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**DuncanK** · February 3, 2003, 23:51

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

oh, ok

**DuncanK** · February 3, 2003, 23:54

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

Originally posted by Zkribbler

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.

Yep, there are also stocks in companies that produce goods that people still use during a recession. Gilette is one, I think. Ask your broker, but he or she might tell you that there won't be a recession.

**Adam Smith** · February 4, 2003, 00:56

Originally posted by DuncanK
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.

IIRC, the most recent studies suggest that minimum efficient scale (MES) for automobiles is about one million units, or four fully utilized assembly plants. This is well within the size of most major markets. eg., US, Eu, Asia. How many other markets can you think of with just one competitor? Aside from public utilities, the natural monopolies which you describe (minimum efficient scale greater than one half market size) are pretty rare.

**Imran Siddiqui** · February 4, 2003, 00:57

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

And the more efficient ones come out winning in the end.

**DuncanK** · February 4, 2003, 01:12

Originally posted by Imran Siddiqui

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

And the more efficient ones come out winning in the end.

Imran,

They subsidize their exports. How does this result in the most efficient producer winning?

**DuncanK** · February 4, 2003, 01:15

Originally posted by Adam Smith
IIRC, the most recent studies suggest that minimum efficient scale (MES) for automobiles is about one million units, or four fully utilized assembly plants. This is well within the size of most major markets. eg., US, Eu, Asia. How many other markets can you think of with just one competitor? Aside from public utilities, the natural monopolies which you describe (minimum efficient scale greater than one half market size) are pretty rare.

Not sure what your saying here. There are several car companies.

edit: shouldn't the MES be for each plant?

**Imran Siddiqui** · February 4, 2003, 01:15

Well, the only nation who you can say who has done this is the US.

Have you never heard of Japan or South Korea? Or even Australia?

They subsidize their exports. How does this result in the most efficient producer winning?

After they industrialize then chances are that exports would not be subsidized (not nearly to the level they presently are).

**DuncanK** · February 4, 2003, 01:27

Ah see what you do is you subsidize your exports and it doesn't matter if you are more efficient. You lower the price of your exports until you put you competitors out of business or atleast disrupt their opperations and take a bunch of market share. With exports market share can be everything. The firm with the most market share has lower average costs. It's not that you are more efficient. It's just that you took the market share.

**Kramerman** · February 4, 2003, 01:57

Originally posted by Anun Ik Oba
I'm already farily depressed in America. This country is great and all- still has a high standard of living even for its poor, but the 'American Dream' is a bulls*** story the upper echelon feeds the lower classes to keep them content. I mean, someones' got to flip the burgers. But burger-flipping or any like job makes you a non-entity in this country.

Untrue. Anyone with the skill and the drive can make it. I speak from personal (or near personal experience, rather), as my borther and I grew up in a trailor park. My mother (educated and very smart) worked hard and was able to move us out of the ghetto and into one of the finest school districts in the state. Now, my brother is on his way to medschool.

The American Dream

Kman

**patrickjb53** · February 4, 2003, 04:43

The economy runs in cycles, and I don't mean bikes, just like everything. It's just a matter of how long will this part of the cycle last?

**Dis** · February 4, 2003, 05:35

Actually I don't plan on investing in gold. But I thought about it.

Gold varies too widely. Yes it has been rising lately, but that is probalby not going to last much longer. If I was going to do it, I should have done it 6 months ago. It will probably peak soon.

I'm still undecided on bonds. Right now I feel the economy is at a crossroads. It's a 50/50 thing. There is a chance it could improve greatly, or an equal chance it could head into a depression. I just get this uneasy feeling when I look at the state of america.

First for you economists out there. I have some questions.

First off it is our workforce. I can't see how most of our economy can be based off of service jobs. This can't be good can it? Nothing is actually being produced. And it's not like we are servicing other nations (with exception of foreign tourists- which is obviously good). but much of the service is for ourselves. This could work if all the rich people were making money off of other nations and spending it here. But I doubt that is happening.

The second issue is debt. Debt is at all time highs from corporations, goverment, and private citizens. Sure we've had some budget surpluses with Clinton, but little if any of that has been used to pay off our debt. Now if the economy is growing, this is now big deal. Because you are making plenty of money to pay off interest. But if the economy is too slow, or not growing at all, it seems to me interest could eat us alive. The debt problem in America worries me. If the economy doesn't start improving soon, debt could bring us down into a depression. Again I'm no expert at this. Just my opinion.

but personally I am paying off my debts as quickly as possible. It's not like I can make more money from dividends than I'm paying in interest. I just can't make that much money on dividends right now. I could in the 90's though. Although I have a decent amount of assets, so this really isn't much of a concern for me. I will be OK in a depression I think.

I also want to talk about boosts to our economy in the 90's. Clinton cannot be responsible for all of it. In fact I think the growth of computers, the internet, and telecommunications fueled all of it. But we are reaching saturation in the western world. There will still be growth but not much.

And lastly the non-industrialized world. Until they can afford to buy our products, I cannot see how they can help us. We aren't going to make much money selling cell phones in Africa. These nations may never be industrialized. At least not until they have favorable goverment conditions. I can't see these nations doing much for us.

I think something drastic has to come about to improve our economy. In the 90's it was computers etc like I said above. In the 40's it was the women in the workforce which provided 2 incomes to buy luxery items. You get the picture.

But it only takes one invention to change the world. It may come about. Or it may not.

And Segway is not that invention.

**Solly** · February 4, 2003, 07:22

Imran

Only if they feel that they can produce the good better and cheaper. Thus, comparative advantage.

You've only described absolute advantage. And you fail to consider capital. Ricardo's and Smith only take labour as something of value - surely as a right-winger you can't be agreeing with them and Marx.

Dissident

First for you economists out there. I have some questions.

Not many questions there.

I can't see how most of our economy can be based off of service jobs. This can't be good can it?

The West can provide service jobs "better" than developing nations, who in turn provide the manufacturing and/or agriculture better than we can.

If the economy doesn't start improving soon, debt could bring us down into a depression.

Not unless interest rates need to rise.

**Main_Brain** · February 4, 2003, 08:16

I thought how to Profit from the upcoming War and I concluded:
on Midterm Oil Companies should rise (Stocks) because of heavy investions in Iraq.
Still a) US stations Troops-> Higher Costs for US
->Might be better off with British Petroleum if not European
Oils like Dutch etc.
b) Puppetregime ->Definatly US Oil Companies

gold would be only a shortterm investment bt thats already too late.. Its too expensive now already.

Comments how to satisfy your Greed on Bush's Actions?

**Imran Siddiqui** · February 4, 2003, 11:07

You've only described absolute advantage.

Not really. If you follow the argument... if they can make goods better and cheaper, then it follows they should focus on those goods and export them... and import those that they can't make as good.

And you fail to consider capital.

How so? Making goods better and cheaper necessarily encompases capital.

Ah see what you do is you subsidize your exports and it doesn't matter if you are more efficient. You lower the price of your exports until you put you competitors out of business or atleast disrupt their opperations and take a bunch of market share. With exports market share can be everything. The firm with the most market share has lower average costs. It's not that you are more efficient. It's just that you took the market share.

That's why you have a WTO

.

**Zkribbler** · February 4, 2003, 12:02

Originally posted by Dissident

but personally I am paying off my debts as quickly as possible. It's not like I can make more money from dividends than I'm paying in interest.

Accck!! I can't believe I forgot to mention that.

Of course if you're paying 15-20% on credit card debt...or are paying on any other debt, for that matter...that's one sure way of "investing" during a down market.

Why invest in bonds, which pay interest only in single digets, when you can knock down your own debts, in which your paying double digits?