US Industry in trouble

Discussion in 'Economics' started by Humpy, Oct 8, 2007.

  1. Humpy

    Humpy

    Sad to see the once great US car firms going down the pan, just like UK ones did in the 70s. The same combination of:-
    1. Greedy overpaid bosses ( Muhlaly on $28m. p.a. )
    2. Stroppy Unions
    3. Strong competition.

    The USA used to beat Europe easily in business and manufacturing. Now the Asian countries are easily beating the USA in just the same way.
    This is the 11th hour guys. Wake up and adapt or become a service industry based country. Real wealth creating jobs are not in the Government, Police, Fire services etc. etc. The money-go-round of service industry jobs won’t go on for very long before it becomes apparent, the economy is a house built on sand.
    The harsh realities of the hotch-potch Capitalist system are being painfully exposed. They ( in the 3rd world ) used to do the suffering – now its their turn to be on top. Can’t blame them too much for putting the boot in where it hurts.
    Just listening to the pundits on business channels – they all see the slide of US and European business clearly but not one of them puts forward a creditable solution.
    Ho hum lets see if they can think of the obvious BEFORE it’s too late…………..
     
  2. I never was able to figure out how a guy making $15 an hr can buy a 40K car built by guys that make $25 an hr.
     
  3. G-Boa

    G-Boa

    Simple. The difference is made up in credit.

    Now apply that same thinking to hedgies, the big gorillas on wall street, institutions and other big traders, and talk about credit...and leverage...talk about $485 trillion global derivatives exposure (a number that has increased 5-fold in the last 4 years) and think about global GDP around $60 trillion - the most the world can push out in a year.

    Think about one real dollar controlling 20 - 30 dollars worth of an asset priced according to what/whom?? And should that asset take a hit....and should other assets be liquidated to cover that hit....

    And who in the world really understands the consequences of this kind of exposure??

    The trends around the world are bullish, but the scene behind the curtain is apocalyptic.
     
  4. it tilts trading massively in favor of the larger players with access to more leverage
     
  5. maxpi

    maxpi

    Chillingly so...
     
  6. And because of the power of exponential growth, you have exponential risk and catastrophe...
     
  7. scary.....even moreso when the shit hits the fan....
     
  8. S2007S

    S2007S


    Reading articles stating that the derivatives market is nearly impossible to guage on how big it actually is.
     
  9. G-Boa

    G-Boa

    With the following kinds of credentials and over 20 years in the derivatives business I'm assuming this guy would be fairly close to the mark:

    "Satyajit Das is a specialist in the area of financial derivatives and risk management. He is the author of a number of key reference works on derivatives and risk management. His works include Swaps/ Financial Derivatives Library – Third Edition (2005, John Wiley & Sons) (an 4 volume 4,200 reference work for practitioners on derivatives). He is also the author of Credit Derivatives, CDOs and Structured Credit Products –Third Edition (2005, John Wiley & Sons) and Structured Products & Hybrid Securities – Second Edition (2001, John Wiley & Sons). He is the author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives (forthcoming, April 2006, Pearson Education), an insider's account of derivatives trading and the financial products business filled with black humour and satire. He is also the author (with Jade Novakovic) of In Search of the Pangolin: The Accidental Eco-Tourist (forthcoming, June 2006, New Holland), an unique travel narrative offering passionate and often poignant insights into the natural world and the culture of eco-travel."