The U.S. is heading towards a major depression

[Sava]

The nature of capitalism, in theory, is competition. In reality, the weaker businesses die off while the strongest company takes the entire market. That's what happened around the end of the 1800's and beginning of 1900's. When the monopolies are eventually broken up, just a handful of regional monopolies remain. They stabilize the market and engage in parallel schemes to stop from shutting each other down while still making money. Those that lose out are the consumers. As with theoretical Communism, Capitalism is not what it's supposed to be.

[Imran Siddiqui]

Labour unions are corrupt. Sure. But they can hardly be more corrupt than corporations.

You don't know unions . My g/f works at the Department of Labor and their WORST cases are against unions stealing pensions, not corporations.

As more and more nations industrialize they all face stiffer competition resulting in market glut.

You are forgetting about comparative advantage.

[DuncanK]

Originally posted by Sava
The nature of capitalism, in theory, is competition. In reality, the weaker businesses die off while the strongest company takes the entire market.

Yeah, that's why so few nations industrialize. Most of the nations who have done well after WW2 have done so because the US has seen it in our own self-interest for them to do so.

[DuncanK]

Originally posted by Imran Siddiqui
You are forgetting about comparative advantage.

No, I didn't forget. But comparative advantage means that they all produce different goods. In reality, they compete directly with each other when they see the opportunity to cut each other out of some market.

[devilmunchkin]

hmmm...i think i beat them there by about 9 years....

[Sten Sture]

Originally posted by Sava
In reality, the weaker businesses die off while the strongest company takes the entire market.

... only to get so bloated and out of touch with their market that some other small company comes along and wipes them out. See US Steel, Penn Railroad, Kmart, Chrysler, Digital, International Harvester, etc. and then the process starts all over. Its pretty Darwinian.


Che - "that's what they said last year" Yes, but it was true. 2002 was a much better year for the overall economy than 2001, at least in the US. The problem was that it actually felt like it was worse - that is a natural part of the cycle, unfortunately. I have said on these forums before that 2002 would feel worse than it was - sort of like the delayed effect of the sunrise on the temperature. Light is the economy and heat is employment. The sun is starting to come up, but the temp will decline for a bit.

There is light on the horizon and its gonna be a pretty nice day! Hang on, get some coffee, we are getting close to improvement that actually feels like improvement.

[Velociryx]

No, Duncan....we don't.

We do not have the resources OR the manpower to provide the entire world (including emerging markets) with 100% of everything they need. And with new markets and new innovations occuring at a rapid clip, there's no way we ever could.

There are just too many products out there....a truly staggering, dizzying array.

Newly industrializing economies need not enter into head to head competition from the get-go. They can begin by providing goods and services where they are needed most....in their own backyards. If they're good enough....if they're strong enough, they'll survive, thrive, and perhaps begin to export their excesses to other countries who can't (for simple lack of manpower and resources) produce EVERYTHING they need.

Not even the biggest economy on the planet (USA) can go it alone. If we cannot hope to become self sufficient, then neither can anybody else....and that's a good thing.

-=Vel=-

[Imran Siddiqui]

In reality, they compete directly with each other when they see the opportunity to cut each other out of some market.

Only if they feel that they can produce the good better and cheaper. Thus, comparative advantage. The problem is usually the claims that third world companies are undercutting first world ones.

[DuncanK]

Originally posted by Velociryx
No, Duncan....we don't.

We do not have the resources OR the manpower to provide the entire world (including emerging markets) with 100% of everything they need. And with new markets and new innovations occuring at a rapid clip, there's no way we ever could.

There are just too many products out there....a truly staggering, dizzying array.

I threw the McDonalds-Burger King thing in there to demonstrate a point. The overall production in the world under capitalism is very inefficient. Many goods, like cars, have an average cost curve which continues on a downward slope to a point of production that is not realized with the current market conditions. That is that it takes more labor to produce these goods than is neccessary.

Granted that some raw materials would have to be imported from the nations who currently import them. But under a planned world economy the underdeveloped nations could concentrate on building their infrastructure and educating their people while goods were imported from industrialized regions. There is no possiblility for this to happen under capitalism because of its competitive nature.

Originally posted by Velociryx

Newly industrializing economies need not enter into head to head competition from the get-go. They can begin by providing goods and services where they are needed most....in their own backyards. If they're good enough....if they're strong enough, they'll survive, thrive, and perhaps begin to export their excesses to other countries who can't (for simple lack of manpower and resources) produce EVERYTHING they need.

Not even the biggest economy on the planet (USA) can go it alone. If we cannot hope to become self sufficient, then neither can anybody else....and that's a good thing.

-=Vel=-

Well, the only nation who you can say who has done this is the US. Probably because the market in the US was so big. Industrialization requires a big market to take advantage of economy of scale. Small nations really don't have any choice.

eidt: typos

[DuncanK]

Originally posted by Imran Siddiqui

In reality, they compete directly with each other when they see the opportunity to cut each other out of some market.

Only if they feel that they can produce the good better and cheaper. Thus, comparative advantage. The problem is usually the claims that third world companies are undercutting first world ones.

.

They also undercut each other. They are all competing in the same market.

[Thrawn05]

No. I remember awhile back I was able to watch Neil Cavuto. He showed a chart of the history of the Dow, adjected for infliation. It showed that no matter what, the market was still going up overall. Yes a few dips but overall up.

Since we now know we are going to war, the markets are starting to level out a little.

Also remember that the '90 were filled with useless corporate models that only work in an up market. We have basicly trimmed the fat off the market and that's good IMHO.

[DuncanK]

Originally posted by Thrawn05
No. I remember awhile back I was able to watch Neil Cavuto. He showed a chart of the history of the Dow, adjected for infliation. It showed that no matter what, the market was still going up overall. Yes a few dips but overall up.

Since we now know we are going to war, the markets are starting to level out a little.

Also remember that the '90 were filled with useless corporate models that only work in an up market. We have basicly trimmed the fat off the market and that's good IMHO.

Trimming the fat, as you say, does nothing to get us out of a recession. That just causes unemployment.

[Thrawn05]

QUOTE:
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Originally posted by DuncanK


Trimming the fat, as you say, does nothing to get us out of a recession. That just causes unemployment.
____________________________________

The fat is useless companies with bad models that shouldn't be there to begin with anyway.

[Drake Tungsten]

Trimming the fat, as you say, does nothing to get us out of a recession.

Luckily we're not in a recession...

[Zkribbler]

Re: The U.S. is heading towards a major depression

Originally posted by Dissident
I have been thinking about investing in gold.

Gold is a haven during times of uncertainty. It goes up during a crisis and comes down during periods of calm. I would guess things won't get much more uncertain than they already are, so gold isn't going to go much higher and, if things calm down, it will go lower.

If you think we're headed for a depression, what you want to be in is high quality debt instruments, that is: bonds, esp. government bonds. That way, if the stock market crashes by, say 50%, you're just sitting there laughing as you collect your regular interest payments.