Don't Understand Why We Are In A Global Depression? Read This Thread.

reply to post by PriamsPride


Hi Priam, nicely written posts.

I think you analogy to troubleshooting our economy is like troubleshooting an electrical system is a very good one. When troubleshooting a electrical system that was working properly before, really, you only look at three things, voltage, current, and resistivity. Mainly you look at voltage, occasionally you have to look at current, and then sometimes resistivity. I think if we were to relate these to economic terms, I would say supply is voltage, the potential, the pressure that pushes the system, current would be demand, the flow of money through the system, and price would be the resistivity, that varies with load.

Our supply side is doing pretty good, in fact very well, we have a great many goods and services out there waiting to be moved, so we are looking at a problem with low demand. With a problem with a lack of current in an electrical circuit, this means you have one of two problems, resistance in the system has built up somewhere, stopping current flow, but allowing the potential to still exist, or there is a high resistance short somewhere, that is pulling current away from the circuit. I would say we have a high resistance short, where too much current is going to the controller, and not enough is going to the motors that drive the system, the middle class, the work force.

the question then becomes, can we fix this problem, or is it really that the whole system has become too much of a giant patchwork, not built for current load, and so needs to be redesigned.

Now, if it is time to rebuild, then we have to start thinking about the components, capacitors, inductors, power supplies, and such. We might want to beef up the worlds monetary system, international banking and investment standards, put some labors controls in place, grease the wheels of third world economies with higher wages, economic standards, and such. Maybe it is time to lower the standard work week again, considering the vast increases in productivity over the last thirty years. We should put some money into our lagging infrastructure, and pull back on military spending.

AS far as your claim that third world workers do not want the things that come with market economies, that they have no taste for these consumer goods they are now producing, you couldn't be more wrong. The people in third world countries want Nikes, Air Conditioning, indoor plumbing, roads and sewer systems, automobiles, TV's, computers, video games, and essentially all the things that first world countries have.

Yes, U.S. corporations are all too willing to exploit the people in third world countries, but don't forget that the corrupt leaders in those countries are at least equally, if not, in my opinion, far more responsible for the lack of human rights in those countries, lack of economic progress, liberty, and opportunity for all.

The people in third world countries were badly exploited by their leaders long before Western corporations began showing up on their shores. In fact the countries that have succeed the most are in fact the countries that most closely associated themselves with western nations.



[edit on 20-4-2009 by poet1b]

Originally posted by poet1b
The problem is easy to see. Global labor competition combined with higher productivity means more people chasing after lower demand for workers, which depresses wages, resulting in lowered demand for goods and services. Without demand, supply can not move. It takes demand as well as supply.

The solution is to lower working hours so more people can participate in the economy while raising wages, to increase demand. Higher demand for available supply is needed to keep markets systems functioning.

Hmmmn, I know that makes sense but there are other elements that come into play in the supply chain. The shipping industry in the UK, i would say noticebly, from december 2007 was affected greatly by the rise in oil prices, along with fluctuations in currency and environmental taxes ect. (For instance: MARPOL, SECA on Seafreight - Scandinavia/Baltics trade lanes), These in turn affected the cost of shipping. The shipping lines pass on the charges to the Freight Forwarders in the form of surcharges CAF's BAF's and in this example MARPOL/SECA (the surcharge is meant to offsett the cost of making the fuel greener).

The Freight Forwarders are then competing with each other due to the rising costs to try to keep hold of their customers (the suppliers and manufacturers) right up to the end users. If they can't compete on price - then they compete on service and quality of that service, to a point were they are bending over backwards to keep their urgently needed custom. Those that compromise on price, often compromise the quality and vice versa. The customer is then in control - the empowered consumer.

The customers get used to this above and beyond kind of treatment and are quick to threaten to take their business elsewhere when things do not go to plan, as can often occur in the world of shipping. The customers themselves - lets call them the Senders and Recievers to avoid further confusion, also experience this with their own customers, e.g. buyers of the Raw of Finished product, they demand the same - i want it yesterday attitude and want them to bend over backwards because they have orders to deliver on, who again, also has this scenario of - i want it yesterday with the end user, the consumer, i.e. us.

The Supply Chain developed a method called JUST IN TIME (due to the empowered consumer). In my opinion it is wasteful and dangerous and it is greed that has turned world trade into survival of the fittest

No kidding, people leave it right up to the last minute each step along the supply chain before shipping their goods - which they leave to the last minute too in a cost cutting measure with warehousing ect. and to compete with the 'empowered consumer demand. Now, yes i can see the logic, although it is all for the wrong reasons in my oppinion. The result is when there are delays, they have left things so close to the wire that they incurr ridicular costs in wasted labour ect. due to stop in production.

With companies credit status now playing a major role in how most companies do business today, this creates another issue for that oh so great 'JUST IN TIME' method. Some shipping companies will only accept payment before collection/delivery if they fail to produce a satifactory score on a THOUROUGH credit check with the shipping companies, or potential delays if they are late with payment and are temporarily put ON STOP. Once there are alot of delays its affects reliabilty and credibilty and results in businesses going under.

As i said, i saw this kick off noticebly with the oil price hike around dec 2007 and when oil came back down (poss Sept 2008) just when they could start to reduce the freight costs - the currency loses value and so affects the costs received/incurred from the foreign trade partner. Catch 22 and its goes on and on.

I have always said, you give someone an inch and they'll take a mile, You beckon to their call and they'll expect you to to come running everytime. Help were it is appreciated yes, submit to outrageous demands - no.

Rant over and sorry if i've garbled, its late here (0200 hrs :lol








[edit on 20-4-2009 by MCoG1980]

reply to post by MCoG1980


I would say you are describing the exact same thing that I am talking about. There are less people buying goods, so the demand for shipping drops. Companies that are shipping the goods are hurting because they are not moving product, so they squeeze the shipping companies. Now the shipping companies are in a bind, so they will squeeze their workers, who won't get raises, very likely will get laid off, and those who hang onto their jobs will be expected to do more. The workers who lose their jobs will certainly be spending less money on goods, and the workers afraid of loosing their jobs will also likely spend less and save more. This means the companies shipping the goods will sell even less goods, and the whole thing goes around in a vicious circle.

Who is making money, why the oil companies of course, record profits. How many hundreds of billions have the U.S. and Brittan spent in the middle east to keep the oil flowing, every year for the last several years, all on borrowed money that the taxpayers of the future will be expected to pay?

In electrical terms I would call that a short. The money that should be flowing into the economy has been shorted into the pockets of the oil companies.

reply to post by poet1b


What you are saying i feel is right, but the fact that everyone has 'demands' and i dont mean demand of the goods, i meaning they want more for there money and the consumer/customer takes advantage of that, creating more problems throughout the chain. Like i said, there are many factors, and i tried to list all that i am aware of, come into play.

What is the good of having demand (as YOU mean the word ) if you cannot forfil that demand. there are too many problems that need addressing to just think a higher demand for products will resolve it. Even if a comapny had a full order book - he has to get over the other obsticles such as the issue of credit with the suppliers and the shipping companies in order to get there (if you can't get credit you have to pay cash up front - which not many people/businesses can afford to do.) If they manage all this, then the products are late as it has been left to the last minute and one little thing causes delays (weather, vessel/truck repairs) - then they could lose there contract altogether - leaving them with costs they cannot recover and taking them into insolvency.

Not only this but there is the issue of the freightforwarders that go under - oh, you described that to a 'T' by the way If you an unfortunate who is moving goods with a company who has gone under - your goods remain stuck in limbo - again delays cost money elsewhere down the supply chain and can lose people their contract as alrady mentioned. Sad state of affairs. When G. Brown said he was going to address the issues of trade at the G20, i did have hopes he may be looking at these issues but only time will tell. I have a few ideas of how things may pan out, my own theories based on what i do know, but unfortunately i cannot disclose them










[edit on 21-4-2009 by MCoG1980]

reply to post by poet1b

AS far as your claim that third world workers do not want the things that come with market economies, that they have no taste for these consumer goods they are now producing, you couldn't be more wrong.

I agree with you, as a matter of fact. The terminology of "taste" I borrowed from cognoscente, intending it as a subtle jab. Frankly, cognoscente should know better than to try to use euphemisms to explain away the poverty of the third world as if it is just a matter of "taste". No one has a taste for poverty -- though some have a tolerance. I apologize that the jab wasn't clear; I forgot to highlight that fact within the post.

U.S. corporations are all too willing to exploit the people in third world countries, but don't forget that the corrupt leaders in those countries are at least equally, if not, in my opinion, far more responsible for the lack of human rights in those countries, lack of economic progress, liberty, and opportunity for all.

This is not about blame, and it is a travesty that our default method of problem solving is to find someone to blame. Blame is a waste of time - solutions are what is needed. The point is that the real power lies in the corporations so it is with them that the change needs to begin. There have always been corrupt politicians -- and this is lamentable -- but let's cut the corruption at its roots (i.e. the corporate powers that be), rather than its branches (i.e. third world leaders)