Comments on naked capitalism: Mirable Dictu! The Journal Says a Few Discouraging...

We are exporting to other high-cost region like Eu...

2008-05-06T07:48:00.000-04:00

We are exporting to other high-cost region like Europe. A family member working for a hi-tech company has been traveling and servicing European countries for over a year, as European companies are taking advantages of the weakened dollars. Europe is as far as he has gone so far, no Asia, South America, or any low-cost emerging countries. If this is an anecdote then the US exports will rise as long as the European companies can tolerate it.

The analogy of US 07 to SKorea 97 has a surface va...

2008-05-05T04:21:00.000-04:00

The analogy of US 07 to SKorea 97 has a surface validity. If one swaps out the cronyism and reckless speculation of the chaebols for the cronyism and reckless lending of the US primary dealers the precipitators are comparable. There the similarities end. ---And SKorea had 6% economic contraction and added 5% to official unemployment.

As Deborah said, their was and still is little in the way of a social safety net in Korea; folks save because they know that no one will save them if they, personally, run into trouble. The US 'safety net' is much weaker than other industrial democracies but still significant. US consumers are, now, far more indebted than consumers were then, our nominally greater personal asset bases notwithstanding. Korean assets came down hard and fast, as did the currency; the real mid-term problem there was that debt and malinvestment gutted the weak part of the manufacturing economy and killed many of the banks. US assets haven't remotely finished their correction; while we may save many of the banks by this approach, by the same token we certainly shouldn't expect a rapid recovery, nominal or otherwise.The US has the reserve currency, but our trade and fiscal deficits at the national level already are colossally outside of historical norms to say nothing of SKorea in 96 going in. Korea was geared to export for an income stream: can anyone say the same with a straight face regarding the US?

How many folks have really considered that much of the 'growth' in US Q1 of this year was _inventory build_, a genuinely frightening development by any historical perspective? We keep hearing about 'rising exports' in the US 08; what _are_ they? Where is the breakdown on WHAT we are exporting with improved profits, and what the potentials _really_ are for temporary growth to be, at the very least, sustained? Concerns like that don't seem to exist in the tinted glass universe described by the permabulls and their media bandwagon tailgaters.

Think about what a 6% contraction would look like in the US. Now, understand that that is the _upside_ from this comparison.

Deborah, A very good point, and one that worries m...

2008-05-05T03:20:00.000-04:00

Deborah,

A very good point, and one that worries me. While the officialldom recognizes how the US has overconsumed and undersaved, I don't think anyone has the foggiest idea how that plays out in practical terms. We are way outside historic norms.

Jojo,

Interesting indeed.

Seems like Wall Street is in danger of losing cont...

2008-05-05T03:13:00.000-04:00

Seems like Wall Street is in danger of losing control of their cheerleaders! I've noticed recently that CNBC seems to be doing less cheerleading also.

Korea has a very different outlook on social progr...

2008-05-05T02:19:00.000-04:00

Korea has a very different outlook on social programs and savings. I spent a lot of time with a Korea family that was over here for their children to go to school here.

What the mother told me was that with Korean culture people believe you need to have at least $100k in the bank in case you get sick and can't work. She personally thought that wasn't enough. They don't have the social programs and they save.

That is enormously different than the US.