July 23, 2003

Looking Forward to Fast GDP Growth and a Lousy Labor Market

Bernanke, McTeer, and Greenspan worry that even the relatively strong GDP growth they hope emerge will be accompanied by a lousy labor market, and perhaps downward pressure on inflation and prices. Why? Because they (like me) think that the rapid productivity growth of the new economy is still burbling away inside the economy's foundations, and driving a big wedge between output growth and employment growth.

Dark linings in the economic clouds - Jul. 23, 2003: Then Fed Governor Ben Bernanke said Wednesday that gross domestic product (GDP), the broadest measure of the nation's economy, could grow at a 3 percent rate the rest of this year and a 4 percent rate next year, but he added that the unemployment rate would still be as high as 6 percent by the end of 2004.

What's more, Bernanke said stronger GDP growth would do nothing to stop a recent slide in inflation that's alarmed many economists. The worry: that the economy could get hit by deflation, an unstoppable drop in prices that has hounded Japan's economy for much of the past decade.

"Even if the economy recovers smartly for the rest of this year and the next, the ongoing slack in the economy may still lead to continuing disinflation," Bernanke said.

GDP grew at a paltry 1.4 percent rate in the fourth quarter of last year and the first quarter of this year, and probably wasn't much stronger in the recently ended second quarter. Meanwhile, the unemployment rate has risen to 6.4 percent, the highest rate since April 1994...

Posted by DeLong at July 23, 2003 07:43 PM | TrackBack

Comments

I keep asking, but nobody ever comments on this: are there or are there not externalities in the interaction of tax and social services (or whatever, in various countries), pushing towards higher unemployment than a more perfect labour market would have other things being equal, that could be fixed with Kim Swales' approach of reducing employers' tax bills according to their employee counts? If as I strongly suspect there really are externalities like this, that would explain how we can so easily get more productivity gains than can be mopped up readily.

I have material on this at http://users.netlink.com.au/~peterl/publicns.html, and some of it links to Kim Swales' stuff.

Posted by: P.M.Lawrence on July 23, 2003 09:19 PM

Do you think it has anything to do with the over capacity that currently plagues us? Bernanke and Dr. Alan have been pumping all this liquidity into the market allowing companies that should have gone under to continue to exist (zombie companies similar to Japan perhaps???). Take a look at all the refinancing that has been taking place in the high yield market -- it is a joke. Everything that had been trading below 80 is now at or near par (not to mention all the companies that are doing second lien and other refinancing to push out debts into the future). I believe you call that default deferral and thanks to the Fed, the pain will come, the question now is when. Look at the equity market (yeah profits have increased because businesses continue to cut costs, something that can't go on indefinitely and even with that cost cutting, the pe ratio is still out of control) or the housing market, and you can trace the dislocation (malinvestment if you'll have it) of assets caused by the actions of the Fed (check out the risk that is being taken in the high yield market at the end of this recession, it is unprecedented). As for GDP, yeah it is growing, but it is being driven by both government and consumer spending while businesses sit on the sidelines. Look at the growth in M3 over the 90s and 2000s; all this easy money created the current problems (i.e. over capacity, malinvestment, misallocation of resources) and it is now exacerbating the problem. Until we decide to take the pain, we are just waiting for the proverbial other shoe to drop -- and then we will really see the unemployment rate rising. Could it be that until we take out this over capacity and stop the flow of "easy money", we will not have a sustained growth in GDP coupled with an improving unemployment rate? Or at some point will the misallocation of resources come back to haunt us regardless of the actions of the fed, or anyone us that attempts to manipulate the markets?

Posted by: Christian on July 23, 2003 09:29 PM

I'm sure this is too simple a model, but it seems as if supply and demand would lead to downward pressure on prices under the conditions described. Lower income for consumers (due to unemployment) leads to reduced demand; meanwhile, companies producing more efficiently can provide the same supply of a commodity at a lower cost, and vendors may choose to lower prices to offset the lowered-income effect on demand.

Posted by: Bob Webber on July 24, 2003 12:06 AM

They never teach 'Output Gaps' in US universities, hence the confusion. Aggregate Hours Worked is currently 4.5-5.0% below its trend level, which has always been an excellent predictor of changes in the core inflation rate one year later. On this basis US core inflation will be 0.5-0.8% by end-2004, 0% by end-2005, and even lower in 2006, because the output won't have closed. To close a 5% gap by end-2006, payrolls growth has to average 360,000 per month until then.... extremely unlikely.

Posted by: Peter vm on July 24, 2003 12:52 AM

>"[T]he new economy," Brad?

Would that be the same old jungle we all know and love--but with greedy "sharks" http://www.j-bradford-delong.net/movable_type/2003_archives/001813.html and fearsome "wolves" http://www.j-bradford-delong.net/movable_type/2003_archives/001819.html ruling the roost?

(Instead of "forward looking economists" http://www.j-bradford-delong.net/movable_type/2003_archives/001808.html , stately old 'bulls' and boring ol' 'bears', I mean ;-)


Here's TODAY'S hot "new" tid-bit:


James K. Galbraith on Global Keynesianism

The decline of Keynesianism that began a quarter-century ago was an ambiguous event, since the Keynesians, helped along by the economic effects of the Vietnam War, had reduced unemployment to below 4% in 1969, at an inflation cost that was both predicted and quite moderate by later standards. But during the 1970s, economists came to see economic problems that might have passed into history as mistakes of policy and external shocks, as, instead, the result of fundamental errors of theory.

They retreated from any the idea that the government's economic policies should aim at achieving full employment, adopting the view that efforts to reduce unemployment were not only futile but also likely to be inflationary -- that you would get only a temporary decrease of unemployment in return for a permanent and intractable increase of inflation. This put macro-economic policy, the manipulation of budget deficits and interest rates to achieve grand goals of employment and growth, on the sidelines. Economic policy moved from the macro to the micro, from the demand side to the supply side, from a focus on accounting aggregates to focus on individual incentives...

...We must confront the global inequality crisis. For this, we must, in the final analysis, raise real wages in the countries with which our workers compete, expand their markets for our goods, and reduce their pressure on our wage structure. You cannot have this without free trade unions in those countries.

You cannot have free trade unions in the long run without democracy (nor democracy without the freedom to form unions). You cannot have democracy without human rights. And therefore, our economic agenda should really begin a long way from economic policy itself, with the campaign for human rights, democracy, and free unionism around the world....

...The great economic powers -- the United States, Germany, Japan -- must stop thinking in purely national terms and start thinking of the larger community of which they are a part. They must understand that the growth of income in the countries to which they sell eventually determines the growth of income in their own countries.

We have not faced the responsibilities of interdependence since the end of the earlier Keynesian period and breakdown of the Bretton Woods system in the 1970s, perhaps not since promulgation of the Marshall Plan. We have abandoned governmental power to market forces, particularly to the global capital markets and the large financial institutions that play in them. However, market forces cannot replace governments in the functions of governance -- neither within national boundaries nor in relations between nations.


We can harbour no illusions about the difficulty of rebuilding a multinational structure dedicated to growth and employment, and of controlling the powerful private forces whose interests would be threatened by our doing so. However, this very difficulty is in one way a virtue. We have suffered because of the short shelf life of the various economic theories put forth over the last 25 years. We try one thing, if it fails to work in a few years, we throw it out.

But if our current difficulties force us to think our problem through to the end and to adopt a set of ideas that contain a vision to which the public can respond -- a vision that holds out neither pointless sacrifice nor immediate gratification but the serious possibility of positive results in a medium and long terms-- we may be able to free ourselves of the cycle of short-lived economic theories, with their false promises and perceived failures.

http://www.jobsletter.org.nz/art/artg0002.htm

Think about it. PLEASE.

----------------------

You'll find complimentary food for thought @

"Panic in the Bond Market?"

http://www.j-bradford-delong.net/movable_type/2003_archives/001808.html


>Main Causes of the Great Depression

Paul Alexander Gusmorino 3rd : May 13, 1996

The Great Depression was the worst economic slump ever in U.S. history, and one which spread to virtually all of the industrialized world. The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. The maldistribution of wealth in the 1920's existed on many levels. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the maldistribution of wealth, caused the American economy to capsize...

http://www.gusmorino.com/pag3/greatdepression/index.html

Interim Report: Notes on the U.S. Trade and Balance of Payments Deficits

Wynne Godley

Summary

1 The United States has a balance of payments deficit worth nearly 4 percent of GDP and negative net foreign assets (or foreign debt) worth nearly 20 percent of GDP. If U.S. growth is sustained in the medium term, it is quite likely that the balance of trade in goods and services will not improve. The United States is the only major country, or country "bloc," to have a substantial trade deficit and this is proving of great advantage to the rest of the world.

2 If the balance of trade does not improve, there is a danger that over a period of time the United States will find itself in a "debt trap," with an accelerating deterioration both in its net foreign asset position and in its overall current balance of payments (as net income paid abroad starts to explode). Such a trap would call imperatively for corrective action if it is not at some stage to unravel chaotically...."

http://www.levy.org/docs/stratan/stratan.html


Why Deficits Matter

Sunday, July 20, 2003; Page B06


WHEN BUSH ADMINISTRATION officials discuss the deficit, they make it sound like a problem on the scale of a particularly persistent case of fiscal dandruff. "Manageable," Office of Management and Budget Director Joshua B. Bolten told a House hearing. "A concern," the chairman of the Council of Economic Advisers, N. Gregory Mankiw, wrote in The Post. Treasury Secretary John W. Snow ventured about as far out as any administration official, but he left the country to do it, telling a London audience that the new deficit numbers were "worrisome..."

http://www.washingtonpost.com/wp-dyn/articles/A17296-2003Jul19.html

As Budget Deficit Grows, Greenspan Speaks Softly

By Jonathan Weisman and John M. Berry
Washington Post Staff Writers
Sunday, July 20, 2003; Page A01


The White House had just released its forecast of the highest U.S. budget deficit ever, but Federal Reserve Chairman Alan Greenspan was not about to be pulled into a blame game. Yes, Greenspan told a House panel on Wednesday, deficits are bad, but then again so is some government spending, and tax cuts can be quite good but only if made judiciously....

http://www.washingtonpost.com/wp-dyn/articles/A17138-2003Jul19.html

Posted by: Mike on July 22, 2003 01:47 PM

>The L-Curve

By David Chandler

The income distribution of the United States


Consider this picture:

Imagine the population of the United States stretched across a football field in order of income, from poorest to richest. Now imagine a stack of $100 bills representing each person's income. (A 1-inch stack of $100 bills is $25,000.) The red line represents the heights of those stacks compared to a football field. I call this graph the "L-Curve."

Here is the top of the "L-Curve". Ordinary millionaires don't even show up!...

http://www.lcurve.org/

Posted by: Mike on July 22, 2003 02:18 PM

>"...better men than you two have understood the problem AND its consequences since the industrial revolution first stood up on its hind legs...

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."

-- U.S. President Abraham Lincoln, Nov. 21, 1864
(letter to Col. William F. Elkins)

And they have TRIED to explain all of this stuff to guys like you two again, and again...

The Economic Consequences of the Peace

by John Maynard Keynes
1919

http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/keynes/peace.htm

Why SOME people STILL don't seem to "get it" after all these years, and bubbles, and crashes, and wars is beyond me.....

Posted by: Mike on July 22, 2003 03:02 PM

----------------------

If you're still hungry, you can get drinks, desert AND more @

"Well, Yes. Obviously"

http://www.j-bradford-delong.net/movable_type/2003_archives/001798.html

(Where, NOT incidentally, you'll ALSO find a rather detailed indictment of the fatuous case for our most recent 'splendid little war'--among other things...)


>"...while I'm here and while the "subtext" of almost every(really big)thing that happens these days is about ignorance and/or oil and/or security and/or what SOME people will do to "control" it, YOU might want to pretend not to notice THESE items too...


THE END OF CHEAP OIL

by Colin J. Campbell and Jean H. Laherrère,
Scientific American, March 1998

http://dieoff.org/page140.htm


9/11 Attack Investigators Complain About Hindrances

Bush team is dragging its feet on access to papers and is cowing witnesses, they say.

July 9, 2003
By Greg Miller, Times Staff Writer

WASHINGTON — Leaders of a federal commission investigating the Sept. 11 attacks complained Tuesday that the Bush administration has been too slow to provide access to key documents and is intimidating witnesses by insisting that CIA and FBI "minders" attend sensitive interviews....

http://www.ctnow.com/news/custom/newsat3/la-na-commission9jul09000429,0,453137.story?coll=hc-headlines-newsat3


July 19, 2003, 12:12AM

U.S. tallied up assets well before war

Documents list Cheney group's activities

By DAVID IVANOVICH

Copyright 2003 Houston Chronicle Washington Bureau

WASHINGTON -- The energy task force led by Vice President Dick Cheney was examining maps of Iraq's oil assets in March 2001, two years before the United States led an invasion to oust Saddam Hussein, newly released documents show..."

http://www.chron.com/cs/CDA/ssistory.mpl/business/2001799


A TIMELINE OF OIL AND VIOLENCE: AFGHANISTAN

http://www.ringnebula.com/Oil/Timeline.htm


Global Warming

Higher temperatures threaten dangerous consequences: drought, disease, floods, lost ecosystems. And from sweltering heat to rising seas, global warming's effects have already begun. But solutions are in sight. We know where most heat-trapping gases come from..."

http://www.nrdc.org/globalwarming/


Energy. There's no shortage of renewable energy resources. North Dakota has enough wind to supply 35% of the total U.S. electricity demand. The sunlight falling on the United States in one day contains more than twice the energy we consume in an entire year. Fast-growing plants and other self-renewing resources awaiting the right technologies for harvesting. Continued research will ensure that these technologies are efficient, reliable and affordable.

Economy. In 2000, America imported more than half its oil at a cost of $109 billion, according to the Energy Information Administration (EIA). New energy technologies based on indigenous, self-renewing resources will help keep these dollars at home to strengthen the economy and create new jobs. A 2001 World Wildlife Fund study estimates that energy efficiency policies and renewable energy resource development could result in 1.3 million new jobs by 2020.

Environment. The EIA estimates that in 2000, 81% of all U.S. greenhouse gases were carbon dioxide emissions from energy-related sources. Clean energy sources such as sunlight and wind can be harnessed to produce electricity, process heat, fuel and valuable chemicals with little, if any, pollution. Sunlight also can be harnessed for tasks such as cleaning up contaminated soil and groundwater...

http://www.nrel.gov/ataglance.html


Our Ten Point Plan for Energy Freedom

http://www.apolloalliance.org/

Posted by: Mike on July 22, 2003 02:12 AM

Ciao <];!)

Posted by: Mike on July 24, 2003 03:58 AM

Wow.

Posted by: Barry on July 24, 2003 04:09 AM

"the economy could get hit by deflation, an unstoppable drop in prices that has hounded Japan's economy for much of the past decade."

Um...nope. Deflation is a generalized drop in prices. Unstoppable is not part of the definition. Bernanke noted that steady inflationary expectations should help avoid deflation. He did not go on to describe what would happen if inflation expectations remain steady even after a generalized drop in prices gets underway, but the answer that is built into Greenspan's statements on deflation is that it doesn't become "corrosive" (that is to say difficult to stop, rather than "impossible" - a silly extreme) until expectations change. As I understand it, inflationary expectations change rather slowly.

Question about productivity. One explanation that has been offered for the continued decline in productivity despite the slowing in capital spending growth is that there are costs to installing and learning to use new capital equipment that delay some of the benefits. Those delayed benefits are part of what has kept productivity rising through the period of slower capital spending growth. (Greenspan says about half of productivity growth comes from factors other than new capital equipment.) OK, when does the delayed rise in productivity finally peter out? How long is the lag? Anybody?

Posted by: K Harris on July 24, 2003 05:12 AM

OK, at the risk of taking up as much room as Mike (where do you find the time?), I have another quibble. The thing CNN got right is that the Fed guys who spoke Wednesday both did say that growth could run above trend without putting an end to disinflation. Now, what exactly is the problem? CNN got the "impossible to stop" part wrong. If growth is above trend, then at some point, new jobs are created, which is what we want. The trend toward deficits is slowed, which is a step toward what we want.

What is it about prices that makes the situation "bad" when growth is good but prices are not rising? Looks to me like any problem in such case has to be on the financial side, rather than in output and employment. Perhaps the policy pipeline remains bloated - flat to falling prices means easy monetary policy for a very long time, with asset prices higher than they otherwise would be. (Bubble believers are all over this one already.) The current account would probably not get much, if any, better under such circumstance. This, however, is not the flavor I get from the CNN piece. Deflation is bad because, well, deflation is bad. Deflation in writing like that seems to carry pretty much the same scare as recession, since the two terms have been used interchangebly quite a bit lately, but they are not the same.

I wonder if we hadn't better get accustomed to the idea of steady prices, with deflation right around the corner. That was the Fed's goal, and I doubt oolicy makers will surrender achievement of that goal lightly.

Posted by: K Harris on July 24, 2003 05:30 AM

The shorter Mike:

Posted by: achilles on July 24, 2003 07:54 AM

Has anyone yet considered a very progressive tax structure and large redistribution of income as a solution? After all, in the 1980's the idealogues were up in arms about cutting taxes on the wealthy and businesses to induce investment while screwing consumers. Now we have massive over-capacity and very weak consumer demand. Funny that. It seems the reverse should be called for by the same idealogues to put money into the hands of those who spend, rather than invest in yet MORE unused capacity?

Didn't think so.

Posted by: Lorenzo on July 24, 2003 08:01 AM

>Has anyone yet considered a very progressive tax structure and large redistribution of income as a solution? After all, in the 1980's the idealogues were up in arms about cutting taxes on the wealthy and businesses to induce investment while screwing consumers.

Which tells us WHO "the idealogues", MOST of the "popular" economists (and ALL the really slick, policitally "savvy" ones ;-) work for.

BTW, FYI, & PDQ

In hock to the hilt

Sun Jul 13, 8:00 PM ET

BY LOU DOBBS

We're Addicted To Debt. We Borrow, our businesses borrow, our state and federal governments borrow. Most of the attention is focused now on the federal budget deficit, which could reach an astonishing half-trillion dollars next year. The overall national debt could almost reach its congressionally mandated limit of $7.4 trillion. State governments, most of which are required by their constitutions to balance their budgets, will have combined deficits of an estimated $70 billion next year. As bad as all of that is, the most troubling burden of debt plaguing this country rests squarely on consumers.

Consumer debt is on the rise, and personal bankruptcies are skyrocketing. Reports show that consumer credit increased 5 percent in May, to $1.76 trillion, and household debt now stands at 110 percent of annual disposable income, up from 76 percent in 1986. Americans set a new record last year for going broke, with 1.6 million people filing for personal bankruptcy. Says Harvard law Prof. Elizabeth Warren, "Consumer debt is out of control. If each little family were a business, we would describe America's businesses as vastly overleveraged . . . far too many are on the brink of disaster..."

http://story.news.yahoo.com/news?tmpl=story&u=/usnews/20030714/ts_usnews/inhocktothehilt

Posted by: Mike on July 24, 2003 08:57 AM

Has anyone considered raising the minimum wage as a way to encourage inflation?

Posted by: bakho on July 24, 2003 09:38 AM

There has been a sharp flow of investment to China and India these several years, coupled with the development of a well skilled labor force in both countries. My sense is that there will be a steady flow of jobs in manufacturing and services to China and India that will limit growth of America's labor force for quite a while.

Posted by: anne on July 24, 2003 10:25 AM

Re:Deflation

The output gap won't necessarily cause deflation immediately. The current economic profits will not create more business spending until consumers start spending. Producers know that lowering prices and entering new industries will not be profitable until consumer confidence increases. Only then will producers start to spend more and cut prices. When they do we will have deflation.

Posted by: Duncan on July 24, 2003 11:21 AM

Duncan

What the hey???
Think clearly.

Posted by: arthur on July 24, 2003 11:25 AM

bahko:

Of *course* not. Are you mad? No one is going to do what really needs to be done here. No monetary transfers to the third world (which can be done almost for free at this point). No raise in minimum wage. NOTHING to help consumers. NOTHING. The political climate of the U.S. has shifted so far to the right that it won't happen even once deflation hits.

*sigh*

Posted by: Lorenzo on July 24, 2003 11:41 AM

bakho,

The blunt instrument argument against raising the minimum wage, as I'm sure you know, is that it costs jobs. The slightly less blunt argument is that a minimum wage hike costs few or no jobs when wages are rising for lower income jobs anyway, but would cost jobs if there is already pressure on jobs. Timing doesn't look good.

As a cure for deflation, the question of whether higher wages for some offsets loss of employment for others doesn't seem all that easy to answer. Probably wouldn't even get a clear answer if we ran the experiment, since so many other factors would be working at the same time.

Posted by: K Harris on July 24, 2003 12:43 PM

"Of *course* not. Are you mad? No one is going to do what really needs to be done here. No monetary transfers to the third world (which can be done almost for free at this point). No raise in minimum wage. NOTHING to help consumers. NOTHING. The political climate of the U.S. has shifted so far to the right that it won't happen..."

- SIGH

Posted by: anne on July 24, 2003 01:19 PM

http://www.cbpp.org/

This analysis finds that a bill approved on July 15 by the House VA-HUD Appropriations Subcommittee would provide about $583 million less than is needed to fund all housing vouchers likely in use at the beginning of fiscal year 2004.

- On and on and on....

Posted by: anne on July 24, 2003 01:26 PM

Peter VM's comment:

"They never teach 'Output Gaps' in US universities, hence the confusion. Aggregate Hours Worked is currently 4.5-5.0% below its trend level, which has always been an excellent predictor of changes in the core inflation rate one year later. On this basis US core inflation will be 0.5-0.8% by end-2004, 0% by end-2005, and even lower in 2006, because the output won't have closed. To close a 5% gap by end-2006, payrolls growth has to average 360,000 per month until then.... extremely unlikely."

Don't ignore this.

Posted by: Fred Boness on July 24, 2003 01:35 PM

Mike,

Could you tell me what investment premises you draw from your work/idea? You know, market direction, commodities prices, gdp growth figures and such. I'd like to do the exact opposite.

Posted by: William Utley on July 24, 2003 03:14 PM

Mike,

Could you tell me what investment premises you draw from your work/idea? You know, market direction, commodities prices, gdp growth figures and such. I'd like to do the exact opposite.

Posted by: William Utley on July 24, 2003 03:15 PM

P.M.Lawrence wrote:
"...are there or are there not externalities in the interaction of tax and social services (or whatever, in various countries), pushing towards higher unemployment than a more perfect labour market would..."

How about a government/business alliance that emphasizes monopolies over competition, as in perpetual "technology" monopolies in patent, copyright, trademark. PC assumes perfect knowledge, but the policies implemented in law in recent years have been focused on making the US a "knowledge economy", ie., an economy where the US extracts rent from the world which uses knowledge that the US controls for production.

Of course, the US feels quite free to make use of any "knowledge" "developed" anywhere in the world to create the "knowledge monopoly". For example, we go to Africa and find plants which form the basis for drugs which we then insist Africans pay knowledge rent on to use.

Or Disney takes stories from around the world to create cartoons and then argues that these cartoons represent unique ideas deserving of protection in perpetuity - I think its safe to say that there will be deals cut to extend copyrights yet again when Walt's cartoons are again due to fall into the public domain.

And given the ease with which knowledge travels, we now have many companies employing people in foreign countries developing knowledge for which the US companies will demand rent around the world. The "knowledge property" created in India by an Indian company, even if owned by a US company would be governed by Indian laws, but by creating it world wide under supervision from the US, companies are able to have it governed by US law.

Posted by: mulp on July 24, 2003 05:16 PM

Okay, I'll admit to having been a bit shrill, but my point stands. The same people using the consumption/investment dichotomy of differing income groups to justify tax cuts to the rich to spur investment in the 1980's certainly aren't going to argue the opposite now even though by their own logic its what the situation demands. I will bet an arbitrary amount of money, however, that not a single step in the direction of stimulating consumer demand (through fiscal stimulus, raising the minimum wage, raising taxes on the rich and lowering them on everyone else, etc. etc.) will be done. Not a single one, no matter how necessary it is to close the gap between capacity and consumption. The political climate of the U.S. will not allow it, even if and when the U.S. slides into deflation. (Which, barring an increase of the real price of oil or assets in general, I see as inevitible here).

Posted by: Lorenzo on July 25, 2003 08:09 AM
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