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U.S. Economy - a couple interesting numbers

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U.S. Economy - a couple interesting numbers

Unread postby Jack » Wed 08 Nov 2006, 18:01:42

$this->bbcode_second_pass_quote('', 'T')he price of new homes was down 9.7pc in September from a year earlier, the worst fall since the slump of 1981. The US Federal Reserve now talks of “ghost towns” to describe the bust flattening the once red-hot markets of Arizona and Florida.

The army of estate agents, surveyors, builders, and the like, made up 55pc of the 2m jobs created by the US economy from 2000 to 2005. Cash withdrawn from home equity reached 6pc of GDP last year.



Most of the article is about politics - however, if you wish to read the entire item, look near the bottom of the piece. LINK

Assuming the numbers are true, the U.S. economy looks even more vulnerable than I had thought.
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Re: U.S. Economy - a couple interesting numbers

Unread postby Denny » Wed 08 Nov 2006, 18:08:18

$this->bbcode_second_pass_quote('Jack', ' ')Cash withdrawn from home equity reached 6pc of GDP last year.


I do not understand how, just by adding debt on one's home, by itself, increases the GDP.

Shouldn't the GDP be a good or service, not money?

One may argue that the money in turn is spent on goods or services. But, what if its used to pay down credit card debt, or it is invested outside the country, or its used for foreign travel?
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Re: U.S. Economy - a couple interesting numbers

Unread postby Jack » Wed 08 Nov 2006, 18:21:27

I would suppose that the loan itself doesn't add to GDP, nor would paying off credit card debt. But with a big check in hand, what dedicated consumer could resist stimulating the economy? 8)
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Re: U.S. Economy - a couple interesting numbers

Unread postby shady28 » Thu 09 Nov 2006, 01:38:36

$this->bbcode_second_pass_quote('Denny', '')$this->bbcode_second_pass_quote('Jack', ' ')Cash withdrawn from home equity reached 6pc of GDP last year.


I do not understand how, just by adding debt on one's home, by itself, increases the GDP.

Shouldn't the GDP be a good or service, not money?



Services are involved in refinancing. You get a loan, a bank takes your loan and sells it, there are services involved and it bounces around between banks, investors, mutual funds, and institutions like Fannie and Freddie. The debt and interest on that debt winds up being part of GDP.

Yes it's stupid. The financial 'industry' is basically the largest single industry in the united states. We no longer build much of anything - we shuffle money around.

Some facts :

"Financial activities generated $2.4 trillion in Gross Domestic Product in 2004 of $11.7 trillion U.S. Economy. (U.S. Bureau of Economic Analysis)

* or 20.6% of GDP (7.9% finance and insurance; 11.7% real estate) (U.S. Bureau of Economic Analysis)
* if it were a country it would be the 4th largest GDP in the world (IMF)
* a GDP slightly larger than China's and smaller than Germany's (IMF)

* Financial services contributed $927.4 billion in GDP or 7.9 percent of the U.S. total. (U.S. Bureau of Labor Statistics)

* Financial activities employment in 2005 averaged 8,141,000 - an all-time high. (U.S. Bureau of Labor Statistics (BLS) defines the financial activities sector as finance, insurance, real estate, rental and leasing.) "

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Re: U.S. Economy - a couple interesting numbers

Unread postby Denny » Thu 09 Nov 2006, 16:49:18

$this->bbcode_second_pass_quote('shady28', '
')
* Financial activities employment in 2005 averaged 8,141,000 - an all-time high. (U.S. Bureau of Labor Statistics (BLS) defines the financial activities sector as finance, insurance, real estate, rental and leasing.) "



It surprises me that so many formerly paper based transaction based buinesses and services, such as banks, insurance, much of government, has not seen a substantial drop in employment over the past forty years. I still see new bank towers and government office buildings going up, its as it computers had never been invented.

I can recall when I went to the bank with a passbook, and they looked up my account activity on a rolladex, marked up my book iwht a pen. All those postings beeing done by hand and double checked. Today all that is automated, but they have complicated even doing a deposit over a counter. And, when you deal with them for any kind of investment, they pass you along tyo two people it seems.

And those charges! I recall. despite all the labor intense steps, I got 3% on a regular savings account, and could write three free checks a month. They then lent prime rate at 6%. Now the interest rate is practically nothing and they charge for each one, they even have a statement fee.

It is odd. Our basic factory jobs are being eliminated for "international competitive" reasons, but so many white collar jobs stay on. But, most most white collar jobs do not add tangible value to people's lives.
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Re: U.S. Economy - a couple interesting numbers

Unread postby Jack » Thu 09 Nov 2006, 21:52:48

$this->bbcode_second_pass_quote('Denny', '
')It is odd. Our basic factory jobs are being eliminated for "international competitive" reasons, but so many white collar jobs stay on. But, most most white collar jobs do not add tangible value to people's lives.


Good points!

But it isn't just white collar jobs. What of the waiter at a restaurant? That's just one example of a host of service jobs that don't add much in the way of tangible value. They do, however, generate some sort of paycheck for a person.

What happens as the economy is stressed? As the jobs are eliminated, what do we do with the people? Camps? Nothing? Make-work and welfare?

I see no good answers, no easy answers. I do see some nasty problems.
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Re: U.S. Economy - a couple interesting numbers

Unread postby PenultimateManStanding » Thu 09 Nov 2006, 22:05:55

$this->bbcode_second_pass_quote('Jack', '
')I see no good answers, no easy answers. I do see some nasty problems.
your 'quick and ugly' notions resonate with me. I've compared it to a race car that has it's oilpan fall off. grinding flaming metal, total instananeous collapse. Who knows, Jack. Maybe it will be a long, slow and painful adjustment. We will just have to wait and see, won't we?
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Re: U.S. Economy - a couple interesting numbers

Unread postby mmasters » Fri 10 Nov 2006, 12:24:34

It would fall apart if it wasn't for the ever expanding support structure in place.

As I initially researched these things earlier in the year I feared for the worst. But as I researched deeper I noticed a lot of life support apparatus. Government authority to exempt SEC transparency; loopholes in the DTCC (naked buying and short selling); the central banks being able to run the economy off inflation; the PPP; how wall street is partially financed by laundered money; and all the collusion in general in corporate america.

It's a fragile beast to say the least.
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Re: U.S. Economy - a couple interesting numbers

Unread postby shady28 » Mon 13 Nov 2006, 01:34:24

$this->bbcode_second_pass_quote('Denny', '
')factory jobs are being eliminated for "international competitive" reasons, but so many white collar jobs stay on. But, most most white collar jobs do not add tangible value to people's lives.


Just keep in mind that the white collar jobs you are describing make a lot less than most blue collar trade workers make or made. You're talking about a lot of 8 - 12/hr jobs in clerical positions.
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