highway U-turn exit ramp and the rollover with roof collapse wipes out an entire family.Chevrolet Suburbans and GMC Yukons with overheating fuel pump wires inside their gasoline tanks. OFFSHORED design is dangerous.OFFSHORED drug research that proves to be deadly following incompetent research with inadequate clinical work. Vioxx induced Heart Attacks which were not properly researched. Blindness from Viagra which has now driven all such advertising off of the prime time television.Then there are the Vaccine debacles after all American vaccine makers have fled the country and the CDC. Now they can concentrate on more lucrative products. Economists and Marketers applaud.Now also we have the word "Pandemic" in our daily newspapers.And, don’t overlook our abandoning the highly successful Hubble telescope because America no longer has the will, or the skills, or the vehicles to maintain it.When Americans did all this work, recalls were not rampant. General Motors was not approaching bankruptcy before NAFTA. It is at risk of bankruptcy now.I could go on, but the point has been made . . . OFFSHORING does NOT produce "world class products." "CHEAP" is the only market force in play today, and buyers will be non-existent, regardless of Retail Price. The citizens of France rioted for two weeks in the streets, burning every corporation and vehicle which they could reach with a Flaming Molotov. Their issue was JOBS. Soon, every bank lobby in France and the USA will be filled with a mob, and every customer will be carrying a flaming torch.I [Walter A Nodelman] expect the United States of America will soon have an economy as robust as Somalia’s. Unemployment will be almost everywhere. When everybody in the American Middle Income Class is unemployed and starts cutting back spending – our American economy will sink into a DEEP nationwide depression. Bankruptcies, repossessions, foreclosures, domestic abuse, empty stores, millions of For-Lease and For-Sale signs, crime, and suicide will become commonplace. No jobs, no income, no spendable cash and no buyers in every marketplace will eventually shut down everything. Read these 3 very scary items… http://www.onlinejournal.com/Commentary/041505Mazza/041505mazza.html Deindustrialization http://www.dissidentvoice.org/Apr05/Whitney0415.htm The Deficit Timebommmbhttp://www.resourceinvestor.com/pebble.asp?relid=12465 Dumping the Dollar Ironically, CEO’s are being cheated themselves by the low quality of the work done off shore. Truth is that the people who are being paid about $3.00 an hour are producing work which is worth that amount. The supply curve of people willing to work at that level of remuneration and quality has equaled the demand curve of corporations who will only pay that much remuneration, and then are satisfied with only that much quality. Those foreigners have been failing to do the job, and it happens often. Gartner recently published statements that said 50% of all outsourcing projects will fall short of delivering expected value and will be deemed unsuccessful. I am hearing that quality for the so-called successful projects is laughing-stock. http://www.line56.com/articles/default.asp?ArticleID=6456 With OFFSHORED Aircraft Maintenance activity, – airliners sent to El Salvador and Singapore to be worked on by low cost UNLICENSED aircraft mechanics, — the aircraft parts are falling off of the aircraft in flight. I can only hope the FAA is paying attention to Northwest Airlines, and Delta Airlines.http://magic-city-news.com/article_3580.shtmlhttp://starbulletin.com/2005/04/12/news/story13.htmlhttp://www.crisscross.com/jp/news/359247Pro OFFSHORING pitches typically encountered are rampant with LIES, with False Statistical Assumptions, and with Genuine Manure about such things as advances of India’s education system over America’s.Lies – (one example, – the OFFSHORE Call-center talker’s variety)My Name is Tony. I am in Houston Texas. How may I help you ? Unlike American based call centers, the OFFSHORE type engage in lies. Many lies. Two lies always before the customer has even completed a first sentence. All of the India OFFSHORE Call Center Talker’s lies are done under orders from the corporate officers. Company policy is to lie to customers. Call center talkers in the USA typically spoke English – clean, clear, understandable English. Their expertise was in their brains and it was based on experience, — not on a script scrolling on a screen, and read into a microphone with an unintelligible Hindi accent. And the Americans did not lie to valued customers. False Statistical assumptions -50% of OFFSHORED projects will fail, Gartner says. That is a projection into the future. It is likely false, as the true number is probably double that.http://www.line56.com/articles/default.asp?ArticleID=6456 Research from Benchmark Portal and from Kelly Services recently has determined that 65% of American consumers would change their purchasing patterns if they believed that a company had offshored its call center operations. In my opinion, assumption of 65% of American customers fleeing a detected OFFSHORING corporation is an understated statistic. Among the 3,347,100 unemployed High Tech Americans who are victims of OFFSHORING – the number of customers acting as fleeing customers will more likely be near 95%. Among the rest of the not-yet-fired Americans, the number might be a bit less than 95%.I personally will NOT do business with an OFFSHORING corporation. Genuine Manure – various panel discussions that frequently spout faulty reasons for OFFSHORING such as . . . .You can often hire higher-quality, more loyal workers offshore than onshore.Most agents in offshore sites have college degrees.Canada, New Zealand, and Northern Ireland have arguably better education systems than the U.S.As for arguments that say countries have better education systems than the USA – which of those countries have put men on the moon? Was it India ? Ireland ? USSR ? Communist China ? Remember that putting men on the moon and bringing them home alive is 36 year old technology. My country did it multiple times. My company contributed to the national effort, and "we" succeeded. Which of the OFFSHORED to – and admired countries have built Aircraft Carriers with combined simultaneous landing and takeoff capabilities? Include on board up to 65 aircraft including supersonic types. Include living quarters for 4,000 skilled people. Include non-refueling ship capability, and operate all twelve active aircraft carriers at once. (All of this is 40 year old technology). Has the Philippines accomplished this? How about India with their impressive education system (and their millions of illiterate street beggars sitting at curbs among the cow dung and the flies) ?Which countries have produced education systems that ultimately resulted in breaking world records? Name a country that has designed and built aircraft which can compete with the triple-sonic SR-71? New Zealand maybe ? If the USA had not agreed to sell India F-16s recently, India would have to purchase third rate French hardware, or Russian hardware (which crashes in Air Shows). Perhaps India would have no hardware. India is not capable of building anything competitive, itself. Which countries have landed robots on Mars and kept the multiple Mars vehicles going doing active mobile research plus daily communications, – for a full year? http://marsrovers.jpl.nasa.gov/home/index.htmlHas Singapore accomplished that ? How many countries have nuclear powered submarines (a 50 year old technology) ? How many of them have suspension bridges (100 year old technology) ?. Which of them has transCONTINENTAL railroads dating 150 years back? Tell me what new medical breakthroughs have come from India’s medical institutions ?Have they invented pharmaceuticals or simply stolen them ?http://www.businessweek.com/ap/financialnews/D88VEI800.htm?campaign_id=apn_home_down Which of the admired foreign countries has ever created Battleships capable of heaving 16 inch diameter, 1,900 pound shells for 20 miles and hitting a target accurately, as the USS Iowa has done ? http://www.fas.org/man/dod-101/sys/ship/weaps/bb-61-dnsn8709176_jpg.gif Japan had one such Battleship, and we sent it to the bottom of the Pacific Ocean. Germany had one and the British sent theirs to the bottom of the Atlantic Ocean.Argentina purchased a battleship and the British sent it to the bottom of the South Atlantic Ocean.India impresses me far less than it impresses Accenture and Convergsys and Yankee Group and Forrester Research and Gartner, and Mckinsey, and Deloitte. India should try to sweep their streets annually before they brag to me about BPO anticipated in the year 2009 (with 50% failure rates). India workers who are paid $3.00 an hour are worth every penny of that. Their work shows matching value in their 50% failure rate.Praising OFFSHORING, despite its huge failure rate is induced by greedy executives who do not care that they are putting my country into crisis. What crisis ? Simply the destruction of my country via the ultimate devaluing of the United States dollar. These vile American (correction – multi-national) businessmen favor the disemboweling of my country, for their own reasons (wealth). The crime which they commit is job STEALING. OFFSHORING is stealing done at the NATIONAL LEVEL. It should be a federal felony. It is stealing from my country and my countrymen. Stealing which crosses federal borders. It is the hollowing out and the de-skilling of the (former) superpower known as the United States of America. It is national stealing exactly as if Americans woke up one Thursday morning and discovered that the Statue of Thomas Jefferson has been stolen from inside the Jefferson Memorial on the Washington DC Tidal Basin. Such a crime would generate New York Times half page sized headlines. From my perspective (239 weeks since a paycheck) stealing is criminal behavior whether it promotes the disappearance of 3,347,100 American jobs (including mine), or whether the stealing causes a suddenly empty Thomas Jefferson pedestal.Walter A Nodelman walter521@aol.com 860 521-8029 5/22/06—