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By Barry Ritholtz via The Big Picture Blog Article
Manufacturing Returns to USA (Jobs Not So Much)
“Some takeaways from the article:
• Post-recession, U.S. manufacturing growth is outpacing other advanced nations;
• 500,000 manufacturing jobs created in the USA over the past three years;
• U.S. factories access to cheap energy, (oil and gas from the shale boom) means cheaper costs versus expensive overseas Oil and costly shipping prices. …
• New made-in-America economics is centered largely on cutting-edge technologies (3D printing, specialized metals, robotics and bioengineering);
• New US factories are “superautomated” and heavily roboticized; …
… looking only at factories misses some of the new jobs … Many of the jobs created are outside the factory floors — R&D, support services, software engineers, data scientists, user-experience designers, transportation & shipping, etc.
Perhaps this helps to explain why every $1 of manufacturing activity returns $1.48 to the economy.”
“Most of the information you need about your competitors already exists within your organization. …
- Your sales staff knows which competitors are the most aggressive, what solutions are being offered, what their marketing messages are, and whether they sell direct or through channels.
- Your purchasing managers know what supplies have been easier or harder recently to obtain because of demand from competition or supply variations.
- Your human resources people know which rivals are hiring and for which positions. They hear from candidates.
You’ll need to develop a “competitive information road map,” an outline of the information needed about your rivals and who might have the information. … Once you have interviewed each staff person, you will then know what information is lacking. Ask your customers, your suppliers or other knowledgeable people in your network to help you fill those gaps. …
You or someone in your firm should be collecting, analyzing and disseminating competitive intelligence on a continuing basis. …
You’ll make better decisions on the four Ps of marketing (product, pricing, placement and promotion) on existing products with the insight gleamed from your customers and about your competitors. And, your path to attractive future products will be much clearer.”
“The horrible shootings in Connecticut have set off another round of debates over the fundamental goals of a business – pitting financial gain against social responsibility. The core principles of lean … are very much built around the idea that the two are not mutually exclusive: The idea that the best way to make money for the stockholders is to take very good care of all of the stakeholders. …
The alternative is the traditional economic view – that labor (the employees) and capital (the stockholders) are engaged in a zero sum battle with each other – that one’s gain is the other’s loss; that relationships with both suppliers and customers should be adversarial – again a sort of zero sum approach that a nickel negotiated away from a supplier or a customer is a nickel gained for the stockholder …
The difference in views is very much a function of the time frame. The holistic, lean approach is a proven winner, but is a long term winner. Optimizing long term shareholder value often means sub-optimizing short term shareholder value. In publicly traded companies the long term view just isn’t in the cards. The costs of dumping an investment in one company and putting the money into another are just too low and the whole thing is structured to enable the trillions of dollars in the markets to lurch from one company to another in a continual quest for the best short term returns.”
“Calculated Risk runs a chart every month putting the current jobs recovery into perspective. “This shows the depth of the recent employment recession – worse than any other post-war recession – and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis,” writes Bill McBride of Calculated Risk.”
“Federal spending on entitlements and interest on the debt drives the federal budget crisis. Together the three major entitlements of Social Security, Medicare, and Medicaid (including Obamacare), as well as net interest, make up more than half of all spending in the federal budget today. Their share of the budget will grow to over two-thirds of all spending in 10 years. By 2025, the major entitlement programs and net interest together will eat up all tax revenues collected in that year.”
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”
— Joan Violet Robinson
“As we approach the ‘fiscal cliff’ of punitive taxation and draconian spending cuts it might be time to suggest that Congress consider that we change our National Emblem to the Ostrich. … a lack of leadership seems to indicate that neither political party has the will to find a totem to make the hard decisions that loom before us in either spending or taxation. So many politicians either seem confused or scared to the point of paralysis on this impending doom.
The results of the recent election are to blame, some say. The voters left in place a Republican House and a Democrat in the Presidency. … one in either party is stepping up to take a stand on the numbers game which we call the budget process …. The head in the sand mentality had taken hold of so many in Washington, so clearly the solution is to adopt the Ostrich as our national emblem. We can’t seem to face our fiscal problems at home nor our foreign problems of a nuclear Iran. We would rather pretend that none of these problems exist and just stick our heads in the sand. So it seems that the Ostrich is perfect for the new national emblem.”
By David Brooks in LBN E-Lert Article
“In 1980, about 30 percent of Americans received some form of government benefits. Today, as Nicholas Eberstadt of the American Enterprise Institute has pointed out, about 49 percent do.
In 1960, government transfers to individuals totaled $24 billion. By 2010, that total was 100 times as large. Even after adjusting for inflation, entitlement transfers to individuals have grown by more than 700 percent over the last 50 years. This spending surge, Eberstadt notes, has increased faster under Republican administrations than Democratic ones.”
“The storyline around America has taken a sudden, and to many, unexpected turn in the past couple months. Just two weeks ago, The Economist featured a cover with a shirtless Uncle Sam flexing with the words “Comeback Kid” above the muscle-bound American icon. This wasn’t your father’s Uncle Sam poster. This Uncle Sam had red, white, and blue pasties on its nipples. The new America seems to have an edge.
The message behind that Economist cover? America has managed to come out of the recession with a leaner, more powerful economy, and is quietly becoming an energy superpower on par with Saudi Arabia thanks to recent advancements in finding new oil and gas. Along with a revitalized energy future, America has begun paying down its debts, closing its trade gap, and was the first to clean up its banking system.”
By Washingtons Blog Article
Many Other Core Economic Figures Manipulated As Well
“[Bank of England executive] Paul Tucker told MPs that Barclays’ abuse of the Libor system may be only one part of the banks’ dishonesty over crucial financial information, suggesting that other markets should now be investigated. An official inquiry into Libor – which helps determine interest rates for householders and businesses – should be broadened to include several over markets where banks are trusted to report their own data, he said. …
The Libor scandal could be repeated in a number of other “self-certifying” markets where prices are determined, he said. “Self-certification is clearly open to abuse, so this could occur elsewhere,” he said. A Financial Services Authority inquiry into Libor should be extended to other self-certifying markets, he said. …
An expansion of the FSA review could take in a number of other interest-rate-related data as well as some complex financial instruments measuring the difference between banks’ borrowing costs and that of the US government. [i.e. the Ted spread]. Some markets in gold and oil are also based on self-certification.
“Political partisans have been having a whale of a time lately dissecting the stats on federal appropriations to figure out whether Barack Obama is a big spender who puts drunken sailors to shame or so tight with a dollar you need the Jaws of Life to pry one out of his hands.
The answer depends. He’s a big spender if you assign him sole responsibility for every dollar spent since the moment he took the keys to the Oval Office, and a tightwad if you agree that everything wrong in America is still George W. Bush’s fault. DeeCee is like that.
Meanwhile, here in Ramerica — the Rest of America, outside the Capital Beltway — the public ought to take note of a number that does not depend on partisan spin. Federal debt has risen to nearly 75 percent of total GDP. In 2008, it stood at just 40 percent of GDP.
That’s because for all the bickering between Democrats and Republicans, Washington is really a one-party town. It belongs to the pro-spending party. Tax revenue goes up and tax revenue goes down, but spending just keeps climbing. President Obama deserves plenty of blame for this, but he needn’t shoulder it all. There is more than enough to go around.”
“But do the rich get a pass on taxes? Not according to Mark J. Perry, who has crunched the numbers and produced this chart (below) showing that the top 400 taxpayers paid nearly as much in federal income taxes than the bottom 50% of income earners. Here’s Perry’s conclusion:
A small group of 400 of America’s most successful earners in 2009, about the number of residents living in a typical apartment building in Washington, D.C., paid almost as much in federal income taxes as the entire bottom half of America’s 138 million tax filers, which is a population equivalent to the combined number of residents living in America’s 29 least populated states, plus the District of Columbia. What makes this disparity possible is the fact that an estimated 47% of individual income tax returns filed in 2009 had a zero or negative tax liability.
And the chart:”
From Heritage.org Article
“In 2010, median family income was $51,360. If a typical family followed the federal government’s lead, it would spend $73,319 and put 30 cents of every dollar spent on a credit card. This family would have racked up $325,781 in credit card debt—like a mortgage, only without the house. What credit card company would continue lending money to this family?”
“The fancy phrase for spying on your industry is “competitive intelligence,” …. Here are 10 perfectly legal ways to conduct online “espionage.”
1. Educate yourself about Google scholar. Instead of just searching on Google (GOOG) and getting all the crud the Internet has to offer, refine your search. Start with Google Scholar, which provides a simple way to broadly search for scholarly literature. …
2. Go where the writers go. Check out the reference links at the Writer’s Guild of America website. …
3. Get to know university librarians. … I recommend starting your search for trade magazine articles with RDS/Business & Industry, Lexis-Nexis Academic Universe and Dow-Jones Interactive. …
4. Run a background check. KnowX.com reports on bankruptcies, liens, judgments, and other legal matters regarding both individuals and businesses.
6. See your analyst. … Here are some of the best places to go: GartnerGroup, Yankee Group, Meta Group, IDG, Forrester Research, Jupiter Communications, Dataquest, and EStats.com
7. Shop the competition. Do you know what a mystery shopper is? That’s someone who is hired to pretend to shop at a store to monitor the customer’s experience. If possible, try to do the same. If practical, actually buy something.
8. You have my permission. Does the competitive company have a permission-marketing opt-in email invitation on its website? By all means, give them your email to see what you will receive.
10. Take stock of the competition. One of best websites for gathering competitive intelligence on public companies is Hoover’s Online, which for a fee … Don’t forget the free stuff at Yahoo! Finance ….
… There is nothing illegal or unethical about using the Internet to learn as much as possible about your industry, your competitors, and even your prospects.”
“The AFL-CIO has launched its annualPayWatch data, revealing that the ratio of the averageS&P 500 CEO pay package to that of the typical worker has once again risen; it’s now an eye-popping 380-to-1. This ratio was just 42-to-1 in 1980.
The average annual CEO pay of companies in the index was $12.94 million in 2011, rising by 13.9% and following a 22.8% increase in CEO pay in 2010. While chief executive pay has become more lucrative, regular Joes’ and Josephines’ incomes haven’t seen similar results. Last year, average worker wages grew by a paltry 2.8% to an average $34,053.
The AFL-CIO was wise to point out that many American investors haven’t necessarily experienced a great windfall either. The S&P index ended 2011 flat. …
In 2007, Whole Foods Market‘s (Nasdaq: WFM ) John Mackey announced he would relinquish pay, stating, “I no longer want to work for money.” He went on to say, “The tremendous success of Whole Foods Market has provided me with far more money than I ever dreamed I’d have and far more than is necessary for either my financial security or personal happiness. … I am now 53 years old and I have reached a place in my life where I no longer want to work for money, but simply for the joy of the work itself and to better answer the call to service that I feel so clearly in my own heart.”
Even prior to that decision, Mackey’s compensation was reasonable in a world where many CEOs made millions every year. Whole Foods Market currently has a pay cap onexecutive compensation; executives can’t exceed 19 times the average worker’s total pay at the grocer.”
By Chris Isidore Article
“On Sunday, the United States gets a distinction no nation wants — the world’s highest corporate tax rate. Japan, which currently has the highest rate in the world — a 39.8% rate on business income between national and local taxes — cuts its rate to 36.8% as of April 1. The U.S. rate stands at 39.2% when both federal and state rates are included. …
But despite the headline number, the statutory rate only tells part of the story. Loopholes and other special treatment for different kinds of businesses mean that businesses pay an effective rate of only 29.2% of their income, which puts the United States below the average of 31.9% among other major economies, according to analysis by the Treasury Department.
… both Democrats and Republicans argue that the corporate tax rate should be lowered as a way of promoting greater economic growth, so that multinational companies have incentive to invest more in their U.S. operations than overseas. President Obama has proposed cutting the corporate rate to 28%, Republican challenger Mitt Romney proposes a 25% rate.”
By Thomas Freidman Article
“David Rothkopf, the chief executive and editor-at-large of Foreign Policy magazine, has a smart new book out, entitled “Power, Inc.,” about the epic rivalry between big business and government that captures, in many ways, what the 2012 election should be about — and it’s not “contraception,” although the word does begin with a “C.” It’s the future of “capitalism” and whether it will be shaped in America or somewhere else.
Rothkopf argues that while for much of the 20th century the great struggle on the world stage was between capitalism and communism, which capitalism won, the great struggle in the 21st century will be about whichversion of capitalism will win, which one will prove the most effective at generating growth and become the most emulated.
“Will it be Beijing’s capitalism with Chinese characteristics?” asks Rothkopf. “Will it be the democratic development capitalism of India and Brazil? Will it be entrepreneurial small-state capitalism of Singapore and Israel? Will it be European safety-net capitalism? Or will it be American capitalism?” It is an intriguing question, which raises another: What is American capitalism today, and what will enable it to thrive in the 21st century?”
By Jamie Notter Article
“Stiglitz pointed out that the depression was a result of a huge shift in our economy, from agriculture to manufacturing. We HAD to have that depression to deal with the fact that our large portion of our workforce was focused on doing something (farming) that wasn’t going to make money and be sustainable like it used to be. We needed to shift into a phase where farming was much smaller and manufacturing was much bigger. You don’t do that by retraining people over a two year period. You need a structural adjustment. Stiglitz argues that the banks failing, etc. was a RESULT of this shift, not a CAUSE of the depression.
So today we might be in a similar boat. This is the time where we finally have to shift AWAY from the manufacturing economy. Stiglitz says it will be towards a service economy, but Denning suggests it will actually be a “creative” economy.
The Creative Economy is one in which both manufacturing and services play a role. It is an economy in which the driving force is innovation. It is an economy in which organizations are nimble and agile and continually offering new value to customers and delivering it sooner. The Creative Economy is an economy in which firms focus not on short-term financial returns but rather on creating long-term customer value based on trust.
Innovation, nimble, continually offering new value, trust…sound familiar? This is what we talk about in Humanize. We hadn’t thought about it in terms of preparing companies for an entirely new economy, but hey, if that what it takes, we’re game! Denning talks about that:
Most large firms of today are ill-equipped to compete in the emerging Creative Economy, in which globalization and the shift in power in the marketplace from seller to buyer have put the customer in charge. Most big firms still have a factory mindset oriented to economies of scale. They are focused principally on maximizing short-term shareholder value. They are not organized for continuous innovation. This way of managing is unable to mobilize the full creative talents of their employees.”
“Apple is disproportionately impacting indices and earnings data, skewing the picture of what is actually occurring.
“While most U.S. companies have struggled to meet earnings expectations, the Cupertino, Calif.-based maker of iPads and iPhones has surpassed even the most bullish of expectations, reporting $13.1 billion in profits during the fiscal 2012 first quarter that ended Dec. 31, more than double that of a year earlier. Revenue soared 73% to $46.3 billion. Those earnings account for about 6% of the S&P 500′s fourth-quarter earnings, according to S&P Indices, making Apple the biggest earnings contributor to the S&P 500.”
I have jokingly told people recently that there are 4 asset classes: Stocks, Bonds, Commodities & Apple.”