Americans are pathetic!!

[RussSchultz]

Russ, you don't really understand what I am trying to say. First of all, I never said the US was "nothing but smoke and mirrors".

1) I do understand.
2) Perhaps you didn't say those exact words, but every example you gave of the US was of something useless, and every example of the EU was some tangible manufactured item.

But anyways, I believe you missed the point of my example. With semiconductors, where the piece part product of american companies never sees american soil until the final product, I'm not sure its that $5 that the company gets actually shows up as part of the trade deficit equation. How is that data collected? There's no tarrifs, no import records, etc. If an Levi's Jeans has a factory in malaysia make pants that get sold in Europe, how does that impact the US trade deficit equation? What if it were a private company that is not subject to public accounting scrutiny? How can any of that value be part of the equation if there's nobody to gather the data?

But beyond that, even if it does factor into the equation, it doesn't change the fact that the US is losing 'valuation' because of the deficit. Something is flowing out. (Unless you assume that some day the US will just negate all of the something that has flowed out) Whether its natural resources in terms of gold or precious metals, promise to provide services and/or product, whatever. Something is flowing out to these manufacturing centric nations in exchange for their goods.

 

[DemoCoder]

L233 has argued the opposite for the Marshall Plan in the past, he will argue that WW2 and Marshall Plan were a massive transfer of wealth from UK, France, et al to the US, that they paid the money back with interest. (forget the fact that it torpedeos the reverse argument, that Europeans loaning money to the US is a transfer of wealth into the US)


For economies which derive a large fraction of their growth from exports, a weak US dollar will be a bad thing. Japan knows this more than anyone, and their central bank is buying dollars like crazy on the currency markets to try and stop the slide.

One of the reasons why EU countries got aboard the free trade bandwagon in the 90s was because they all had trade surpluses with the US. The minute the dollar slides far enough that those surpluses shrink or turn into deficits and French and German workers lose jobs, they will be out on the street protesting, and lickety-split, there will be protectionist tariffs slapped on US goods. There are already many unfair hidden tariffs on US goods anyway, I mean, if some Europeans want to buy milk produced with growth hormone, or GM tomatoes, and they are prevented by government regulations (really protections for inefficient french farmers), it amounts to an impossibly high tariff.


One factor missing in these discussions is multinationals. These are not properly accounted for in US trade figures. (if Daimler Chrylser sells a car, which country gets to count it?)

Economists offer various explanations for the persistent U.S. trade deficit. Some argue that America buys more from the world than it sells because its companies are growing less competitive. Others blame the "unfair" trade restrictions and labor policies of other countries. Still others point to the underlying strength of the dollar, which makes American goods and services more expensive for foreign buyers.

Whatever the proper explanation, a simple and important fact is absent from the debate: the trade balance is no longer a valid scorecard for America's global sales and competitiveness. Given a choice, U.S. firms prefer to sell goods and services abroad through their foreign affiliates instead of exporting them from the United States. In 1998, U.S. foreign-affiliate sales topped a staggering $2.4 trillion, while U.S. exports -- the common but spurious yardstick of U.S. global sales -- totaled just $933 billion, or less than 40 percent of affiliate sales. How U.S. firms compete in world markets, in other words, goes well beyond trade.

BTW, the same is true for Germany

Germany, for example, may not be a significant exporter to the United States, but German affiliates here employed nearly 800,000 Americans and racked up sales of roughly $240 billion in 1998 -- nearly five times the value of German exports to the United States in the same year. Similarly, import figures suggest that China has greater stakes in the United States than the United Kingdom does. But that is hardly the case, given the latter's deep and long-standing direct-investment ties with the United States. U.S. imports from the United Kingdom totaled only $36 billion in 1998, roughly half the value of that year's imports from China. But affiliate sales of British firms operating in the United States -- $192 billion in 1998 -- greatly exceed those of Chinese firms.

 

[Joe DeFuria]

Russ...

Stay out of this. I thought "EU vs. U.S. threads" were reserved for DC, Vince, L233 and myself...

 

[RussSchultz]

Not reserved for, of course. Just that if you mix L233 + any one of you, the thread is sure to turn into a US vs. EU thread.

edit: more better coherence.

 

[Silent_One]

Russ...

Stay out of this. I thought "EU vs. U.S. threads" were reserved for DC, Vince, L233 and myself...

Can't have all the fun.....

 

[DemoCoder]

That does NOT mean Nvidia loses money, they get $5 out of it. It means that of the $15 Joe Yankee spends on the board, $10 flows into foreign economies to pay for chip production and board production. So when you look at the video board, the US did consume more foreign goods/services than it produced itself. What Nvidia did was designing the Chip and marketing it and it got $5 out of it. That is the value the US economy provided in that trade. TSMC produced $5, MSI produced $5.

Well, if your numbers were correct, that would be the case, but it is far more complex than that. I'm not going to quibble with your ratios (which I believe are incorrect). First of all, I believe that Nvidia derives the majority of the profit in these scenarios. NVidia's investment in the process is IP, the $5 they get is pure profit, most of which goes to the US economy. NVidia's "cost" of production is cheap. In the case of MSI, they have to buy all of the components to manufacture the board, it's not just labor. Some of these components, miracle of miracles believe it or not, are manufactured in the US (excluding RAM) This means some of MSI's $5 is spent buying things like capacitors and chemicals from the US. Moreover, TSMC themselves paid the US during manufacture of their fabs.

You say the money from the trade deficit does not come from a guy printing dollar bills (or issuing bonds or somehow motivating investors to dump money into a deficitary economy for the sake of short term RIO etc). Well, then tell me: where does it come from?

Let's assume you were on a barter system and we were exchanging good A for good B in equal numbers. Now all of a sudden, let's assume that country B thought A's good wasn't worth a 1:1 ratio. Now they want two A's for every B shipped to them. If A and B were assigned local currency values, say with 1 gold bar each, and started out priced equally in each market, we would have a balance of trade with 1 gold bar worth of goods imported and 1 gold bar worth exported. However, with the 2:1 ratio, A gets B's products worth 1 gold bar, but B gets two gold bars worth of products (valued in A's local markets, that is, if B tried to sell 2 products it in A's market, it would net 2 gold bars) So now we have an imbalance. A imported 1 gold bar of value, and B imported 2 gold bars of value, so B is now -1. Remember, this is all virtual valuation because A and B aren't accepting each other's gold, they only barter products.

In case you are wondering, B is the "strong dollar" country. A is the cheap exporter.

However, this is an unnatural situation, because gold bars are freely convertable, and thus in reality, the value of A's products would drop to 0.5 gold bars from B's standard, or seen from A's standpoint, B's products would be twice as expensive. So let us now allow trade in gold bars.

Now A has a choice: buy expensive B products with gold bars (financed with cash of goods sold to B) or stockpile gold. Meanwhile, if A isn't buying B's goods, then B is paying A with gold bars, depleting its reserves.

Let A choose to stockpile gold. A's reserves increase, B's decrease. Well, stockpiling gold is not a good thing, believe it or not. Sooner or later, B will run out of reserves, and A's own flush currency will drive up inflation and interest rates. Therefore, A will choose to invest gold bars.

It just so happens that B's low reserves create a demand for currency. And guess who has currency to supply? A. B's demand for currency drives up the rate of return and A is all too happy to supply gold bars back to B (which it uses to buy A's products)

Now the question becomes, what is A getting in return for the gold bars it is investing in B?


L233 will have you believe that it is nothing. A isn't getting anything, and B is getting a free ride. In fact, he will tell you that B's reserves will never run low, because B will print more gold bars. (if that were the case however, there would be little need for A's investment, and the increase in currency flowing in, either from printing it locally, or sending it abroad and having it come back would lead to inflation)


The reality is, A's gold bars are buying stuff. It is buying real estate, it is buying foreign assets. A will get its gold bars back + interest, and it will not come "out of thin air", and it doesn't come from the printing press.


The whole cycle started with B's "strong dollar" policy. As a result, B's has moved it's manufacturing to country C, where the dollar buys assets and labor C. It then sells products to A through C.

 

[L233]

L233 is just reiterating the fallacious dollar conspiracy that I debunked earlier. If he picked up an economics textbook, instead of reading stupid essays in the media, he wouldn't have even bothered to post.

I am not reiterating any "conspiracy". What the hell are you talking about? Besides, your points are so incredibly wrong that your attack looks rather dumb.

The trade deficit is an artifact of the abnormally high dollar,
which bleeds wealth away and jobs from the US into Europe. It is not Europe that is financing America, it is Americma that has been financing Europe, including European manufacturing jobs.

The high value of the dollar is NOT the cause of the trade deficit, it's merely a contributing factor. Your whole argumentation hangs on the weak thread that the trade deficit is entirely caused by an overvalued USD. But the numbers do not back you up.

You simply cannot attribute $450b of trade deficit to an overvaluation of the USD. That's plainly dumb. The steep rise of the trade deficit began when the 90s boom economy ran out of investment money and had to compensate by drawing foreign money into the market while consumer spending increased and increased. The money that got invested in the US was spent, burned and still is.

In 2002 the US trade deficit with the EU skyrocketed from 60b to 80b while the Euro increased it's value towards the USD by about 20%! So European goods got 20% more expensive but still the US bought 30% more? And it seems to continue in 2003 - the Euro gained another 13% while the trade deficit of the US (-> EU) rose by another 10% compared to the first 4 month of 2002.

From 1992 to 2002 it went vom +10b to -80b. That's not just a currency value thing, sorry.

In the past 14 or so months the Euro increased it's value towards the USD by ~40% while the exports from EU to the US increased signifcantly. How does that jive with your theory?

Even if the USD devalued significantly (well, it already did, no?!) it would not get rid of the US trade deficit. Sure maybe it would be lower, maybe even a lot lower - but never even remotely close to balanced as long the the US consumes more than it can afford.

I mean... it's not all price. Some time ago a BMW was only little more expensive than a crappy Oldsmobile in the US. Now that the USD's value fell to a realistic level and the BMW got more expensive. Well, do you think anyone who wants a BMW will now switch to Oldsmobile?

That brings us to the issue of how the trade deficit is financed. What does the capital influx to the US buy the investors? Capital ownership? Yup. Real estates? Yup. Dollars? Yup. All currently and especially in the past grossly overvalued.. as soon as America's deficitary economy goes boom and the respective bubbles burst, foreign investers can kiss their money good bye. The US market might be profitable as long as the capital keeps flowing to the US but at some point it might stop.

Well, lots more to anwser here... hope I can find the time.

 

[RussSchultz]

I'm not going to quibble with your ratios (which I believe are incorrect).

They're not too far off. the "correct" semiconductor gross margin is 50% (i.e. sell it for twice what it costs to make).

The rest of the markup comes from the other players in the channel, and it also ends up being about 2x to get to MSRP. The only profit that NVIDIA/ATI will make out of it comes from that original 50% of the component.

You can safely assume that the piece parts of of your $400 card are about $200, assuming the typical consumer electronics fabless semiconductor business, and NVIDIA/ATI are making about 10-15$ per.

 

[indio]

well from what I can recall that during the largest expansion in US history we had a strong dollar.

The US is not an export economy, less than 10% of the GDP is exports.


I really only need to address this quote because this is what I'm trying to say. Be it a given fact that the US is not dependent financially on it's export power there is no need for a weak dollar . A weak dollar only guarantees cheaper US goods overseas , which we have established is not a necessity. When I say supply side economics I'm referring to the idea if our US products are cheaper than they are now with a weak dollar foreigners will buy it , this equates to if you lower taxes and give ppl. more money they will make capitol investments . This is just like saying "If you build it they will come" We know this is not the case.

I don't know where you get the notion that the stock market rose because of baby boomers dumping savings into stocks considering savings was and is at all-time record lows to the contrary the stock market made record climbs. Not to mention record numbers of personal bancruptcies and debt. There were no significant savings to invest that would produce such a gain and if there were I would like to see the statistics that support that assertion.
The reason for growth was purely productivity and efficiency related from the advent of information technology which created a new career path in the US economy. There was no such thing as IT 15 years ago. This filled a significant void.
Think back just a little don't you remember checking out at the market and having someone ring it all up by hand . That used to take FOREVER. Even smallish grocery stores would need 20 employees. Now they can run large ones with 7-10. The point is productivity rose reducing companies labor cost but increased there need for capitol investment i.e. information tech equipment which in turn feeds all the "middlemen" resellers importing product from overseas. However with a week US dollar resellers would be able to by less items for the same money. Which in turn makes them sell the products for more money becuase they are not getting the volume the need to stay in business and the end-user doesn't get the product that will increase the productivity which will increase his profit margins.
I think you are trying to over-simplify the matter. factoring in raw materials is a non-starter be it mineral or agrico because of the obscene amount of US subsidies them do not let any gather a true free market picture.

Every good, save raw components mined out of the earth, is a value-add.

I was not referring to any and all contributing to a product . i was referring to only adding the "logistics" into the selling of the product.
Dell makes a deal to by products , assemble them , advertise them , then sell them as if it was manufactured by Dell . Dell is a reseller/marketer. No different than walmart or sears. Why are they referred to as a PC manufacturer though?

BTW I'm american. If I had any european manufactured electronics I wouldn't know because they are all branded something else. Do you think there are stickers that say "Middle-managed in the USA" for nothing.

 

[micron]

True.....Zenith, General Electric, RCA, I have no freakin' idea who makes these products anymore.

 

[DemoCoder]

I am not reiterating any "conspiracy". What the hell are you talking about? Besides, your points are so incredibly wrong that your attack looks rather dumb.

#1 you are in contradiction 90% of economists and most economic theory. #2 your theory on the US economy is a recycled essay put out by a socialist think tank and recycled through the indy media.

The high value of the dollar is NOT the cause of the trade deficit, it's merely a contributing factor. Your whole argumentation hangs on the weak thread that the trade deficit is entirely caused by an overvalued USD. But the numbers do not back you up.

It is not the single cause, but since US productivity has risen faster than European productivity, and since labor, tax, and regulatory costs in the EU are generally higher than the US, what can possibly be the explanation for say, European Steel to sell better than US steel? Steel is a commodity. There can be only two explanations: US steel is more expensive because of exchange rates and/or US steel is more expensive because other markets are more closed to US products (e.g. tariffs). US steel is not more expensive because Americans are inefficient at producing it, and it is not the case that Americans do not produce steel at all.


Third, argument based on trade deficit numbers is weak, since it does not account for multinational production. US based companies did not simply self destruct in the face of a strong dollar and trade barriers. They used the purchasing power of the strong dollar to invest in Asia and Latin America, and now products are produced there in American owned companies, but don't count as exports, even though majority of the money returns back to the US.

You simply cannot attribute $450b of trade deficit to an overvaluation of the USD. That's plainly dumb. The steep rise of the trade deficit began when the 90s boom economy ran out of investment money and had to compensate by drawing foreign money into the market while consumer spending increased and increased. The money that got invested in the US was spent, burned and still is.

No it's not. It's tired up in homeowner mortgages and US bonds which US citizens are making debt service payments to. The vast majority of the stock market boom was driven by domestic capital. The trade deficit didn't balloon until after mid-1999 which was after the boom had ended.

From 1992 to 2002 it went vom +10b to -80b. That's not just a currency value thing, sorry.

It was -31b in 1986 and 3 years later it was +25b. Care to explain a 56b shift in just 3 years in terms of structural changes in the manfacturing sector? Think all of a sudden in 3 years, US goods went from sucking, to great, and then back to sucking? Think US firms moved offshore in 86, moved back in 89, and then back offshore again?

Such short term fluctuations cannot be explained in terms of structure factors. Every economist knows they are the result of exchange rates, interest rates, and relative performance of economies (e.g. Strong US economy = more imports)

I mean... it's not all price. Some time ago a BMW was only little more expensive than a crappy Oldsmobile in the US. Now that the USD's value fell to a realistic level and the BMW got more expensive. Well, do you think anyone who wants a BMW will now switch to Oldsmobile?

Interesting how you always try to pick some US product that represents what you think is representative of poorly made or unpopular products. Some BMWs may be price inelastic (M3s, M5s, Z3s, etc) because of the cache' associated with them. The BMW 325 certainly would come up against low end competition.

All currently and especially in the past grossly overvalued..

Says you, Mr Nostradamus. No one knows. Thomas Jefferson once said "the best thing about real estate is that they don't make it anymore" Predict away. Saying something is overvalued is like saying "sometime in Japan or California in the future, there will be an earthquake" It's bound to happen sometime, but it's also bound to go up as well. Unless you have a mathematical formula which can tell me precisely the "real" value of something. Booms and busts are natural cycles. European investment isn't burnt, and the US current account on capital flows shows the billions flowing back to EU investors every quarter.



How much money have you made in investments?

 

[DemoCoder]

You can safely assume that the piece parts of of your $400 card are about $200, assuming the typical consumer electronics fabless semiconductor business, and NVIDIA/ATI are making about 10-15$ per.

They must be deriving revenue from other sources then. NVidia is making about $200 million in revenue a year, which means they'd have to sell like 20 million GPUs a year, which seems a little excessive, even if you combine the XBox and desktop segments together.

The question then becomes, how much of the cost of the TSMC fab and the MSI board flows to the US?

Consider (old 2000 news)

EX-IM BANK FINANCES $800 MILLION OF U.S. EXPORTS TO MALAYSIAN SEMICONDUCTOR PLANT
Agreement signed at Ex-Im Bank headquarters to benefit U.S. and Malaysian economies

Washington, D.C.: A long-term loan from the Export-Import Bank of the United States (Ex-Im Bank) will help a Malaysian semiconductor manufacturer, Silterra Malaysia Sdn. Bhd., to purchase $800 million of technology, equipment and services from LSI Logic Corporation in Milpitas, Calif., Fluor Daniel Intercontinental in Irvine, Calif., and 23 other U.S. companies for the construction of a semiconductor wafer fabrication plant in the state of Kedah, Malaysia. Ex-Im Bank’s loan to Silterra Malaysia is guaranteed by Malaysia’s Ministry of Finance.

Signing the documents today at a ceremony at Ex-Im Bank headquarters in Washington, D.C., were Ex-Im Bank Vice Chair and Chief Operating Officer Jackie Clegg and Silterra Malaysia Chairman Tan Sri Dato’ Mohd Sheriff bin Mohd Kassim. Also in attendance was Malaysia’s ambassador to the United States, Dato’ Ghazzali Sheikh Abdul Khalid.

"This transaction will sustain and create U.S. jobs and will also support economic growth in Malaysia. The new plant will help Malaysia to grow as a manufacturing center and market for U.S. technology and services," said Ex-Im Bank Vice Chair Clegg at the signing today.

Silterra Malaysia, a Malaysian start-up company, is building the semiconductor manufacturing plant in Kulim Hi-Tech Park in Kedah. The new plant will manufacture semiconductors according to customer design specifications and will produce the current industry standard chip (0.25 micron) and the next generation chip (0.18 micron) but not DRAM semiconductors. LSI Logic Corporation has the major technology transfer contract on the project and Fluor Daniel Intercontinental has the major construction contract.

Ex-Im Bank is an independent federal government agency that helps to finance the export of U.S. goods and services primarily to developing markets around the world by providing loans, loan guarantees and export credit insurance. In fiscal year 1999, Ex-Im Bank helped to support nearly $17 billion of U.S. exports worldwide.

I don't have any data on how TSMC was constructed and finances, and where board assemblers get their non-silicon components, but I doubt that they are all locally produced and in locally (non-US affiliated owned and financed) shops.

 

[DemoCoder]

True.....Zenith, General Electric, RCA, I have no freakin' idea who makes these products anymore.

GE is an incredibly large company and makes products too numerous to list.

 

[DemoCoder]

I don't know where you get the notion that the stock market rose because of baby boomers dumping savings into stocks considering savings was and is at all-time record lows to the contrary the stock market made record climbs.

Generation X savings are at all time lows, but baby boomers had vast sums of money tied up in pension funds and IRAs. Where do you think all the money come from to fill the coffers of those mutuals funds and pay for all those IPOs? It didn't come from rich people, and it didn't come from foreigners, it primarily came out of retirement accounts, pension funds, and endowments.

I was not referring to any and all contributing to a product . i was referring to only adding the "logistics" into the selling of the product.
Dell makes a deal to by products , assemble them , advertise them , then sell them as if it was manufactured by Dell . Dell is a reseller/marketer. No different than walmart or sears. Why are they referred to as a PC manufacturer though?

Because they manufacture PCs. They have real people, sweating with tools, putting them together. They are no different than companies making projectors, TVs, DVD players, etc. These companies buy components on the market, sometimes make one or two components, assemble them together, and brand them as a product. Go find a European manufactured DLP projector. It will have a TI fabbed DMD chip in it, and probably a TI DSP.

You can go buy lots of consumer goods, which you think are unique, open them up, and find they share a lot of parts. For example, 90% of WiFi and Bluetooth products are based on just 2 chipsets. That's why Linux can ship just two drivers and work with almost every WiFi card in existence.

 

[RussSchultz]

They must be deriving revenue from other sources then. NVidia is making about $200 million in revenue a year, which means they'd have to sell like 20 million GPUs a year, which seems a little excessive, even if you combine the XBox and desktop segments together.

Nope, doesn't sound excessive to me at all. Sounds a bit on the short side, actually.

http://www.itworld.com/Comp/1181/030117pcsales/

Worldwide PC shipments in 2002 reached 132.4 million units

Something has got to be in them, and they're not all integrated video. Even assuming half are, and half of the rest go to NVIDIA (that is about their market share, right?) we're still talking 30M or so units.

 

[Deflection]

Sorry for that title....marketing you know!

I read in today's newspaper...that Beckham and Victoria are going to begin a marketing blitz in US to make Americans know about them.....

The problem is we have our own "stars" that are even better at being twits then those two. However, there always seems to be room for more.

 

[DemoCoder]

I would bet most of the Nvidia shipments are TNTs and GF2s or GF4s. Would the per-chip margin on a GF2 really be the same as a GF4Ti? Who's making most of the difference on the Quadros, is it Nvidia, or the OEMs? Presumably, there is no cost difference in fabbing a Quadro since it is identical, so the markup is purely Nvidia on the chip side? (why would TSMC charge more for a Quadro?)

I'd also be curious to know the construction and ownership details of TSMC. Total US foreign assets are $6 trillion. Total foreign holding in US are $8 trillion. Total investment in Taiwan is about $40 billion, and most of their imports are foreign machinery equipment.

 

[just me]

Yeah it was all Gray Davis's spending spree (& illegal aliens) that put us in this position. Keep believing that:

"Energy regulators find market manipulation happened in California

By H. JOSEF HEBERT
Associated Press writer

WASHINGTON — Federal energy regulators, cataloging widespread manipulation of Western markets, said Wednesday they probably will require about $3.3 billion in refunds, a third of what California says it's owed.

The Federal Energy Regulatory Commission also signaled that it probably will not force energy companies to renegotiate more than $20 billion in long-term power contracts California agreed to when natural gas and electricity prices soared to record levels in 2000 and 2001.

Two of the three commissioners — both Republicans — oppose renegotiating the contracts that California officials say were inflated because of the corrupt market activities prevalent at the time. The issue will be decided next month.

The actual amount of refunds has yet to be determined by the commission and whatever they decide is likely to be challenged in court. But the staff report's analysis put the amount due at about $3.3 billion, according to FERC officials.

California has argued that it is owed nearly $9 billion in refunds because of price manipulation.

In a lengthy report, FERC investigators outlined a broad array of manipulation of natural gas and electricity prices that aggravated electricity supply problems in the West, causing prices to soar in late 2000 and early 2001.

"Price gouging abounded," said Commissioner William Massey, the only commissioner who favors renegotiating the contracts. Massey is a Democrat; FERC Chairman Pat Wood is a Republican, as is Commissioner Nora Brownell.

California Gov. Gray Davis, a Democrat, said the FERC report confirms "there was … a massive ripoff of California ratepayers" and said it has yet to be determined if FERC "will have the grit to order the remedies that are necessary."

Massey said the situation was allowed to run out of control because the commission refused to impose significant price controls until the summer of 2001. "We should have intervened earlier."

Wood said power supply problems caused by the shortage of hydropower in the Northwest "created a fertile environment for companies to twist and turn and perhaps break the rules."

The staff report concluded that key to the electricity price run-up in California and later the Pacific Northwest was the manipulation of natural gas prices by energy companies through false reporting of prices and other techniques that misled traders.

Many of the suspect trading strategies previously had been disclosed, mainly through a string of internal Enron memos provided to the FERC last year. The report, based on a 13-month investigation, found that companies other than Enron also were deeply involved in price manipulation.

Along with seven Enron subsidiaries, five other companies were singled out in the report as having engaged in marketing activities that warrant disciplinary action. The FERC commissioners said they would decide within the next few weeks whether to impose sanctions on the companies that would severely restrict or ban their activities in energy trading.

The companies included Reliant Energy Services Inc., and BP Energy Co., two marketers that allegedly colluded at a major California trading hub to rapidly drive up prices and then down again, in the process taking profits.

A spokesman for Reliant emphasized that FERC has yet to decide on disciplinary action.

The other power and gas markers singled out for discipline were Bridgeline Gas Marketing LLC, Citrus Trading Corp., ENA Upstream Co., Enron Power Marketing Inc., Enron Energy Services Inc. Enron Canada Corp., Enron Compression Services Co., Enron Energy Services Inc., Enron MW LLC and Enron North America Corp.

Enron filed for bankruptcy in December 2001 and has sold off its online power trading operation.

The 2000-01 Western energy crisis cost California as much as $45 billion in higher electricity bills, lost business due to blackouts and a slowdown in economic growth, according to the Public Policy Institute of California.

FERC for the first time on Wednesday indicated it was ready to examine alleged market abuses during the summer of 2000 when California energy prices also soared. If energy companies are found to have violated commission rules and orders, they could be required to return some of their profits from those sales as well, FERC officials said.

"This was a very ugly situation in the West, one where I don't think anyone was on the side of the angels," said Commissioner Brownell.

On the Net: Federal Energy Regulatory Commission, www.ferc.gov"

http://www.gazettetimes.com/articles/2003/03/28/news/the_west/thuwst03.txt
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Seems my California brethren (& others) have forgotten the $13Billion in State funds that were spent to off-set those costs to consumers.

Blame it on illegal aliens, trailer trash, idiots, etc. & think you are the only one(s) that has been there & done that as you continue your sermon from the mount! Preach on close minded ones.

PS: When ya travel 280, 680, 101, 17, 85, etc. you can thank me for helping build them & my brother-in-law for designing them. I do have the 1st hand knowledge of $$$ wasted on paying ppl for monkeys work. I got run out of the Union for working too hard & have personally seen it happen to others. (Remember when the Union dock workers went on strike beacuse they wanted Union ppl to man the surveillence cameras @ Union wages? How much did Cal. lose in revenues behind that? Got any idea?) The "game" is to 'milk' the job for as long as possible & the Unions have it down to an art. 'Play the game' or find another job. I found another job > Paralegal w/an AS Degree from one of the few ABA Certified Paralegal Programs in the country. I now assist the elderly in obtaining benefits they are entitled to. (I also dabble in Consumer Rights)
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I understand the need for cuts, Joe (thanks for thinking I'm an idiot w/o a clue, BTW) it is the nature of the cuts & the services affected that I'm concerned about. Schools go bankrupt (those that think Oakland is the only one are sadly mistaken) yet we increase police & build more prisons here. Pretty sad for an 'enlightened' society, IMHO.

California is not alone:

"Twenty-nine states have imposed across-the-board cuts, slashing all state programs equally, according to NCSL. Thirteen states have cut spending on Medicaid. Twelve have cut higher education spending. Nine states have cut elementary and secondary education spending.

http://www.govtech.net/news/features/news_feature.phtml?docid=40094

Read & believe what you want ... I do & will continue to.

This is an info post seasoned w/some personal knowledge & opinion. You don't have to accept any of it. Your choice. I would appreciate it if you keep the replies on topic & not of a bigoted nature tho'.

Thanks & good day to all,

 

[DemoCoder]

Umm, perhaps you are not aware of this, but it is ratepayers that pay electric bills, not government taxes. Yes, Californias overpaid for electricity, but the majority of that did not come out of the State budget. (the $45 billion incluces lost economic activity, but I already said that falling tax revenues cannot account for the deficit, nor can the energy contracts account for the spending differences, it's too big)

You can't excuse the massive spending increases in the California budget during the boom years. (just go look at the total expenditures in 1998 thru 2002) And even now, the so-called "cuts" you are talking about are miniscule. For example, $60 million cut out of the $3 billion University Of California system, a system already too socialist for my tastes (I went to college on the east coast, I had to get a student loan and pay tuition vastly higher than this massively tax payer substituted university and community college system they have)


I don't know what bigoted nature you are talking about. I never said anything about immigrants or unions. California's problems are an artifact of government waste and spending. It's a simple as that. It was hurt by recession, but that in and of itself can't account for the crisis.

 

[L233]

#1 you are in contradiction 90% of economists and most economic theory.

By claiming that the US trade deficit is a problem and that it leeches on the wealth of the world to finance it's consumption? 90% of the economists don't share that sentiment?

#2 your theory on the US economy is a recycled essay put out by a socialist think tank and recycled through the indy media.

IIRC that article (I haven't really read it, just skipped through it) claimed that the cause for the Iraq war was to stop a potential domino effect caused by Iraq's decision to conduct oil trades in Euros which might threaten the International Dollar Standard the USA depends on.

No, I did not exactly write that. I was talking politics and history. I was asserting that deficitary economies in highly developed countries are a trait of of empires and in order to be able to continue leeching off the world's savings, the US must make sure it stays an empire by making itself needed. I tied the attractiveness of the US financial market to it's role as super power.

I have identified two "theories" about the possible ramifications of the US trade deficit - but almost everyone who isn't a total total quack acknowledges the nature of the problem: the US is drawing on the savings of foreign countries to sustain it's consumption, not temporarily but chronically.

One theory (the "mainstream" one I am leaning to), which is supported e.g. by Alan Greenspan, warns that the US cannot expand its borrowing forever. At one point foreign investors will wonder if their investments in bonds, stocks, property etc. will ever be profitable or, even worse, if they will ever get their money back. Investors might grow reluctant of lending increasing amounts of money to the US. In a worst-case scenario, investors could pull out of the US financial market, the dollar would crash, the stocks would plunge, interest rates would go up and the economy would come to a grinding halt. Or maybe something not quite THAT catastrophic but still bad. This is the stuff you can read about in the Finacial Times, Wall Street Journal etc.

Another interesting theory which this guy published in a FT article in early 2002 asserts that the International Dollar Standard assures that the US will has a limitless credit line on the international financial market so the US cannot really go broke ever. The only threat to the IDS would be a cataclysmic event like rampant inflation. He also pointed out the problem of the overvalued USD so you might actually agree with him even tho he too identified the fact that the US is hoovering the world's capital - which is my point exactly.

Quote:
Another consequence is that the world’s richest, most mature industrial economy is essentially draining the rest of the world of capital. This is particularly hard on emerging markets and other developing countries. Declining support for the US’s modest overseas development programmes for poor countries may be no bad thing but inadvertently grabbing the lion’s share of internationally available private financial capital certainly is.

You can DL the article (which was published in the Financial Times on Feb 5th 2002 here:
http://www.stanford.edu/~mckinnon/briefs/BushJohnson.pdf
there's also a follow up to this article, titled "The International Dollar Standard and the Sustainability of the U.S. Current Account Deficit":
http://www.stanford.edu/~mckinnon/papers/Brookingsrevabst.pdf

The guy actually published quite some stuff in the International Dollar Standard.

Nevertheless, all things considered I still stand with my claim that the US economy is parasitic, clearly identifies the USA as an empire and does not do any good to the world.

Actually, after reading through Ronald I. McKinnon stuff, I have to admit that I was never really aware of the prominent role of the International Dollar Standard in the gobal economy. It seems to be crucial to the USA. So the theory which you disregard merely on the grounds that it was put out by a socialist think tank (like there was such a thing in the US, but hey, to you neocons even Brookings Institute is infested with commies so *shrug*) might actually have a certain dedree of validity - but I personally doubt that puny Iraq would have had the power to threatend the International Dollar Standard, so nah, not really.