82CardsGrad

This link provides a high-quality summation of what is at hand, and what lies ahead... Some of which you have referenced Conrad, some of which I have posted... Again our positions have been staked - we'll see...

http://www.frontlinethoughts.com/index.asp

Russ Smith

I'm saying a lot of companies at least in Silicon Valley started massive cutting to try and reach profitability. The easiest way is layoffs, so they then had to scale back research which means no innovation. The problem is everyone did the same thing, off shoring and layoffs. So company A did it and cut prices, adn then all their competitors did it and cut their prices as well. Many of their customers are foreign so they got the widget cheaper from the price war.

Meanwhile the US company came out in the same boat the price is lower the cost is lower so their margins and profits stayed the same. But now most of their workforce is in Bangalore.

We're seeing secondary layoffs now in the Bay area because costs have risen so substantially in Bangalore that and since most of their Rd&D is now there, they are cutting people again in the US to cut their cost structure.

In theory globalization can be a good thing but right now we're on the short end of the stick.

__________________
"This space available"

Rats

You have to count me as one of the people that "think its that bad" also. If anyone has not protected there portfolios and prepared for a very nasty downturn in the markets then it is to late and they have not been paying attention. There is no way out of the OTC derivitive mess that Wall St. has perpetrated on businesses, municipalities, and investors. The losses will be staggering. So far we are having the losses from Subprime, next the Prime option arm mortgages will reset and we will have more downward pressure on the financials. More states will have huge shortfalls. We are literally at the tipping point on the equity markets. Only at the beginning of the huge down swing. The shoe to fall first is the one falling now. The Insurers that guarenteed against mortgage defaults are insolvent and can't cover. There are 1 or 2 major banks near insolvency and CFC today had to hault stocktrading so they could deny they were bankrupt(which they are and Conrad and I called it back in Sept.) Things can not be repaired with out a deflationary reset. How far down that is really the only debate IMO.

__________________
Pain heals, chicks dig scars and glory lasts forever. In the 4th qt fast guys are slower but Big guys are still BIG.

conraddobler

Yep

__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.

~Abraham Lincoln Lyceum Address

conraddobler

Globalization was never in our interests, it's just not.

It's in the interest of the people who own and run major corporations that used to be soley based here but are now just global organizations that make money.

Middle America was sold to the highest bidder, when you unleash our tactics and production technologies on the whole world, our standards of living will increase at first because we are showing the way, but then the world will cut the cord and release us as used up consumptively dried out baggage.

Eventually the world will stablilize at a new level and we'll be thrown into that mix to compete with people from China and India to produce products, and my children will never see the same standard of living as I did, nor will their children. There is evidence now of massive fraud and massive cutthroat competition comming out of China and India, massive losses covered over by paper gains in the stock market, accounting rules allowing business to count their stock gains as income, in other words massive games that are now blowing tires right and left.

Globalization means that hungry guy in India is going to go head to head with your kid for a job in the new world order, if you're kid isn't a whole bunch better, their wages are going to be set by said hungry guys willingness to work and your kid is fighting an uphill battle.

They individually may due to skills or talents that are in demand but the vast majority of our population that did manual labor is in fact totally screwed.

They're also screwed in terms of lacking education at high enough levels on the average to compete.

This is the legacy we've been sold, our competitive advantage was sold out for profit.

We all benefited from the buying power of our middle class, if you sink them into service related servitude you have to pay for those services out of a diminishing productive pool that can't sustain it.

Our trade deficit, our debt policy, our private debt all of this gave the illusion that nothing had changed, jig is up, piper is at the door, bill's here folks.

Now for those not wanting the unvarnished truth stop here, for those who want the illusion this won't have a personal effect because I work for the government, my job is safe, you might just want to cease reading right here.

You are target number one, you are paid for out of the productive taxes of a decreasing base of people, you work for an organization that through the fault of us all, has grown to epic proportions to the point where more people work for some form of government than don't.

When the private sector lie is exposed, stuff like California's shortfall is going to become an epidemic, a wildfire of tax shortfalls, our government already drowning in debt can't print more money to pay you because if they do we'll all be paying 20$ a gallon for gas, they can't increase taxes or we'll all go broke paying them, and they can't borrow anymore because we frankly have reached the end game on more borrowing.

We're all about to live in what's called financial reality, a place where your want's and desires don't count for squat, where what you want has to be matched with what you earn.

We have lived our whole existence funding government by the productive efforts of the private sector, but somewhere sometime the public eclipsed the private and that's when debt ramped up, it gave the illusion of stability, you didn't notice police, or firefighters or public services going bye bye cause we borrowed to pay them, well if you can't borrow, you can't print and the private sector can't pay as they go what do you think comes next?

Debt is about to get real tough to come by, so much so it's likely not an option unless you already have the cash to pay it back, and at that point what is the point?

Your house isn't an option to borrow anymore, cash is but again that's self defeating.

So you're about to live the life of a bankrupt society, cash only, pay as you go, oh boy that's going to suck wind for a lot of people.

Including people who aren't really worried right now, people paid by government which is funded by debt, which won't be funded that way much longer, trust me.

__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.

~Abraham Lincoln Lyceum Address

GreenCard

You guys are telling us some bad stuff but nothing we can do to help ourselves but removing sharp objects and bending far over to kiss our ass goodbye.

conraddobler

Don't spend more than you make and have as little debt as possible.

Otherwise your plan is fine.

__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.

~Abraham Lincoln Lyceum Address

lvgentleman

Count me in as one of the "it's that bad" crowd. All I'd add to the above is our spending, our inability to properly account for our actual debts (we use a different system for accounting for the government), and the upcoming tidal wave of retirees.

We need to cut way back on the spending - now. There's no more money to spend, and the rest of the world is starting to recognize that (hence the falling dollar). It's only going to get worse before it gets better.

__________________
LET'S DO THIS!

Odi profanum vulgus et arceo.

Russ Smith

In the past month I've had a friend, a family member and another friend all survive layoffs where they work. The first 2 at marvell, the last at Credence.

In both cases the companies cite this or that for the layoff but all 3 people are in a position to know that a large part of the reason was offshoring.
Like everyone else they cut costs, at first they were paying 1/5th the salary in Bangalore to the Bay area so that was a nice savings. ALl the pricing got restructured to account for their new costs so their prices came down through labor cost not innovation, economies of scale etc.

Well they were paying 20 cents on the dollar in bangalore they're now paying 60 to 65 cents on the dollar there because labor costs have exploded there with people jumping job to job and Indian companies coming in and competing etc. Now the US companies have a problem they lowered their prices based on payroll and now their payroll is going back up. They either cut their costs, raise their prices, or reduce their profit margins.

So both companies had large layoffs recently to cut costs. Marvell had other reasons they did a bunch of acquisitions and were a bit bloated, but in both cases they had what I'm calling a secondary layoff in part due to offshoring and globalization.

My own company is in a similar situation we just haven't pulled the trigger on the layoff yet. I know 2 other people sitting in the same situation for the same reason not yet announced at other companies.

I had a commercial real estate broker tell me the same thing on Monday, we're not seeing the pickup we expected and the main reason is a lot of the companies we thought would be expanding and leasing new space are actually laying off and contracting to cut costs.

It'll eventually turn right now the big hope locally(Bay Area) is things like Solar, there's a bunch of solar startups here and also biotech but semiconductor here is in a huge slump because of the price wars from globalizing too quickly.

note, I'm not in the blame Bush for this camp but I do think things are a mess right now and since he's in charge he has to take some of the blame.

__________________
"This space available"

dreamcastrocks

Yeah, you know what I meant.

Live for today, not for tomorrow. Love it. Who needs to live responsibility? Getting into debt is the American way.

ajcardfan

I think we're all going to die. And, whatever money we have, we won't be able to take with us.

__________________
We live in a world which is full of misery and ignorance, and the plain duty of each and all of us is to try to make the little corner he can influence somewhat less miserable and somewhat less ignorant than it was before he entered it.

T.H. Huxley

conraddobler

82 likes to talk smack about how great we are, and I agree actually.

I'm sure we all have some experience with how superior things can be and still are here in many ways.

I've done a fair amount of traveling and I also have had to endure working with departments based overseas, it's a nightmare and often times you'd like to stuff the cost savings up someone's rear regions.

However what we really have done is close the gap between us and them, we've shown them how in hundreds of different ways how we operate.

They aren't stupid, they're watching, if we'd have had someone representing the people in congress they would have said look, maybe world trade is good, and maybe we do want to grow these markets but we've got a COMPETITIVE advantage here and if we sew the seeds of globalization, we're really creating our next competitors.


The problem is no one represents us up there and they don't really care.


I have heard about a lot of what you are talking about, or more specifically read about tech and it's particular wage trap that it's sprung on itself.

The real economy isn't healthy enough to afford goods like it was when debt was free flowing, at the same time the debt that came before flung so much money into emerging markets now there is inflation running rampant over there, we exported our inflation to them and now it's comming home to roost but we have no pricing power due to the weak economy, all that's left to squeeze is costs and profits and the last thing to go is profits so costs equal people here.

It's a real bear trap and it's only one example of the negative feedback loops that are strung around everywhere.

It's no accident Greenspan used to marvel at all the positive feedback going on and smile, we had rough patches but we were in the early glow of all the postive effects of our actions all of which are now unleashing monsters we made during the good times.

Once you read enough on this you see that we've created the perfect storm, it may not be swift but it will be huge and brutal.

__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.

~Abraham Lincoln Lyceum Address

conraddobler

Oh you should die spending your last $ on a great hooker, unless your wife is still alive.

Anyhow, living with no money is the bigger issue, when you're dead who cares.

__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.

~Abraham Lincoln Lyceum Address

82CardsGrad

I don't characterize demonstrating confidence and faith in MY country as "smack" Conrad... and neither should you...
I believe I have shown you a fair amount of appreciation and understanding of your position and the often times exaggerated facts you present. Often times I agree to a point with your positions. Yet, I refuse to stake the doom of ALL doom positions that you continue to push.

Above, you use the term "they" and now claim that "we" have taught "they" our ways... Really? Do you really believe such nonsense?

"They" most certainly did NOT need "we" to teach them a damm thing. In fact, if you really understood business, you would know that "we" have learned just as much from "they" over the recent decades... It was the Japanese that spurred our focus on process wasn't it??

America remains by a HUGE margin, the largest consuming nation on the planet. So much so that even though China and India dwarf our population, it will take them several decades, perhaps more, before they even approach the rate of pure consumer-related consumption of the U.S. There are demographic shifts at play that of course are uncontrollable. America is looking at the largest & wealthiest generation walking the planet (Baby Boomers), beginning to exit the workforce and retire (or at least begin their version of retirement...). What this will mean to America in terms of employment opportunities, the way in which companies morph themselves in order to deal with this dramatic shift, and ultimately on consumption is yet to be seen... But it hardly suggests the sort of doom and gloom you continue to push...

The world is indeed FLAT Conrad. That is a reality and America did not create that condition. We accepted it... Now, as globalization itself forges ahead, shifts and matures - we will continue to see periods where companies harness the inherent power, and thereby produce healthy performances, growth and success, and periods where dynamics dictate shifts and turns that might not feel as well to companies and employees.
Russ makes some solid points in that the cost differentials are growing tighter. Particularly in India, where that workforce is quickly wising up and demanding higher wages - with their demands being met more often than not. This is a GOOD thing. The attractive nature associated with India is not so attractive any longer. Additionally, the fact that more and more of India's population is moving up the economic ladder is also a GOOD thing. More consumers are being born every day in India! More people to buy our goods and services!!
As for China, they remain a country that is nearly impossible to do business in for the average American company. Too costly. Too bueracratic... As a country, they are only slowly (more slowly than India) shifting from a country that saves to a country that spends.

Globalization was and is inevitable Conrad. The "competitive advantage" America has always enjoyed is not only found within our people, but in our way of life, the way we are governed, the freedom we as people and as an economy have been able to enjoy while the rest of the world wallowed in state-controlled environments...
Do you really believe that Americans are smarter, or somehow more intelligent than the rest of the world? Of course not... Global competition was inevitable. As a country, our mission is to do all we can to ensure our culture and our economy remain as free and open as ever. Why is it that for GM and Ford, their profit per car sold outside the U.S. dwarfs that of cars sold in America? Is that the "fault" of "we"?? I think you're smarter than that...

conraddobler

http://video.google.com/videoplay?do...35365191428174

That is the first video from the BBC on the century of the self, 4 parts, it's not at all about boomers, although I think they are the first generation to be so completely raised on consumerisim mostly through TV.

Boomers are the most self indulgent force the planet has or will likely ever see, me me me me.

It's 4 hours long, not expecting you to watch it but if you did you'd see exactly how things have gotten where they are now.

Unleashing this force on the world, and we did invent it btw, modern consumerisim is all us baby.

It's a plauge of mankind is what it is, and it will ruin civilization and destroy what's left of America as people shed rights in supposed self interest by the buckets.

I disagree with you totally.

America hasn't been what you're talking about in a long long time, what it is, is a shadow of it's own principles, the truth hurts.

__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.

~Abraham Lincoln Lyceum Address