Are pensions a burden on the former employer?

Yoda said:
First post from a non rocket scientist so be kind :)

The keynes theory went totally out the window with companies who saw increased product demand decided to create jobs for communist chinese and take 6.5 +million livable wage jobs from americans. Who not only dont have any disposable cash to buy their products may have to be on public assistance, food stamps etc. That of course doesnt include all the additional jobs sent to India, indonesia and the phillipines and bangladesh you get the picture.
Americans cant buy this economy out of its malais, the corporate interests seem to have assured that. What going to exascerbate the problem is automation technology thats going to put more people out of work.
This country is going to have 60% plus of its population in 3rd world status. We all know everyone cant be rich and successful and educated and have a degree and a profession. Cant all be Drs Lawyers and Indian Chiefs.
Some where along the line the Rich had better decide that they are Americans and that Helping Americans and America means more than a few extra bucks profit. You get to the point to many americans are hurting then we may have a real revolution where the peasants storm the castle and the Baron is rich no more. Just rambling uneducated thoughts :)
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That would be true if the US didn't have a strong supply side. Keynes' theory applies to any time a firm provides any good or service - goods example would be doctors, retail, food, housing, and automotive. Offshore production means the demand increases (the sparks) need to be bigger in order to make a sustained difference, but it doesn't invalidate circular flow.
 
DamnYankee said:
Good start with a terrible follow-through.

1. "Corporate interests" are profits, which are good for the economy.
2. Automation is awesome for the economy since more wealth can be produced with less labor.
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1. No they aren't. As Keynes and modern day economists have pointed out, corporate profits are typically stored. This is especially true when demand is low, and investments are typically fruitless.
2. No, it's not. With that comes the cost of a decreased labor force, which is the equivalent of job losses - which means that increase in production won't be consumed and thus won't lead to an increase in wealth.
 
Rose Captain said:
That would be true if the US didn't have a strong supply side. Keynes' theory applies to any time a firm provides any good or service - goods example would be doctors, retail, food, housing, and automotive. Offshore production means the demand increases (the sparks) need to be bigger in order to make a sustained difference, but it doesn't invalidate circular flow.
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People have to have jobs to have the means to buy those goods and services right ?
 
Rose Captain said:
1. No they aren't. As Keynes and modern day economists have pointed out, corporate profits are typically stored. This is especially true when demand is low, and investments are typically fruitless.
2. No, it's not. With that comes the cost of a decreased labor force, which is the equivalent of job losses - which means that increase in production won't be consumed and thus won't lead to an increase in wealth.
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1. You mean invested, freeing up capital for others to borrow from. Or are you suggesting that they hide money in mattresses?
2. No, the folks just get jobs doing something else that previously no one had time for.
 
DamnYankee said:
1. You mean invested, freeing up capital for others to borrow from. Or are you suggesting that they hide money in mattresses?
2. No, the folks just get jobs doing something else that previously no one had time for.
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I mean they save it. When massive amounts of wealth are concentrated in the upper classes, yes some of it is invested, but a large portion of it isn't.

This is very unlike those who spend increases in wealth on things they need immediately.

2. That's crap. There's skill displacement to deal with, and industry doesn't come out of nowhere. There was a study, by MIT, I believe, that talked about how some of the biggest industries are beginning the process of mass job displacement. If this continues, in the short term, they will fail. Sure, a new industry may appear in the long term, but there' very little to currently suggest that.
 
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Rose Captain said:
I mean they save it. When massive amounts of wealth are concentrated in the upper classes, yes some of it is invested, but a large portion of it isn't.

This is very unlike those who spend increases in wealth on things they need immediately.

2. That's crap. There's skill displacement to deal with, and industry doesn't come out of nowhere. There was a study, by MIT, I believe, that talked about how some of the biggest industries are beginning the process of mass job displacement. If this continues, in the short term, they will fail. Sure, a new industry may appear in the long term, but there' very little to currently suggest that.
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1. Yes, the save it. Which means it's invested somewhere, freeing capital. Or are you suggesting that they hide money in mattresses?
2. Economic evolution takes time, yes. But it must evolve. You may have read some study, but history proves that automation increases economic activity and overall wealth, especially among the poor. See the Industrial Revolution. See the Technological Revolution.
 
DamnYankee said:
1. Yes, the save it. Which means it's invested somewhere, freeing capital. Or are you suggesting that they hide money in mattresses?
2. Economic evolution takes time, yes. But it must evolve. You may have read some study, but history proves that automation increases economic activity and overall wealth, especially among the poor. See the Industrial Revolution. See the Technological Revolution.
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1. Saving and investing are two very different concepts.
2. Yes, history agrees with you on this one. And so do I, to a certain extent. Another important distinction within econ that you should familiarize yourself with: short term vs. long term. I and most economists will tell you that the economy will probably adapt in the long term - but in the short term, workers will suffer.
 
Actually, banks and corporations DID hang on to their money the last few years. Banks weren't making loans. Corporations weren't investing in R&D or in salaries. Might not have been tucked in a mattress, but they weren't doing much with it.
 
Rose Captain said:
1. Saving and investing are two very different concepts.
2. Yes, history agrees with you on this one. And so do I, to a certain extent. Another important distinction within econ that you should familiarize yourself with: short term vs. long term. I and most economists will tell you that the economy will probably adapt in the long term - but in the short term, workers will suffer.
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1. Not really. Smart people have diverse portfolios; some in low risk- high liquidity (bank accounts), medium risk- medium return (diversified stocks) and finally high risk- high return (venture capital, which is what our theoretical factory represents). The CEO who sees the economy shrinking but is not going to expand his factory. Instead he's going to invest his profits in stocks and in liquid assets so he'll have more money to expand operations when the economy recovers. This savings allows others to borrow.

The fact that banks weren't lending even though their accounts were now full was due to the fact that they themselves had invested too heavily in their own high risk ventures, and needed to re-balance to reflect the changed economic environment.

2. Short-term pain is always a trade-off for long term growth. That's why I'm not opposed to limited unemployment insurance. That's also why I have a certain percentage of my own savings in liquid assets, in case I lose my own job.
 
Ignoring the fascistic nonsense bit of that post, I will point out how flatly wrong your first assertion is.

The stock market crash occurred as a product of those holding stocks selling them off. These weren't re-bought until recently, which hiked up the price (Hence all your "stock market at a record high" threads.) No sane person would invest in stocks during a recession.

And I was discussing individual income concentration, not banks. If you want that to be a topic, make another thread.
 
No, the stock market crashed because of the credit market collapse, Bear Sterns (which I personally, wisely dumped three years previous), Fannie, Freddie. See here.
 
DamnYankee said:
No, the stock market crashed because of the credit market collapse, Bear Sterns (which I personally, wisely dumped three years previous), Fannie, Freddie. See here.
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I know that. And so does everyone remotely familiar with economics. But what you fail to account for is the rush of sales - it happened during the depression as well.

Anyway, the point is that you don't buy stocks when the economy's contracting.
 
Rose Captain said:
I know that. And so does everyone remotely familiar with economics. But what you fail to account for is the rush of sales - it happened during the depression as well.

Anyway, the point is that you don't buy stocks when the economy's contracting.
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No you wait until it bottoms and starts to rise. The "rush of sales" was because investors lost confidence.
 
Rose Captain said:
Exactly. So remind me what plutocrats were doing with their money during the economic decline. ;)

I'll give you a hint.

SAVING
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Converting it to bank accounts, gold, bonds, or what have you. The growth in savings then allows banks to lower interest rates...
 
One could easily argue that failing aggressive oversight much of the market's history shows constant manipulation for the benefit of the few.

Great Depression: The cause of the Great Depression can be attributed to several key, interrelated factors.
* residual effects of WW I
* tariff war sparked by unsound government tariff policies
* government's laissez-faire (hand's off) business regulation policies - Hoover, a businessman himself, saw no need for the government to interfere
* unscrupulous tactics and insider trading to control the stock market - The government's handling of business and the economy would not have been a problem without the manipulation of the stock market

The “smart” money—the Bernard Baruchs and the Joseph Kennedys who watched things like money supply—saw that the party was coming to an end before most other Americans did. Baruch actually began selling stocks and buying bonds and gold as early as 1928; Kennedy did likewise, commenting, “only a fool holds out for the top dollar.”

Since the stock market was believed to be a no-risk, no-brain world where everything went up, many people poured all their savings into it without learning about the system or the underlying companies. With the flood of uneducated investors, the market was ripe for some manipulation and swindling. Investment bankers, brokers, traders, and sometimes owners banded together to manipulate stock prices and get out with gains. They did this by subtly acquiring large chunks of stock between them and trading them between each other for slightly more each time. When the public noticed the progression of price on the ticker tape, everyone would buy the stock. So, the market manipulators would then sell off their overpriced shares for a healthy profit. On and on the cycle went as uneducated investors turned a profit by selling the manipulated, over-priced shares to someone who wanted to have a rising stock.


Matt Taibbi,July 9, 2009 wrote Goldman Sachs has engineered every major market manipulation since the Great Depression -- and they're about to do it again

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Sources:
http://voices.yahoo.com/causes-great-depression-1652833.html
http://www.fee.org/the_freeman/detail/great-myths-of-the-great-depression#ixzz2W8ozu1FJ
http://www.investopedia.com/features/crashes/crashes5.asp

http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405#ixzz2W8mEWDa8


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