Buffett, Ballmer predict bright economic future

[Temujin]

Buffett, Ballmer predict bright economic future
Business leaders at conference are bullish on future of U.S. and world

By MATT GOURAS
updated 9/13/2010 3:53:13 PM ET

BUTTE, Mont. — Some of the biggest names in business said Monday that they see a bright future for the economy, with famed investor Warren Buffett declaring the country and world will not fall back into the grips of the recession.

"I am a huge bull on this country. We are not going to have a double-dip recession at all," said Buffett, chairman of Omaha, Neb.-based Berkshire Hathaway Inc. "I see our businesses coming back across the board."

Buffett said the same things that worked for the country through a century of two world wars, a depression and more — all while increasing the standard of living — will work again. He said banks are lending money again, businesses are hiring employees and he expects the economy to come back stronger than ever.

"This country works," Buffett said during a question-and-answer session via video at the Montana Economic Development Summit. "The best is yet to come."

The likes of Buffett, Microsoft Corp. CEO Steve Ballmer and General Electric Co. Chairman Jeff Immelt told the nearly 2,000 business leaders, government officials, aspiring entrepreneurs and others at the summit that things are getting better. They also offered some ideas for what needs to be done.

(Msnbc.com is a joint venture of Microsoft and NBC Universal.)

Ballmer said there soon will be more technological advancement and invention than there was during the Internet era. That will help drive business growth, he said.

"I am very enthusiastic what the future holds for our industry and what our industry will mean for growth in other industries," said Ballmer, whose company is based in Redmond, Wash.

He envisions new technologies that move beyond the Internet to tie together computers, phones, televisions and data centers to create amazing new products. And the pace of innovation will increase as technology makes workers more productive.

"All areas of science today are moving forward more quickly," Ballmer said. "The speed of scientific breakthrough is accelerating."

The conference was organized by U.S. Sen. Max Baucus. The Montana Democrat said it leaves "bickering and name-calling" back in Washington, D.C., so leaders can find good ideas.

Immelt said angry political rhetoric is not helpful and headlines are too focused on finding negative indicators. He said business at GE, one of the world's largest companies, is improving.

Immelt said the country is going to need to adjust, though. The economy since the 1970s has been driven by consumer credit and a misguided notion in building a "lazy" service economy, he said, and manufacturing, with an aim to reduce the trade deficit, is the key.

"It was just wrong. It was stupid. It was insane," Immelt said of the push for a service-based economy. "The future of the economy has to be as an exporter."

He said Fairfield, Conn.-based GE is now finding it profitable to build manufacturing and service centers in the United States rather than overseas, because it is more competitive to do so.

More investment is needed in technology innovation, exports need to be rejuvenated, and clean energy and affordable health care need to be given top billing for policymakers, Immelt said.

But the corporate leader said he recognizes a polarizing environment in Washington makes it unlikely a national energy policy and other helpful guidance will ever take hold. Instead, he urged local business leaders and government officials in the audience to come up with their own local solutions.

"Anger is not a strategy. Anger does not create growth. Only optimism creates growth," he said. "Be the contrarian. Everyone is mad today. Be happy."

I would love to see a some technological breakthroughs in conjunction with some good government programs that could do this, but unfortunately I'm bit to jaded that anything like this will actually happen.

[aerius]

Immelt said the country is going to need to adjust, though. The economy since the 1970s has been driven by consumer credit and a misguided notion in building a "lazy" service economy, he said, and manufacturing, with an aim to reduce the trade deficit, is the key.

"It was just wrong. It was stupid. It was insane," Immelt said of the push for a service-based economy. "The future of the economy has to be as an exporter."

He said Fairfield, Conn.-based GE is now finding it profitable to build manufacturing and service centers in the United States rather than overseas, because it is more competitive to do so.

Hey asshole, so why the fuck did you just close down a lightbulb factory in the US and outsource all the manufacturing and R&D to India?

http://economictimes.indiatimes.com/new ... 565911.cms
Exerpt:

BANGALORE: General Electric plans to set up a new manufacturing plant at a potential investment of up to $50 million in India, where it also intends to hire 3,000 people for its technology centre here, senior company officials said today.

[Nephtys]

Because it's cheaper and more efficient for the company to produce in India. This is nothing new. But the US's comparative trade advantage lies in more advanced products. After all, if the US tries to export lightbulbs, you're just going to get shut down by cheaper factories with cheaper labor abroad who have the exact same level of lightbulb construction expertise, while the same is not true of other products.

[JME2]

Show me a flying pig and I might believe these hopeful claims. At the moment, my cynicism refuses to believe any of this usual claptrap.

[Temujin]

And the good news continues:

‘Great Recession’ over, research group says
Downturn lasted 18 months; longest recession since World War II

msnbc.com staff and news service reports
updated 2 hours 11 minutes ago

The “Great Recession” has ended, officially.

At least, that's the word from the private, nonprofit research organization that calls the beginnings and endings of recessions, the National Bureau of Economic Research.

The NBER said Monday that the recession which began in December 2007 ended in June 2009, which marked the beginning of an expansion. The announcement rules out the possibility of a so-called “double-dip” recession, because any new downturn would be seen as a brand new recession.

President Barack Obama said that even though the NBER officially named an end to the recession, the economy has a long way to go and much work to be done to become healthy again. "Something that took ten years to create is going to take a little more time to solve," Obama said at a town-hall-style meeting shown live on CNBC.

The NBER said it chose the June 2009 date based on examination of data including gross domestic product, employment and personal income.

"The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months," the NBER added in a press release on its website.

Just because the recession ended 15 months ago, it doesn't mean that the economy is healthy, the NBER asserted. "Economic activity is typically below normal in the early stages of an expansion, and it sometimes remains so well into the expansion," the NBER said.

In April, the NBER declined to call the end of the recession, and some of its members said at the time they were concerned the economy could dip back into negative territory. In Monday's announcement, the NBER said any fresh downturn would mark a new recession, not a continuation of the one that began in December 2007.

"The basis for this decision was the length and strength of the recovery to date," the NBER said.

U.S. officials have been struggling to find a way to speed up a sluggish recovery that has left unemployment at a painfully high 9.6 percent. The U.S. Federal Reserve's policy-setting committee meets on Tuesday and is widely expect to discuss whether additional measures are warranted to bolster the economy.

The NBER normally takes its time in declaring a recession has started or ended.

For instance, the NBER announced in December 2008 that the recession had actually started one year earlier, in December 2007.

Similarly, it declared in July 2003 that the 2001 recession was over. It actually ended 20 months earlier, in November 2001.

Its determination is of interest to economic historians — and political leaders. Recessions that occur on their watch pose political risks.

In President George W. Bush's eight years in office, the United States fell into two recessions. The first started in March 2001 and ended that November. The second one started in December 2007.

NBER's decision means little to ordinary Americans now muddling through a sluggish economic recovery and a weak jobs market. Unemployment is 9.6 percent and has been stuck at high levels since the recession ended.

Many will continue to struggle.

Unemployment usually keeps rising well after a recession ends. Four months after the 2007 downturn ended, unemployment spiked to 10.1 percent in October 2009, which was the highest in just over a quarter-century. Some economists believe that marked the high point in joblessness. But others think it could climb higher — perhaps hitting 10.3 percent by early next year.

After the 2001 recession, for instance, unemployment didn't peak until June 2003 — 19 months later.

Orly?

[JME2]

Again, I'm still waiting on that flying pig.

And even if it's true, it does no fucking good for a lot of us.

[J]

Allow me to translate the above from NBER econo-mumblejumble to plain English: The Recession is over, welcome to the Depression.

[JME2]

Allow me to translate the above from NBER econo-mumblejumble to plain English: The Recession is over, welcome to the Depression.

Hear hear. I never thought I'd live to see another one...

[Nephtys]

So, I thought SDN's board culture promoted rational reasoning for arguments instead of just posting kneejerk reactions. Guess that's only for some topics and not others, hmm?

After all, Global Warming is a Myth, Evolution is a Lie, and all scientists are in a conspiracy.

[bobalot]

So, I thought SDN's board culture promoted rational reasoning for arguments instead of just posting kneejerk reactions. Guess that's only for some topics and not others, hmm?

After all, Global Warming is a Myth, Evolution is a Lie, and all scientists are in a conspiracy.

I thought I was the only one getting tired of J shitting all over every financial thread with predictions of doom.

[JME2]

I'm sorry, I'm not in the best of moods and I have an inclination to treat news like this as bullshit. I will keep it out of the News/Politics section from this point on.

[J]

So, I thought SDN's board culture promoted rational reasoning for arguments instead of just posting kneejerk reactions. Guess that's only for some topics and not others, hmm?

What's the US economy based upon? Well let's see, 70% or so is consumer spending. What enables consumer spending? Well, there's two things; wages and credit/borrowing. Inflation adjusted wages have been flat for at least a couple decades for all but the rich and show no signs of rising, plus the easy credit & borrowing binge which we've had for the past 15-20 years is now over. Where does the spending come from either now or in the future? Unless there is a substantial re-alignment of the US economy or consumer spending is restarted at 2005 levels, or a combination of the above, there is no recovery. Period. I do not see any signs, anywhere, of either of the above taking place.

[Surlethe]

So, I thought SDN's board culture promoted rational reasoning for arguments instead of just posting kneejerk reactions. Guess that's only for some topics and not others, hmm?

What's the US economy based upon? Well let's see, 70% or so is consumer spending. What enables consumer spending? Well, there's two things; wages and credit/borrowing. Inflation adjusted wages have been flat for at least a couple decades for all but the rich and show no signs of rising, plus the easy credit & borrowing binge which we've had for the past 15-20 years is now over. Where does the spending come from either now or in the future? Unless there is a substantial re-alignment of the US economy or consumer spending is restarted at 2005 levels, or a combination of the above, there is no recovery. Period. I do not see any signs, anywhere, of either of the above taking place.

What do you think this depression is?

[Uraniun235]

[there is no recovery. Period. I do not see any signs, anywhere, of either of the above taking place.

So, as a Canadian, what's your plan for dealing with that imploding nuclear-armed right-wing banana republic neighbor of yours?

You know it's going to end extremely messily. Don't deny it. Tell us all about the nightmares that keep you awake at night.

[J]

Unless there is a substantial re-alignment of the US economy or consumer spending is restarted at 2005 levels, or a combination of the above, there is no recovery. Period. I do not see any signs, anywhere, of either of the above taking place.

What do you think this depression is?

OECD debt deleveraging. Whether we get an actual re-alignment out of it (start building stuff again, reduce consumer spending as a percentage of the economy, etc.) is yet to be determined.

So, as a Canadian, what's your plan for dealing with that imploding nuclear-armed right-wing banana republic neighbor of yours?

http://www.standingonguard.com/index2.html
What else would it be?

[Surlethe]

Unless there is a substantial re-alignment of the US economy or consumer spending is restarted at 2005 levels, or a combination of the above, there is no recovery. Period. I do not see any signs, anywhere, of either of the above taking place.

What do you think this depression is?

OECD debt deleveraging. Whether we get an actual re-alignment out of it (start building stuff again, reduce consumer spending as a percentage of the economy, etc.) is yet to be determined.

Why wouldn't the economy realign and begin to grow? When debt has fallen far enough, consumer spending will stabilize and begin to start rising again. In fact, if consumer spending falls as a proportion of GDP, economies will actually grow more quickly (on average) because the increased saving will be invested.

[J]

Why wouldn't the economy realign and begin to grow? When debt has fallen far enough, consumer spending will stabilize and begin to start rising again. In fact, if consumer spending falls as a proportion of GDP, economies will actually grow more quickly (on average) because the increased saving will be invested.

If the powers in charge screw things up sufficiently we could end up in a long term liquidity & debt trap which would imply a long term stagnation.

[Surlethe]

Why wouldn't the economy realign and begin to grow? When debt has fallen far enough, consumer spending will stabilize and begin to start rising again. In fact, if consumer spending falls as a proportion of GDP, economies will actually grow more quickly (on average) because the increased saving will be invested.

If the powers in charge screw things up sufficiently we could end up in a long term liquidity & debt trap which would imply a long term stagnation.

Three questions. How might that happen? Has it ever happened before? And what are the chances of it occurring now?

[J]

Three questions. How might that happen? Has it ever happened before? And what are the chances of it occurring now?

1) The government takes on debt as the private sector deleverages. Any gains made from private sector debt deleveraging are sucked out of the economy via taxation & bond sales to service the government's debts.

2) Not exactly, but Japan's lost decade and the 70's to early 80's stagflation in the US are rather similar events.

3) Unknown. If the bond market stays quiet there's a fairly good chance if things continue on their present course but a dislocation would force a reset. It all depends on if/when/where Bondzilla decides to make his appearance. Bondzilla appears to be MIA for the time being, he should've stomped the world flat late in 2008, however the only confirmed sightings to date were in Iceland and Greece.

[Surlethe]

1) The government takes on debt as the private sector deleverages. Any gains made from private sector debt deleveraging are sucked out of the economy via taxation & bond sales to service the government's debts.

The extent to which crowding out occurs is (a) not clear to me and (b) an empirical matter.

2) Not exactly, but Japan's lost decade and the 70's to early 80's stagflation in the US are rather similar events.

To test, we need good definitions of "liquidity trap" and "debt trap".

3) Unknown. If the bond market stays quiet there's a fairly good chance if things continue on their present course but a dislocation would force a reset. It all depends on if/when/where Bondzilla decides to make his appearance. Bondzilla appears to be MIA for the time being, he should've stomped the world flat late in 2008, however the only confirmed sightings to date were in Iceland and Greece.

What does this say about your model's predictive capabilities?

[J]

1) The government takes on debt as the private sector deleverages. Any gains made from private sector debt deleveraging are sucked out of the economy via taxation & bond sales to service the government's debts.

The extent to which crowding out occurs is (a) not clear to me and (b) an empirical matter.

Buh?

2) Not exactly, but Japan's lost decade and the 70's to early 80's stagflation in the US are rather similar events.

To test, we need good definitions of "liquidity trap" and "debt trap".

Neo-Classical or Post-Keynesian?

3) Unknown. If the bond market stays quiet there's a fairly good chance if things continue on their present course but a dislocation would force a reset. It all depends on if/when/where Bondzilla decides to make his appearance. Bondzilla appears to be MIA for the time being, he should've stomped the world flat late in 2008, however the only confirmed sightings to date were in Iceland and Greece.

What does this say about your model's predictive capabilities?[/quote]

It requires more work. The models and theories I'm using are still in the early stages of development and they can't account for all factors yet. It can predict general trends but not specific events, for instance it can tell you that Europe is headed for a worse downturn than Canada but it's not going to predict which country will default when.

Which still puts it ahead of all conventional models since none of them predicted the current recession while the models I'm using did.

[Surlethe]

The extent to which crowding out occurs is (a) not clear to me and (b) an empirical matter.

Buh?

Well, you're talking about crowding out. So: the amount that government borrowing crowds out private investment is, here, empirical.

Neo-Classical or Post-Keynesian?

Your model, your choice.

It requires more work. The models and theories I'm using are still in the early stages of development and they can't account for all factors yet. It can predict general trends but not specific events, for instance it can tell you that Europe is headed for a worse downturn than Canada but it's not going to predict which country will default when.

Which still puts it ahead of all conventional models since none of them predicted the current recession while the models I'm using did.

What? Every model that I know of predicts that when prices get out of whack with supply and demand, there's a big market correction. Every model I know of predicts that when the financial system collapses, it generates a real economic crisis.

[Temujin]

It requires more work. The models and theories I'm using are still in the early stages of development and they can't account for all factors yet. It can predict general trends but not specific events, for instance it can tell you that Europe is headed for a worse downturn than Canada but it's not going to predict which country will default when.

Which still puts it ahead of all conventional models since none of them predicted the current recession while the models I'm using did.

I'm no economic expert, but I get the sense that a lot of the uncertainty is because were in unfamiliar territory. The global economic system has never been this big or complex with the degree of debt (national and personal) never so great, and the old ways (conventional models) either didn't take certain factors into account or they were flat out ignored by fuckers like Greenspan, Bernanke, Paulson, etc.

[J]

Well, you're talking about crowding out. So: the amount that government borrowing crowds out private investment is, here, empirical.

Not really, though some crowding out is involved. It's more a debt tranfer from the private to government sector with the problems which this entails. For example, private debt can be defaulted without destroying a nation's currency, credit rating, and ability of its government to fund itself via deficit spending, this is no longer possible once the debt is transferred to the government side. Once the transfer is made, the debt must be serviced at all cost (not all, but nearly) which places a structural drain on the economy.

Neo-Classical or Post-Keynesian?

Your model, your choice.

I think we should cover this part in a separate thread since it has the potential to become very long and messy. I'm also not sure if I'll have enough time in the next while to cover this in as much detail as I wish.

What? Every model that I know of predicts that when prices get out of whack with supply and demand, there's a big market correction. Every model I know of predicts that when the financial system collapses, it generates a real economic crisis.

Oh really? So why is it that only eleven economists in the entire world saw the current downturn coming?

[Surlethe]

Because information costs are so high?