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Is capitalism dying in the U.S.? February 19, 2017

Posted by hslu in Economics, Election, Politics.
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The Screwed Generation Turns Socialist

http://flip.it/VJHyDg

Where are you?

A very interesting article about the changing wheels of American politics.

Sad but unfortunately true  December 11, 2016

Posted by hslu in Economics.
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How true. Just look at the gap between Goldman Sachs’s managing partners and the 99%.

Recession once every 4 to 7 years. Why? July 7, 2014

Posted by hslu in Economics, Euro, Global Affair.
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Yeah, since 1947.

Why?

Is it the Fed? Is it the too big to fail and too big to jail financial institution? Is it the war?

Can the recession or if you will boom and bust cycle be avoided?

May be it is the inherent natural of the capitalism and us human beings: greed and fear.

May be it is the government regulators, including the Fed, who are by default incompetent, lazy, unaccountable and always failed to do their jobs.

May be it is the politicians who failed to make laws before the shit hits the fan so to speak.

The truth of the matter is sadly for our common people a combination of all the above.

If it is and I think it is, the capitalism system is seriously flawed and the history will for sure repeat itself again.

Last recession was in 2009 which means another one will come in a couple of years. Since the Great Recession was so severe, it may take a couple of years more to get rid of the leverage out of the system. But, come it will. Inflation has already started in the US.

Up, Up and Away! March 21, 2014

Posted by hslu in Economics, Global Affair, Gold, stocks.
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Something is happening at a breakneck speed since 2003 and, yes, you’ve guessed it: the rich get richer, and that’s exactly what Bernanke wanted with his now infamous QEs: trickle down economy.

For trickle down mechanism to work, two things have to happen: First, the rich has to get richer and, secondly, the rich has to spend their riches.

Worldwide 2014 there are:

  • 1,682 billionaires:up 82% since 2003;
  • 37,104 $100-millionaires:up 62% since 2003;
  • 167,000 $30-millionaires:up 59% since 2003.

There is no doubt that the first part of the trickle down puzzle is in place but the riches haven’t spent their money as much as it is needed to move the US economy to break free speed.

That’s why QE3 is still in progress now.

In the mean time, wages for the middle-income population have mostly been stagnant and many of them haven’t benefited by the rising stock and real estate markets because they don’t own that much stock to begin with. The values of their homes have barely moved back to the pre- great recession levels.  Few of them own any gold.

US median Household Income Dec 2007 - June 2013

The US economy has been limping along at 2% for the last 5 years.

Can we call this progress?

Yes, it is for the riches and it is the natural progression of capitalism. It is wealth distribution from the middle class to the top. That’s what is supposed to happen when capitalism is the rules of the game of the society. This has been the rules laid by the United States for other nations to follow for many decades in the past.

Way back in my JH days, I learned in my 公民 classes that, according to 国父孫中山; Dr. Sun Yat-sen, that one of the ill effects of capitalism is inequality of personal wealth between the haves and have-nots. Sure enough, inequality is at its utmost extreme in the United States because the single most important objective of capitalism is the accumulation of profits. With unlimited hot money provided by Bernanke, the riches on Wall Street and other places in the world, sure had a good friend in the most important position in the world.

I kept wondering that when will the inflation time bomb explode?

Americans did it to themselves July 26, 2013

Posted by hslu in Congress, Economics, Euro, Global Affair, jobs, Obama, Politics.
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The 2008 financial crisis was the product of capitalism which was heavily promoted by the United States over the last several decades.

Look at the damage it did to the citizens of the world. In short, capitalism is a failed economic system because of the boom and busy cycles it has repeated over the past decades. Capitalism is also partly responsible for many uprisings all over the world because of the inherent inequality created by the system. Does Obama‘s 99% sound familiar?

Look at the lousy condition America is in right now. Obama has openly rallied the 99% against the 1%. This is 階級鬥爭 pure and simple and it has been very effective! What else can you say about the high approval rating he still enjoys in light of the continuing 14+% true unemployment rate for 3+ years?

He has successfully shifted the blame to the top 1% (by extension, the capitalism) and by doing so made the middle class his friend instead of his enemy. Of course, the bottom 47% was long in his pocket to begin with.

But he has left the country in a hole (debt and social welfare) much deeper than Americans can dig themselves out of.

The middle class in the US will suffer the most because the rich 1 to 5% (who’s counting, anyway) will shift their wealth around and minimize their federal taxes. They may give up their US citizenship all together if necessary.

The American poor will continue take handouts from the government like they have always been doing like nothing has happened. If anything, their benefits will even increase now that Democrats have been in power for 5 years with 3 more to go.

That leaves the once all mighty American middle class who has carried this country for so long.

They are no doubt exhausted. Their once good-paying jobs have gone to other countries which have learned the in’s and out’s of the capitalism so well. The old-style middle class Americans are not qualified for the high tech jobs that command $100+ K salary because they don’t have the skills. These jobs are reserved for the kids of many highly educated Asian, Russian and European immigrants who have helped built the America the way it was before the 2008 financial crisis. What’s left are jobs in service industries, nursing, waiter and waitress jobs, and the ones which can’t be out-sourced. the sad truth is that as a class, they get paid about 1/2 of what they used to make. Their kids fared even worse because of the sorry state of the American public education system from the high school and on down.

Unfortunately, the so-called new middle class will be the last ones left standing who will be responsible for paying down the rising debt and the costs of the bloated social programs created by Obama and his cohorts.

Don’t feel sorry for Obama. He will continues to enjoy his paid vacations (security details included) and pension thanks for the 53% who pay federal income taxes. The senators and Congressmen will collect their fat pensions and enjoy their health care system reserves solely for them.

Americans did it to themselves. They did it under capitalism. They have no one else to blame now that capitalism is crumbling down around them.

They will naturally merge into a socialism structure, a failed economic system if you ask me.

The dim light at the end of the tunnel will be a lower standard of living for everyone, the new middle class included.

If you don’t believe me, just look at France, England, Italy, Spain, Greece, and… Should I continue?

http://www.cnbc.com/id/100596232

 

America is changing into Socialism fast April 7, 2013

Posted by hslu in Economics, Obama, Politics, Taxes.
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Americans have been giving the right for the pursuit of happiness.

Under Obama, you are still having this right but you first have to pay other people’s 99-weeks unemployment benefits, health care benefits, food stamps and other social welfare benefits.

In other words, in Obama’s mind, the rich and the middle class have to first help others pursuit their happiness before working on your own.

After you have done that, you are on your own to do whatever you still can.

With American’s current fiscal structure, “you” means our children and their children. They have a huge debt to pay.

We suffer as well in the form of lower benefits.

Blacks in general do not like capitalism because as a race they can’t compete. They like socialism because they don’t have to a lot to get by. Obama is doing all he can to fulfill the dreams of the his fellow citizens.

With Obama, America has crossed the point of no return to perpetual socialism. America is doomed to become Greece when, not if, the US dollar lose its reserve currency status.

The path to the poor house has been laid for America because the Republican Party has lost the war to Democrats forever. The trend of demographic in the US doesn’t support the conservative ideas once championed by the Republican Party. If amnesty for illegal immigrants proposed by Obama and the Democrats becomes reality, the Republican Party will lose another 10 million votes. The once Conservative party is doomed forever. It will be lucky if it can hold on to the House.

Tea Party is doing as much as it can, but they are fighting a losing battle. If they are a force to be taken seriously, Obama won’t be re-elected in 2012. The Tea Party just didn’t have the headcount to inflict any serious blow to the Democrat Party.

You and I should be prepared for the unavoidable and the unthinkable future. Socialism is here to stay for as long as eyes can see. Hold-on to your money because Obama and Democrats are coming to get it.

Communism is dead. Socialism is in Turmoil. Is Capitalism next? December 3, 2010

Posted by hslu in Economics, Global Affair, jobs, Politics, Taxes.
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The root cause is human’s selfishness.

Communism is Dead.

Why should I work harder if guys next to me who don’t  don’t work as hard get paid the same as I do?

If you do not believe me, just ask anyone from China before capitalism was allowed to flourish starting in 1985.

Socialism in Turmoil.

Why should part of my hard earned money goes to some one who sits on his or her butt with hands out all the time?

If you do not believe just ask any tax payer from Germany who is asked to bail out people in Greece and Ireland. Unfortunately the United States is moving to become a socialist country.

Capitalism is Dying.

Capitalism is struggling to win supporters in the US if it is allowed to police itself like it did before the mortgage crisis. Capitalism also caused the bust of Internet bubble in 2000 and the subsequent recession that followed. In short, capitalism is the root cause of the boom and bust cycle that we have endured since the early 1920’s.

In the end, the rich got richer and the poor became even poorer before the cycle repeats itself.

If you do not believe me just ask anyone who has been on the unemployment line for the past 99 weeks.

 

 

 

 

 

What PIGS and American Auto Union have in common? May 23, 2010

Posted by hslu in China, Economics, Global Affair, jobs, Politics.
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What happens in Europe now has already happened in American Auto Union

The left-leaning governments across Western Europe including France and PIGS countries have built a generous socialized system for over half a century. Workers in public and private sectors alike enjoyed month long paid vacations, retired near 50 years old, protected by national health care systems and lived on welfare benefits on the backs of younger workers. The socialism model has created two or three generations of lazy workers who sipped coffee and read newspapers on the jobs, went home early in the afternoon and retired early to enjoy their fat pensions. The comfortable living style was made possible because European countries spent very little on national defense because it was paid for by the United States during Cold War. The laid back mind set created a socialized system which was ill-prepared to compete with capitalism embraced by Americans and lately by millions of Chinese.

Now let me ask you a question: have you seen this drama unfolding before?

The question is yes; in American’s Auto Unions of GM, Ford and Chrysler. These companies went belly up because the union workers got lazy and couldn’t compete with workers from Japan and lately Korea. Union’s bloated salaries, fat pensions and generous health benefits did them in. Their laid back business model couldn’t produce cars wanted by the consumers. As a result, these companies went belly up and required billions of tax dollars to bail them out. Now that these companies’ loans have been restructured, number of workers reduced, workers’ salaries modified and health benefit slashed, we’ll see how good their cars are. They will enjoy a period of growing market shares thanks to troubles at Toyota. But the real test is in the market place where consumers will always choose by their feet. It will take five to 10 years to see how big a dent GM and Ford will be able to make in Toyota’s reputation.

Now let’s go back to the sorry states European countries found them in.  Since socialism is no longer working, western European countries have to adapt drastic measures to cut government spending, reduce public workers salaries, increase their work hours, reduce their health benefits, raise retirement ages and reduce pensions of younger workers. The governments have to borrow billions to avoid bankruptcy in the short term and tighten their bellies to pay for the debts. The leaders of these governments have to take steps to change the structural disadvantage of their country in order to compete with developing countries in the world market. The reform will be difficult to take but it is a necessary pill if these countries want to avoid high unemployment rate or rising deficits. If they don’t, they will gradually become dying states and suffer lower living standards for decades to come.

Who would you say was responsible for the crisis in these European countries?

My answer is China.

China’s rising from Communism and embracing Capitalism opened the door of opportunity for trillions of dollars in the world market. Huge sums of capital left these European countries in droves and went to where they were treated the best, China, since 1993. As a result, thousands of plants all over the world were forced to shut their doors which took jobs away from the less competitive countries and transferred them to China instead.

During the process of global wealth transformation, countries which have other means to generate revenues, such as oil exporters in the OPEC and countries with natural resources, were less affected because of the rising commodity prices.

It will be interesting to see how long China can maintain its growth pattern with protectionism popping up all over the world led by the United States.

I suspect that this is not the end of the chapter yet.

Chinese like to say 三十年河東, 三十年河西 ”san1 shi2 nian2 he2 dong1 san1 shi2 nian2 he2 xi1.” The drama just got interesting and 好戲還在後面呢 “hao3 xi4 hai2 zai4 hou4 mian4 ne3.”

Please enjoy the show. I know I’ll have a good time watching this show unfolding.

The Decline of the United States Continues February 21, 2010

Posted by hslu in China, Economics, Energy, Global Affair, jobs, Politics, Small Business.
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The Decline of the United States Continues

Take a look of the graph of the annual rate of employment growth over the previous ten years and you’ll see the decline of the U.S. has accelerated in the past decade.

Source: NYT and US B of Labor Statistics.

During the early stage of the economic expansion after WWII, the U.S. enjoyed an unprecedented 4% annual job growth rate. After a dip into 1% or less in the 1960’s, it remained more or less at 2% for the next 5 decades until the end of last millennium.

The collapse of the dot com economy at the turn of the century began the slow deterioration of the U.S. employment picture. After the housing prices peaked in July 2005, the U.S. labor force took another beating with the burst of the housing bubble. The greedy Wall Street bankers and willing participants in U. S. Congress such as Democrat’s Barney Frank and Chris Dodd kicked off the deep recession and the latest financial crisis. The end result was that the U.S. economy failed to generate any job from July 1999 to July 2009, except a paltry 0.01%.

So what was the root cause behind the near contraction of the U.S. job market of the last decade? Was it the dot com bubble? Was it the Housing bubble? Or was it the financial crisis?

No. It was capitalism.

Capitalism is contagious and can be duplicated all over the world. All you need is amiable government policies, cheap labor, capital, natural resources and the desire to make a profit.

Japan did it in the 1980’s. But as Japan’s expansion started to threaten the U.S. economy, the United States killed its growth with the Plaza Accord. Hong Kong, Taiwan, Korea and Singapore joined the game but their combined economy wasn’t big enough to threaten the U.S.

Until China joined the club about 25 years ago!

China opened its door in the mid-1980, trillions of capital found its way into China and capitalism flourished. Its double digit growth rate in the last decade took the world by storm and exposed America’s structural deficiency due to the weakness of capitalism. The United States has pressured China to change but China’s economy of scale and closed currency policy left the U.S. little options to reverse the course. As a result, Americans are victim of the very thing that has put U.S at the top of the world.

The purpose of capitalism is to make a profit. The unstoppable thirst to squeeze out every drop of profit from its operation caused the company to search for new ways to improve its efficiency because, without it, the company can not compete. In order to survival,

  • Companies in the United States used automation to replace blue collar workers by the millions.
  • Union members were fired because their wages and benefits could not be sustained.
  • Service jobs were transferred to foreign countries because of difference in wages.
  • Automated cash registers took jobs away from people with the lowest skill levels.
  • Many Internet and software related jobs have been out-sourced because capitalism demands lower labor costs whenever possible.
  • Oil companies slowly moved their operations to other countries because of depleting resources, tough environmental laws and demanding regulations. Besides, the executives of the American oil companies are tired of spearing in front of the unfriendly members of the Congress to explain their operations and profits to these idiots whenever oil prices are pushed up by supply and demand.
  • Tough government regulations and policies on labor forces and environment gradually pushed companies to foreign countries in search of accommodating policies.
  • High corporate taxes gave little incentives for companies to move their operations into the United States.
  • Many companies moved their plants to developing countries because workers there are willing to work for much less, they don’t take sick leaves, they are easy to manage, the land is cheap and their policies are purposely made more accommodating to foreign capitals.

In fact, capitalism is aimed to generate as much profit with as few workers as possible. The American companies have to reduce their domestic work forces in order to compete with companies in other countries who have embraced capitalism with utmost enthusiasm.

The job growth rate in the last decade may be even lower if not for the following reasons:

  • The public sector, i.e., the governments, became bigger at every level: federal, state and city. However, these jobs are not productive.
  • The health care industry has been growing because of the aging of the population and obesity.
  • Lawyers, accountants, managers and consultants have grown because companies need them to operate in a more complex world.
  • People in the field of education have grown because parents demanded smaller classes.
  • Building industry expanded due to housing expansion in the first half of the decade and government spending.
  • More workers in the restaurant business because working parents don’t have time cooking at home.

Going forward, the exodus of the manufacturing sector will continue. Job losses in these industries will not stop. U.S. auto companies will face even more competition from Korea, India and China. Boeing’s market share and profit will be reduced with the introduction of China’s commercial air planes in a few years. U.S arm sales to foreign countries such as Saudi Arabia and UAE, the largest of the world, will be competing with the cheaper and equally deadly weapons from China. The leadership position in drug and medical instruments will disappear if the Democrat-controlled government has its way to socialize the industry.

In the end, the United States will become a service-oriented country and that’s the beginning of the end of the dominance of the United States on the world stage.

In the mean time, the Democrats under Obama, Pelosi and Reid are tirelessly moving the U.S. to a socialism country further reduce America’s competitiveness. They have to go if the U.S. has any chance to reverse the decline of the labor force. Government’s stimulus can not sustain economic growth in the long run. It is the private sectors which have generated the much-needed jobs. They have to embrace capitalism with the assistance of government to recapture market shares from foreign competitions. Without this, American jobs will continue to disappear. The employment growth curve in the graph above will continue to decline despite the pending recovery of the U.S. economy.

Another decade from now the growth curve may sink below the 0% line and by that time, the structural deficiency of U.S. industries and demographic make up of American population will make the reversal almost impossible to achieve.

America will slowly follow the foot steps of Spain, France and British and yield its leadership position to other countries such as China, India and then a country in Middle East such as Iran in 60 to 80 years or so.

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