The economic impact of the current Exodus from the United States.

[SouthAmerica]

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Cesko: And result of this common sense in Brazil. War between gangs and police for control of the communities.


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April 7, 2008

SouthAmerica: Here we go again.

This thread is to discuss the economic impact that the exodus of immigrants, legal and illegal are going to have on the price of real estate in many areas around the country.

Let me spell out for you.

This exodus that we are talking about it will make the recession much deeper in the United States or most likely the real estate market downturn can help tip the US economy into a new Great Depression as the real estate market keeps imploding slowly.

This new situation it is not business as usual and most people have not recognized that as yet. A major force that has been pushing the price of real estate up for a long time not only is not there anymore, but it is putting further pressures on the price of real estate on the way down and helping the implosion even further.

How hard this simple fact is for people to grasp it?

By the way, today the United States has over 2 million criminal gang members and these gangs are spreading all over the US to distribute their illegal drugs and so on… and many of these gang members might be your neighbor in any city around the country.

Today there are more criminal gang members in the United States than police trying to catch them – there are only 1.8 million policemen in the US trying to protect you and your family.

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[TraderZones]

Quote from southamerica:

You said: “NOW HOW ABOUT A COMPARISON OF THE AMERICAN AND BRAZILIAN ECONOMIES:”

GDP % growth

Year 2007

Brazil = 5.4 %

US = minimum

US economy $13.5 trillion GDP for 300M people
Brazil economy $1.8 trillion for 200M people

You think 5% is impressive? You have barely started climbing out of the trash heap


Estimated % growth (implosion)

Year 2008
Brazil = 5 %
US = (implosion)

Good thing Brazil has never had a slump. Wait, actually they did, for a very long time

*****
Unemployment

US = 5.1%

Note: Plus over 5 million people who can’t find a job, but are classified as “discouraged workers.”

Real US unemployment adjusted for discouraged workers.

US = 10.0%

Brazil = 9.6%

You are a real crackhead if you think Brazil reports differently than the rest of the world.

But keep smoking the weed. You might accidentally say something useful...

Despite these figures, the economy cannot be considered developed. Although the economic changes since 1947 greatly raised the country's per capita income, in 1995 was still only US$4,630. Growth and structural change have not altered significantly Brazil's extremely unequal distribution of wealth, income, and opportunity. Despite impressive increments in economic growth and output, the number of poor has risen sharply. Most of the poor are concentrated in the rural areas of Brazil's Northeast Region, or in the country's large cities or metropolitan areas. The economic and political troubles of the 1980s and early 1990s have only complicated the task of correcting the country's development pattern.

 

[SouthAmerica]

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TraderZones: Unemployment

US = 5.1%

Note: Plus over 5 million people who can’t find a job, but are classified as “discouraged workers.”

Real US unemployment adjusted for discouraged workers.

US = 10.0%

Brazil = 9.6%

You are a real crackhead if you think Brazil reports differently than the rest of the world.

But keep smoking the weed. You might accidentally say something useful...


*****


April 7, 2008

SouthAmerica: I heard in the last week a number of economists saying that the United States is not heading for a New Great Depression and one of the first things that they mentioned to back up their position is the number of unemployed people during the Great Depression. They say that the unemployment figures reached the level of between 20 and 25 percent of the US labor force in the 1930’s.

The problem with these people is that they are not connecting the dots and they are not taking a closer look to the real data. They are not taking a lot of information into account and they accept the meaningless unemployment rate figures published by the US Labor Department.

Data from the US Labor Department shows that the current unemployment rate in the US is 5.1 percent. But if you make some rational adjustments to the unemployment rate as reported by the US Labor Department, you get a complete different picture.

The US Labor Department keeps unemployment rates low at around 5 to 6 percent range using a Mickey Mouse system of reporting. It is very easy – just create a new category for “Discouraged Workers” and you dump in that category any adjustments necessary to achieve the desired fictitious unemployment rate.

Since George W. Bush became president almost 7 years ago – about 5 million people from age group 44 to 57 disappeared from the US work force (most of them with advanced degrees) – you can find them during the week playing with their laptops and cell phones, and looking busy at Starbucks, Borders, Barnes and Noble and so on all around the country. (This trend reflects a real waste of talent and practical experiences going on in the US today).

Another large group – probably in the millions – decided to call themselves consultants (because of various reasons including their age, pride, and so on). Others even though they still reasonable young (on their 50’s) decided to qualify themselves as retired.

Another very large group of approximately 4 million mostly unemployed people are hiding on the disability figures. In the first 3 years of the Bush administration the number of people who started receiving disability benefits went through the roof; they increased from 1.5 million people to 5.5 million people over a period of 3 years before the Bush administration realized what was happening, since then they closed that door even to the people who are really disabled.

But for all practical purposes we know that there are about 4 million people who would be working if there were jobs on the economy who are hiding on the disability figures.

If we make further adjustments for at least 1.5 million people who are in the prison system in the US, and for the over 10 million people who are underemployed or call themselves consultants or decided to further their education because they could not find a job, then a more realistic picture appears of the unemployment rate in the United States, with the actual unemployment rate that would be approaching very fast the 20 percent unemployment rate.

Let’s see if after connecting the dots we get a better picture of what is really happening inside the US labor market.

The latest fictitious unemployment rate reported by the US Labor Department was 5.1 percent.

Then after you make some adjustments such as:

Discouraged Workers = at least 5 million people

Hiding on the disability statistics = 4 million people

Americans that are in prison because of lack of opportunities = 1.5 million people

Americans who are underemployed or decided to further their education because they can’t find a job = 10 million people


There was an official measure of 7.7 million unemployed in the U.S. as of March 2008 after we adjust for the above extra 20.5 million people not included on the US government data then the adjusted number of unemployed people in the United States is 28 million people and the actual unemployment rate is around 19 percent as of March 2008.

Sorry, if I forgot to include on the above information some of the new creative ways the US government uses to fudge the unemployment rate numbers and keep the unemployment as low as the US government can get away with.


*****


March 2008

Actual unemployment rates after some rational adjustments:

United States = 19.0%

Brazil = 9.6%


*****


More info about the United States government hospitality business:

The number of people in prison in the United States also continues to grow year after year and in the near future the United States will have over 2.5 million inmates in Federal, State, and local prisons.

If the United States were not using its prison system as a source of creating new jobs – if the United States had only the number of prisoners consistent with the historical growth of the population then the US probably would have not more than 500 thousand people in prison today.

As of the end of 1997 the hospitality business of the United States government included 125 Federal Prisons, 1375 State Prisons and 3300 municipal, county and local jails, but that was when the total number of people incarcerated in the U.S. prison and jail system which was estimated to be 1,800,000 people as of the end of 1997.

But since the end of 1997 the prison population has increased by 23 percent and many more prisons have been built in the United States in the last 10 years and billions and billions of US taxpayer money have been invested on the future of the US economy.

In the decade 2000 to 2010 the U.S. government should expend a minimum of $ 100 billion dollars, (1998 dollar value) to accommodate their new guests in the prison system. (This $100 billion dollar expenditure assumes that the inmate population will increase to only 2.5 million inmates by the end of year 2010 if the number of inmates goes higher then the number of prisons should increase accordingly)

The annual expenditures for the United States criminal justice system it has three major components: Police, judicial and corrections as follows:

Year 2002 (in Billions of US dollars)

POLICE = $ 82.9
JUDICIAL = $ 58.8
CORRECTIONS = $ 67.5
TOTAL = $ 209.2

I don’t have the time to check the latest data from the U.S. Department of Justice - Bureau of Justice Statistics – But you can bet that in 2008 the total it is over the US$ 500 billion for the year since the number of inmates has increased since 2002.

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[SouthAmerica]

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April 8, 2008

SouthAmerica: Here is some food for thought.


Brazil:

Population: 190,010,647 people

Age structure: 65 years and over: 6.3% (male 4,880,562/female 7,002,217) (2007 est.)

Labor force: 99.47 million (2007 est.)

GDP (purchasing power parity): $1.838 trillion (2007 est.)

Brazilian Government Budget:
revenues: $244 billion
expenditures: $219.9 billion (FY07 est.)


Brazil Net Public Sector Debt % of GDP

2008 = 41 % = (US$ 530 billion)

2009 = 40 % = (US$ 540 billion)

2010 = 38 % = (US$ 530 billion)

Source: Brazilian Central Bank 3/28/08

Central Bank reserves + private reserves are US$ 18.8 billion higher than public and private external debt (US$ 194 billion). Brazil is a net external creditor since January 2008.



*****


United States:

Population: 301,139,947 (July 2007 est.)

Age structure: 65 years and over: 12.6% (male 15,858,477/female 21,991,195) (2007 est.)

Labor force: 153.1 million (includes unemployed) (2007 est.)

GDP (purchasing power parity): $13.86 trillion (2007 est.)

United States Government Budget:

revenues: $2.568 trillion
expenditures: $2.731 trillion (2007 est.)

US government cumulative outstanding debt:

The United States has $ 9.5 trillion of cumulative outstanding debt plus another $ 2 trillion in outstanding debt by the states – and the federal government has another $ 70 trillion in liabilities that are coming due regarding the baby boom generation.

For all practical purposes the US government is insolvent and bankrupt.


*****


Summary:

Cumulative government outstanding debt:

United States = US$ 9.5 trillion

Brazil = US$ 530 billion


Age structure:

Brazil = 65 years and over: 6.3% of the population equal to 11,882,779 people (male 4,880,562/female 7,002,217) (2007 est.)

United States = 65 years and over: 12.6% of the population equal to 37,849,672 people (male 15,858,477/female 21,991,195) (2007 est.)

That is what was going on in 2007 just wait and see what these numbers are going to look like in another 10 years when the baby boom generation has exploded in the US and it will be costing a fortune for the United States government.

By the end of 2018 the US economy will be carrying the weight of at least 59 million people age 65 years and older.

Basically the US economy it will be based on the nursing home industry and taking care of old folks.

The only consolation for Americans is that by 2018 the Chinese are the owners of the United States and the US government will be indebt to the Chinese to the tune of US$ 5 trillion dollars - and it will be China’s problem how to fund nursing home America.

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[limitdown]

Quote from southamerica:

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You guys on Wall Street have to thank Ben Bernanke to place a floor on your losses.

Maybe you guys in Wall Street can start commemorating St. Bernanke Day to commemorate – the patron saint whom bailout bad and bankrupt businesses and reward mediocrity.


*****

I guess some attempt at an answer is better than no answer at all. There are such huge gaps in the logic, that I will skip over these and ascribe good intent to your overall objective and theme.

On a number of other threads, the same point regarding the overall dishonesty in packaging subprime loans priced and indexed using the Libor (perhaps titled the london bank overnight rate) instead of US Treasuries, because they were targeting overseas buyers intentionally and planning on dumping all that trash on unsuspecting buyers in other countries.

On a number of other threads, the well documented notion of positive (inbound) immigration has on revitializing depressed areas of the US economy and home base has always been used in past years. It is a known fact regarding negative (outbound) immigration and its opposite affect upon the local economy, businesses, real estate and on the region.

One important thing is there really is no Wall Street! There really are no singular entities where traders, financiers or bankers get together and set policy and work together. What you're in reference to is what things look like from a significant distance from Wall Street. Up close and in the pits, as it were you would clearly see all the distinct and seperate and opposed entities, bankers, financiers and traders. There really is no "we".

Perhaps seeing those distinct lines, seperate issues, or seperate camps will help you to target better, your concerns and perhaps get the response that you seek, perhaps not.

 

[SouthAmerica]

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SouthAmerica: Most people know what I mean when I say Wall Street.

The term "Wall Street" represent the financial system of the United States.

I wonder how many billions of US dollars were lost on the stock market because Ben Bernanke did interfered with the normal market swings.

How many people lost money when they sold short some stock or bought a put in the expectation that the bottom was ready to fall off the market - and these people expected to make a killing when the market went down.

Then Ben Bernanke placed a floor on the market and he also opened the Feds wallet for this major Wall Street bailout.

And suddenly the market goes the other way because of this US government market intervention and because of Bernanke's actions I am sure that many short sellers on Wall Street lost their shirt.

Maybe the short sellers also can get a refund of their losses from the Fed.

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[limitdown]

Quote from southamerica:

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SouthAmerica: Most people know what I mean when I say Wall Street.

The term "Wall Street" represent the financial system of the United States.

I wonder how many billions of US dollars were lost on the stock market because Ben Bernanke did interfered with the normal market swings.

How many people lost money when they sold short some stock or bought a put in the expectation that the bottom was ready to fall off the market - and these people expected to make a killing when the market went down.

Then Ben Bernanke placed a floor on the market and he also opened the Feds wallet for this major Wall Street bailout.

And suddenly the market goes the other way because of this US government market intervention and because of Bernanke's actions I am sure that many short sellers on Wall Street lost their shirt.

Maybe the short sellers also can get a refund of their losses from the Fed.

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again,

in broad strokes, those comments and concerns are true, however, one would be very hard pressed to find an actual person that lost large,

individual traders in stocks are usually investors and willing and usually do hold stocks long term, so the discomfort of loss with a downward movement due to news (like described) is expected. they usually hold for dividends or overall appreciation, generally over 6 month - 12 month periods....

professional traders (whether mutual funds, hedge funds, group traders etc.) generally can withstand the ups and downs that occur due to news events, just like they are willing to withstand a windfall from an unexpected positive move in their direction (whether short and the stock drops, or long and the stock rallies).

oh, those billions of dollars just shifted between accounts, again in general and in broad strokes. should a hedge, mutual or etf fund loose then their opposite side of the trade, hence hedge (usually an opposite position is taken in futures, options, index options, equity options or otherwise) carries them through to a blended or moderated loss / gain. again, unless you or I are employed by these funds and getting both an exhorbatent salary and bonus, then who cares! indeed, who cares!, let them all loose and you and I gain!

The Federal Reserve, and the US Treasury exist to keep the US financial system in business. They acted in their job role and authority, and will act in similar or otherwise similar ways in the future, yet again. It is reassuring that there is and are some back stops to ultimate collapse. Other national governments are patterned the same off ours and other European models (like Britain and Switzerland). There is no problem with them acting to preserve the viability of the American way of life. Even Brazil has similar procedures, just perhaps not as pronounce as in the US.

again, your premise needs refinement and clarification and a more specific range so that it achieves the desired effect you intended. ever have your professor say that about your thesis just before graduating?

 

[Capablanca]

Quote from southamerica:

In 2003, Jack Lessinger published an article: “Another Great Depression?” and he said the following on that article:

Another Great Depression?
By: Jack Lessinger

The economy is drifting into uncharted and dangerous seas. In Japan, second largest economy in the world, an epidemic of deflation is already well advanced. In America, except for energy and the imponderables of the Iraq War, deflation is beginning to curtail profits, investments and employment.

Like many other respected economists, Paul Krugman sees little threat. Krugman's solution for deflation is simple: Print carloads of money. In the ensuing inflation, loans would be repaid with cheaper dollars. Increased borrowing and spending would revive the economy. Ben S. Bernanke, newest member of the Federal Reserve Board of Governors, has suggested much the same solution in the event of a full-fledged U.S. deflation.

The Krugman-Bernanke scheme is perfectly consistent with accepted economic doctrine. But it is hopelessly naïve. My research on complex interactions between the society and economy of the U.S. since 1790 suggests that deflation and inflation cannot be toggled by clicking on an economic switch. Price levels depend on social variables as well as economic. (Schizomania, 2003.)

Some interesting ideas in that article but Lessinger does take liberties with his analysis. Krugman devised his solution specifically for the Japanese problem. Japan being largely a nation of savers was in a deflation spiral. Something seemed necesssary to entice Japanese to spend. A policy of monetary devaluation brought about by negative real interest rates was the solution offered by economic theory even if it ran counter to central banks' usual instincts to be wary of inflation. Contrary to Lessinger's account there was deep suspicion of the proposed solution. If we are to look at the results over the last few years, however, the Japanese economy if not as dynamic as it was wasn't in as moribund a condition as it was previously either. What would Lessinger's advice for Japan have been? Save more?

Bernanke on the other hand is dealing with a populace that is maxed out as it is. What solutions are there? Lessinger's advice is more applicable even if too little too late.

 

[SouthAmerica]

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Limitdown: again, your premise needs refinement and clarification and a more specific range so that it achieves the desired effect you intended. ever have your professor say that about your thesis just before graduating?


*****


April 8, 2008

SouthAmerica: No, not a single professor ever told me that. I used to be a straight A student.

I think outside of the box, and for people who are inside of the box and know all the boundaries around them, my way of thinking would seem very foreign to them.


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Limitdown: oh, those billions of dollars just shifted between accounts, again in general and in broad strokes. should a hedge, mutual or etf fund loose then their opposite side of the trade, hence hedge (usually an opposite position is taken in futures, options, index options, equity options or otherwise) carries them through to a blended or moderated loss / gain. again, unless you or I are employed by these funds and getting both an exhorbatent salary and bonus, then who cares! indeed, who cares!, let them all loose and you and I gain!


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SouthAmerica: If Ben Bernanke had not interfered with the market then the Dow probably would be down at least another 2,000 points, even though trillions of US dollars would had evaporated from the system in that case - but as you said they just shifted between accounts and everybody would have been happy. And the Wall Street players and main street have nothing to worry about.


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Limitdown: It is reassuring that there is and are some back stops to ultimate collapse.


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SouthAmerica: That means that all that you described above it does not work in real practice, since Ben Bernanke and the US government had to jump in with major intervention to stop the system from ultimate collapse.

Why the US government wants to save a system that it is completely broke?

Why stop the collapse by artificial means (by just placing a band aid on the system) instead of watching the system find its own support and new foundation?

Now Ben Bernanke has reassured the market that you can deal in any type of crap, inefficiency, or even monumental financial scams such as the subprime mess and the Federal Reserve will come to your rescue and it will bail you out.

The only problem is that the problems that caused this subprime mess still are there and it will just get worse in the coming years.

With real estate values going down at least another 30 percent in the next 2 years and feeding the bad news into the economy and more people losing their jobs one thing is going to feed on the other to continue the downward spiral.

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[TraderZones]

Quote from southamerica:

March 2008

Actual unemployment rates after some rational adjustments:

United States = 19.0%

Brazil = 9.6%

So you think you can keep cooking the US numbers, and keep Brazil at 9.6%?? Get real. The truth is, the US is at 5.1% and Brazil at 9.6%. Any fudging you do on the numbers, will apply to both, or they apply to none.

The truth is, that Brazil is a glorified banana republic - a backward nation with a very high poverty rate compared to the west. Its effect or even its disappearance would be a minor effect.

So tell me, if Brazil is so much better than the US, when is the last time that a recession in Brazil threatened the rest of the world like the US could, as in the following IMF projection?

The U.S. economy will slip into a "mild recession" this year and could drag the global economy down with it, the International Monetary Fund predicted Wednesday.

In its latest World Economic Outlook, the IMF sees a 25% chance that world economic growth could fall below 3% this year and next -- "equivalent to a global recession."