4 October 2019

1) MGM Resorts has reached agreement with families of victims who were killed in the October 2017 mass shooting in Las Vegas. The settlement for the 2,500 family victims will be almost $800 million dollars with the agreement that all pending litigation against MGM will be dismissed. The shooting left 58 dead while wounding hundreds of others.

2) Soon to be implemented, tariffs will make imports more expensive for Americans, such as Scotch and Irish whiskies, Parmesan cheese and French wine. The tariffs will be on $7.5 billion dollars of European imports. Further tariffs are threaten over aircraft subsidies by the European Union, coming at a time when economies have been hurt by the US-China trade war. The World Trade Organization has ruled America can impose tariffs because the European Union has failed to abide by earlier ruling of Airbus subsidies.

3) The service-sector activity in the U.S. slowed to its weakest pace in three years this September. This is another sign that the U.S. economy may be weakening where the services sector accounts for more than two thirds of economic activity. The non-manufacturing index fell to 52.6 last month, which was the lowest reading since August 2016 and far below the 55.3 expectations.

4) Stock market closings for – 3 OCT 19:

Dow                 26,201.04    up    122.42
Nasdaq              7,872.26    up      87.02
S&P 500             2,910.63    up      23.02

10 Year Yield:    down   at    1.54%

Oil:    down   at    $52.34

FUTURE of HYPER CONSUMERISM!!!!!!!!!!!

The Real Value to Society for the Youth of America is as Consumers, But What Becomes of Them if Hyper-Consumerism Declines.

By: James Lyman BSAE, BSEE, MSSM

Economic & Finance Report

I’m old enough to remember the first oil crisis of 1973, when the Arab nations tried to punish America for her support of Israel in the Seventy-Two war by cutting off oil shipments. American manufacturing was already in decline when the economic shock of oil shortages ripped through society. Suddenly, American manufacturing started crumbling away as factory after factory closed with American business losing all interest in making their money by manufacturing. The Rust Belt was born. Confronted with a growing problem of spreading unemployment and diminishing opportunity for people, the government had to come up with a new way of doing things, a new kind of economy.

The solution was deemed to be the service economy, the hyper-consumerism where people’s value in the economy and to society was as consumers working to support other consumers, who in turn worked to support more consumers. Instead of producing real material wealth as was formally done with a manufacturing based economy, America would depend almost exclusively on the multiplying effect of money being exchanged from one person to another, a basic principle taught in any introduction course of economics.

Not long ago I wrote another article titled, “Tiny House – Tiny Future” about how the millenniums were turning away from the traditional living in large houses and instead going to homes that are one tenth the traditional size, and consequently foregoing the purchasing common to the hyper-consumerism society simply because they no longer have the room to keep stuff. This I proposed was maybe a sign that hyper-consumerism was coming to an end, that it was not sustainable. With diminishing opportunities for the young, they don’t have the monies to participate in hyper-consumerism the buying of things just to be buying and having things.

Then while checking my email, I glimpsed a banner for a news story about how some of the top ten retailers where closing stores, which instantly caught my attention. Could this be another sign that hyper-consumerism was on the decline, that the much vaunted service economy we depend on is now crumbing just as manufacturing with the rust belt did? Will the millenniums and Z Generation be less able to make substantive contributions to society? I decided to check into this and here’s a parcel list of those retailers who are contracting by closing stores:

Sears & Kmart: 43 additional stores

J.C. Penney: 138 stores

Macy’s: 68 stores

Payless ShoeSource:  512 stores and counting

Radio Shack:  1,000 stores with only 70 remaining

Staples:  70 stores

CVS: 70 stores

Neiman Marcus: number not stated

Furthermore, some of the top American retailers may be declaring bankruptcy this year. No doubt, you’ve heard the recent story of how Alfred Angelo Bridal, the national bridal gown retailer, suddenly closed their doors in bankruptcy leaving hundreds of soon to be brides with nothing to wear to their nuptials but what was already in their closets. Not only that, but they would get just a fraction of their money back  and then months or years from now at that!

So what if this is portents of things to come? So what if the youth of America doesn’t have the hyper-consumerism based economy of their parents and grandparents? Well the real question is, what do they have instead? What is in line to replace it? The answer is nothing! No one in the government is working on some alternative, just like 1973 when American manufacturing was fading. It wasn’t until the shock of the oil crisis that our government gave the situation any consideration, and then it was a quicky decision with little to no real consideration (in other words talking points), and certainly no modeling of the consequences from that decision. That time, they sort of lucked out and it’s worked for several decades, but can they luck out again?

And how do I know that no consideration is being given to a possible demise of hyper-consumerism? Because you hear virtually nothing about the obsolete people problem with the displacement of workers by technology. This is a very integral part of today’s economic problems for the millenniums, in that anytime you can reduce the intellectual-skill levels required for a job, you reduce your labor cost. Displacement by technology means that millenniums are less able to make money because machines are doing the better paying work. Without money, their value as consumers diminishes so they are less able to support a hyper-consumerism based economy. Like the washing away of sand under the foundation of a house, there just comes a time when the house can no longer stand.

Without hyper-consumerism  what will become of so many of America’s youth.

HAPPY MEMORIAL DAY TO THOSE WHO RISK & RISKED THEIR LIVES 4 US…ALL (USA)

By: Economic & Finance Report

Special day in the United States. Memorial Day is a day of rememberence, recognition and reflection, for those who have sacrificed and who continue to sacrifice their service and lives for our country’s sovereignty, liberty, and unconditional freedoms…

I salute and commend our servicemen and servicewomen, who tend to the challenges daily, that face this great nation….

*Salute & God’s Many Blessings*… Happy Memorial Day -SB

THREE STRIKES!!!THE 3 METHODS of TECHNOLOGY DISPLACEMENT: AMERICAN YOUTH STRIKE!!!!!!!!!!!!!!!!!!!!!!!!

By :James Lyman BSAE, BSEE, MSSM

Economic & Finance Report

Today, when you say ‘technology displacement of people’, everyone thinks of the poor little old factory worker standing on the assembly line. Some machine is brought in, the down trodden worker is handed a pink slip, pointed to the door and told, “Don’t let the door hit you in the butt when you leave!” But this is the displacement when I was a millennium … many decades ago. This is the image most Americans still have of technology displacement. When the 2008 recession started, you may have noticed a number of news stories about professional people, corporate middle management making six figure incomes, who got laid off. Where once, they could have a new job in just days, or a few weeks, they had gone months even years without any offers. They were no longer needed, simply because those who remained working were now able to do the jobs of those laid off because of technology. In other words, those laid off had been displaced by technology just as factory workers had been decades before.

Images of factory workers being laid off when a new machine is brought in to do their jobs, persist as how technology displacement works. In reality, there are three ways or methods which people are displaced by technology, and they are:

1) Direct Displacement – The traditional technology displacement that everyone always think of, where a machine is brought in that directly replaces an individual, often several people. The classic example is the machinist, those workers who created the industrial revolution, who made modern America. These people were replaced, rather quickly I might add, by robot machine tools that not only did the work of highly skilled machinist, but did it faster, more accurate and much better all around. Not only did these robot machines take over the highly skilled and much sought after jobs of machinist, but they allowed the extensive migration of manufacturing

from America. Those skills once so required by manufacturing were no longer needed, making machinist obsolete.

2) Oblique Displacement – The second means of displacement is by a technology allowing one person to do the work once done by many. Using a machine, if one person can do the work once done by ten, then those remaining nine people are out of work, and so therefore are no longer needed. A 90% reduction of the work force. An example is draftsmen, those skilled workers who create and maintain the engineering drawings needed to define a product for manufacture … or for building your new house. These drawings were once done using drawing boards, T-squares, pencils, scales, dividers, compass and triangles. Just like an artist does, the draftsman would draw an image on paper of some part or thing, which was scaled so someone could make that part without error. This was a highly skilled occupation which took considerable time to correctly create such drawings, and even more time to make changes as a design evolved. But using a computer and CAD (Computer Aided Design) software, a draftsman could not only make drawings faster, but much more accurately, more accurate than a part could actually be made. A draftsman did the work of many traditional draftsmen using pencil and paper.

3) Indirect Displacement – The third method is where technologies displaces a number of people who have the intellectual ability to do the work of an unrelated career field. While not as clearly identified as the first two methods, especially the technologies doing the displacement, it has had a profound effect across the American economy. For years technologies have been displacing young people, especially new college graduates, who find limited job prospects for their field of studies. They have returned to universities to acquire a law degree, then pass the bar to become lawyers. These process has so glutted the job market for lawyers, that now between 20 and 50% of new lawyers are unable to find employment as lawyers. While there is no machine that has directly replace lawyers, they are nevertheless being displaced indirectly by a number of technologies

I just finished reading an interesting book, “The Second Machine Age” (1) which described how technologies displaces people by allowing reorganization of businesses so fewer people are needed. This is a form of oblique displacement, and explains why those corporate middle managers, making six figure incomes, got laid off. No machines or technologies were developed to deliberately replace them, it was just a consequence of a number of technologies. However, this is changing too, with a new artificial intelligence technology called Watson. If you Google three words … IBM, Watson and Jeopardy you will find a recent revolution in artificial intelligence, a machine named Watson that went against the two very top winners of the quiz program Jeopardy and beat the pants off them. The AI technology is now available to the commercial and medical communities, including television ads promoting sales of these systems. H & R block is now using this technology to prepare income tax returns.

The reality of today’s kids, the millenniums, is they are getting the worst deal since the Indians sold Manhattan for twenty-four dollars.

Our school systems have completely failed to provide the education necessary for the twenty-first century, continuing to prepare America’s youth for my world, the mid twentieth

century, a world already faded away and gone. They now live in a world which every few years, they must reformulate themselves for a new job … a new career field, and those who can’t are left behind. Therefore, the only real answer to technology displacement is education– the real education of the math and sciences which gives an individual the solid foundation to be able to continually reformulate themselves to continue a career.

No doubt, today’s youth are facing an uphill battle if they are to have any economic or financial future.

1.“The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies”, Erik Brynjolfsson, Andrew McAfee, W. W. Norton & Company, New York, 2014

Health Insurance Gorilla: The One Ton Gorilla In The House; That No One Talks About In The Debates About Health Insurance!!!!!!!!!

Economic & Finance Report

By :James Lyman BSAE, BSEE, MSSM

Since Hillary Clinton’s attempt to reform the health care system with insurance reforms, through Obamacare and now our present debates to again reform health insurance, there has always been a ‘one ton gorilla’ silently sitting in the middle of all these political debates and machinations. A massive gorilla that’s always been present, sitting quietly right square in the middle of it, dominating the whole national debate, but no one ever admits to its presences let alone considering its impact on the problem. And that two thousand pound gorilla is the growing problem of obsolete people in the midst of our economy!

Since the start of my engineering career in the seventies, I have witnessed one career field or class of jobs after another disappear to new technology. And while these people have mostly gone on to find new jobs, inevitably they are lower paying jobs because lower skills are required. Anytime you reduce the skill-intellectual requirements of a job you reduce your cost of labor simply because more people are able to do that job. This displacement by technology has created a growing class of Americans who are obsolete and therefore less able to make substantive contributions to society as reflected by their lower pay scales. The principle problem of these proposed health insurance programs for America is the growing abundance of people unable to afford health insurance simply because they have so very little to contribute to society. Because they are obsolete, they no longer have the ability to make contributions and therefore have little to no money. That’s the two thousand pound gorilla in the room. The preponderance of obsolete people is the gorilla weighting down, indeed crushing any and all efforts to provide access to health care to all Americans.

The structure of a bridge provides a perfect analogy, since it must support more than what’s crossing over it. It must also support the weight of itself, the weight of the structural members

that holds the bridge up. In general, the weight of the bridge far exceeds the weight of what crosses over it, so most of the weight of the bridge is supporting the weight of the bridge itself, only a small amount supporting the loads crossing over it. It should come as no surprise that as the weight on the bridge increases, without a corresponding increase in what the bridge is made of (weight), the bridge is less able to support these loads. This little paradox of bridge weight means it’s not enough to just add structure to support additional weight, you must also add structure to support the weight of that added structure. That added structure is many times more than was added to support the additional weight on the bridge.

OK, so what’s the point? Like a bridge, the bulk of working people support the working force by paying for infrastructure, government services such as police and schools, maintenance of public works, public communication networks (roads, waterways, air ways) … any and all parts of supporting a modern society. That means each is making money to pay a part for that support, while those who are too far behind, who have few to no skills needed in the twenty-first century, are unable to pay anything, so they’re the one ton gorilla sitting on the bridge being supported by the rest. But like the supporting members of the bridge, the bulk of the support workers provide goes to support the workers themselves with just a little left over to support the gorilla. Many people think that each individual worker is in turn able to support one of the unfortunate ones who are unable to make substantive contributions to society. This bridge analogy shows why this assumption is so invalid, because it isn’t a ‘one for one’ relationship … most of the bridge structure goes to holding up the bridge itself, not the gorilla.

But worst yet, obsolescence of people means the gorilla is made larger (heavier) by subtracting from those who are supporting the bridge and hence the gorilla. As the gorilla grows heavier, the bridge grows weaker and therefore less able to support the load on it. The burning of a candle at both ends! Eventually, just like a real bridge, it is no longer able to support the load and collapses. This is not some abstract intellectual exercise for debating in pubs and cocktail parties, we are seeing it now in Greece, Turkey, Italy, Spain … we’re seeing it now in Venezuela where the collapse of the socialist economy has people killing and eating their cats and dogs!

Social Security is a prime example of the many supporting the few. When first passed, there were a little over 16 workers to support each elderly recipient, while today it’s 2.6 supporters per recipient. And more and more of these supporters are the millenniums, at a time when fewer and fewer of them are able to support just themselves. The structure of the bridge is eroding while the gorilla continues to grow!

Principle factor in the health care problem is people are not advancing technologically, and therefore are less able to make substantive contributions to society. This is reflected in the people’s inability to pay for their heath care. This is the one ton gorilla that everyone is ignoring in the calculus of health care as well as other aspects of social problems. Right now, one side advocates extensive government control of the health system to resolve the mirid of problems, while the other side advocates the free markets to resolve those problems, with neither considering any aspect of the obsolete people who are the actual forcing function of these problems.

And as it stands now, it’s the millenniums and Z-generation who are will to be the fall guys for