19 March 2021

1) American military officials are warning that, in the next few years, China could invade Taiwan. The island nation has long been a sore subject of U.S.-China relations. China’s rapid military build-up, are recent indications that Taiwan could unilaterally declare its independence from the mainland. An invasion could throw the whole region into chaos and potentially culminate in a shooting war between China and the United States, who is treaty bound to help Taiwan defend itself against Beijing. The Chinese army’s capabilities have matured to such a degree that this is no longer a dilemma we can afford to brush off. The Biden administration must signal its willingness to ‘go to the mat’ for Taiwan and help ensure the island can defend itself, but without further spooking Beijing. China has commissioned 25 advanced new ships, including cruisers, destroyers and ballistic missile submarines, with capabilities designed to keep America and its allies, who might interfere on Taiwan’s behalf, at bay. Meanwhile, China is integrating its new equipment into an increasingly sophisticated force

2) Production at U.S. manufacturers unexpectedly declined in February, representing a pause in recent momentum as factories were beset by severe winter weather and supply-chain challenges. The 3.1% decrease in output was the first since April, following an upwardly revised 1.2% gain in January. Total industrial output reflected a 7.4% surge at utilities, that was the largest advance since March 2017, also driven by increased demand for heating. Manufacturers continue to battle supply shortages and shipping challenges, but lean business inventories, steady demand from consumers and solid capital spending should push manufacturing back up.

3) A Tesla Model Y electric car, with its Autopilot engaged, crashed into a Michigan police car that had pulled over with its lights on. The driver was using Tesla’s Autopilot system when he crashed into the police vehicle, but there were no injuries, according to police. The 22-year-old driver was issued citations for failure to move over and driving with a suspended license. Tesla’s Autopilot system allows the car to brake, accelerate, and steer automatically. The electric car maker also sells its full self-driving software as a $10,000 one-off add-on and plans to release it as a subscription model this summer.

4) Stock market closings for – 18 MAR 21:

Dow 32,862.30 down by 153.07
Nasdaq 13,116.17 down by 409.03
S&P 500 3,915.46 down by 58.66

10 Year Yield: 1.73%

Oil: down at $59.53

14 April 2020

1) The auto industry, already reeling from the new car shutdown and depressed demand, is now concerned about a possible used car price collapse, which could have far reaching effects across the economy. The used vehicle auctions are now virtually paralyzed, the same as the rest of the country, with vehicles piling up at places where buyers and sellers bid on cars and trucks, a situation which cannot go on for months. This is creating a huge level of wholesale supply in the market as inventories continue to expand. This will cause fiscal problems for in-house lending divisions, lease contracts and car rental companies from falling car values. Used car sales fell 64% in the last week of March with prices falling an estimated 10%. The auto makers credit companies are taking huge losses and looking for ways to take advantage of asset backed securities market. With car rentals way down, rental companies are fearful of having to raise cash by selling off inventory when prices are way down.

2) Mr. Neel Kashkari, the head of the Federal Reserve Bank of Minneapolis, was on ‘Face the Nation’ television show last Sunday, considers the U.S. may be facing an 18 month shutdown based on what is happening in other countries. Fearing flare-ups, America may face shutdowns until an effective vaccine or therapy is found.

3) Economists fear poor recovery, with high unemployment through 2021, despite the trillions of dollars in cash and loans from the Federal Reserve. Nevertheless, the massive effort is likely to leave millions of additional Americans unemployed for an extended time with unemployment not just spiking, but remaining for the next year. Unemployment may jump up to 20% in the coming months then coming down into the single digit range. It’s expected that a lot of people will not be getting their jobs back as the economy shifts and reforms itself. The more specialized a design, the more brittle it is.

4) Stock market closings for – 13 APR 20:

Dow 23,390.77 down 328.60
Nasdaq 8,192.42 up 38.85
S&P 500 2,761.63 down 28.19

10 Year Yield: down at 0.75%

Oil: down at $22.71

DISCUSSION OF NIGERIA & LIBYA CAPPING OIL PRODUCTION NOT ON TABLE, FOR NOW (OPEC)

By: Economic & Finance Report

 

OPEC has insisted that oil output from Libya and Nigeria are not on the agenda in meeting in St. Petersburg, Russia next month to discus the pact OPEC members currently made to reduce oil supply flow.

Nigeria will cap oil production if it can maintain 1.8 barrels pumping, while Libya wants to maintain 1.25 barrels of oil flow. Libya and Nigeria are currently exempt from the curbing of oil production by OPEC. -SB

OBSOLETE PEOPLE, TECHNOLOGY ADVANCES & FUTURE JOB MARKETS:::::::::

 

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A Quick and Easy Recipe for the Technologist

By: James Lyman, BSAE, BSEE, MSSM

Economic & Finance Report

For those of us without a technical foundation, we fail to appreciate the impact of those electronic boxes setting on our desks, with their TV like screens, keyboards and mice . . . they’ve had on our society. For most people, the personal computer is a plaything used with the internet. In a world with ever expanding automation, people have come to think that an iron man robot from the movies is required to displace them. They know that such machines are still in the future and hence feel safe that they can’t be replaced by a machine.

Over the years, I’ve heard many people exclaim, “Why did they lay those people off? They’ll just have to hire them back! Who will do the work, if they don’t hire them back?” They say that, because they’re thinking in terms of that iron man robot. Unfortunately, reality is far different from perception, indeed the process can almost be explained as a recipe for the technologists.

When I first started my engineering career in the early seventies, the department manager of a major retailer such as Sears, Montgomery Wards, JC Penneys and smaller ones I can no longer recall . . . could make an OK living. Not really good . . . but not really bad either. This is because a department manager had a number of responsibilities. He (almost all were men at that time) determined what products would and would not sell in his area, how much inventory was needed, when to order and how much, what was seasonal and what sold year round, how the inventory should be displayed, when something was selling too slowly and needed to be discounted . . . all the intellectual tasks associated with retailing in the traditional “mom and pop” store.

Not everyone could do this work. There was a certain minimum intellectual level required to do the job. If we could quantify the intelligence of people, not just the traditional IQ, but also such things as people skills, mechanical ability, word skills (verbal and written), music talent, education, motivation and self discipline- all the things we do over and above what a monkey does. If it was possible, we could measure the number of people verses their intelligence level, and as you might expect, get a frequency distribution as seen in Figure 1. Toward each end, we get fewer and fewer people, with most people somewhere in the center. People like Beethoven and Einstein would be on the extreme right, while those with sever learning disabilities on the left. Mind you, there really isn’t a Composite Intelligence measurement, we are just using this concept for illustration.

Now, a traditional retail department manager requires some minimum intelligence level for his job, which we represent in Figure 2 as a red vertical line marked ‘a’. People to the right of this line could do this job, but there is also a Composite Intelligence level where no one will do the job. For example, people like teachers, doctors, engineers, lawyers . . . people who were able to work in career fields with higher salaries. We represent these people with another red line to the right of line ‘a’, marked ‘b’ in Figure 3. Therefore, the number of people available is represented by the red cross hatching between lines ‘a’ and ‘b’.

Supply and demand! For a relative constant demand, a small supply means a higher price. That’s why department managers from my youth, could make an OK living. The number of people capable of doing the job was sufficiently small to keep their price (salary) up.

Now, if you go to a modern retailer such as Walmart , who was one of the pioneers of the technology now widely used in retailing, you can see the impact of computers. Workers get a computer printout showing where each of those steel shelves goes. Then another saying where each hook goes- 14 up and 27 over, 46 up and 19 over, for each and every hook. Then another computer printout showing on which hook each SKU (the bar code inventory number on each item for sale) item is hung. Computer systems determine what will sell in each store location, how many needs to be on hand, what is seasonal and what levels of inventory require reordering. The reordering is also automatically done by computers from the store to the warehouse.

When you pull an item off its hook, and pay for it, the cashier scans the bar code on the item. The cash register isn’t really a cash register in the traditional sense, rather it is a computer terminal which tells another computer that the item is being purchased. That computer then deletes it from its inventory, decides if the inventory is now too low, and reorders that item if below minimum level and isn’t going out of season. Indeed, before you reach your car, the computer system may well have reordered more of the items, thereby starting the process of other computers pulling more inventory from the warehouse bins and routing it to the truck which delivers to the store.

With computer systems now doing the bulk, if not all of the intellectual chores, the required Composite Intelligence level for the retail worker, is considerably lower than line ‘a’. The blue line ‘c’ in Figure 4 represents the new lower limit of required Composite Intelligence, with the area between blue line ‘c’ and red line ‘b’ the number of people who can now do the job of a traditional retail department manager. We fill that area with blue cross hatching to make it more apparent.

Again, we have supply and demand. With the demand still fairly constant, the huge increase in supply of people makes the price (wages) drop like a rock. Now, almost anyone can do the work, and so retail workers now get paid just enough above minimum wage that a worker shows up for work . . . most of the time, shows up sober . . . most of the time, shows up not under the influence of drugs . . . most of the time, and does the required tasks . . . most of the time.

A variation of this recipe is to use technology to allow a single human to do the intellectual work of many. The draftsman and accountant (or book keeper) are prime examples. Using computers and specialized software, one person can now do the work of a dozen or more people. What had once been good paying, sought after jobs are now just above subsistence pay, just because one can now do the same work of many. That’s why people aren’t rehired to do the work, so over the years the Golden Rule of Automation has become:

If you want something done right . . . get rid of the human!

That’s how the world has been going for decades. That’s what most people don’t appreciate. You don’t need to build that iron man robot as seen in movies, rather you only need to replace the human’s upper level intellectual functions, and this is what has been happening for the last thirty years. All across our economy, we have been displacing people left and right with technology. Where have these people been going? The solution is the so call service economy. Since the first oil crises in the early seventies (start of the decline of American manufacturing), people have been migrating into hyper consumerism where they work to support other consumers, who in turn work for other consumers, that work for other consumers. No one creates any real material wealth, rather money just circulates around, and because of the multiplying effect of circulating money, the economy seems to grow and be healthy.

The fly in the ointment is hyper consumerism rests firmly on a foundation of cheap and plentiful resources, in particular . . . oil. So what happens if we lose the oil? Where will these people go next? For when the oil is lost, the real value and worth of most Americans will come to an abrupt and sudden end. And none of those governing us seem to even be aware of this recipe, the consequence it holds for us, and most importantly, what’s to be done with the preponderance of surplus obsolete people we now have.

The first reaction of people is to demand “Stop the technology displacement! It’s not right!”, not appreciating that this technology displacement isn’t something new- not a product of the computer age. Technology displacement has been going on long before recorded history . . . before the Bible was written. We were not designed for anything like the world we now live in, rather we were designed to be hunter-gatherers, to live in small tribes of a few dozen with a life span of about 30 years. We were designed for an environment with a 50% kill off of the young and a 10% kill off of females from birthing. We were designed with a birth rate that just exceeded our death rate. Humans are designed to be a very efficient food gathering, reproduction machine.

Then came the first technology displacement of herdsman, where humans either followed wild herds such as the plains Indians and buffalo or Lapplanders with their reindeer, or herdsman of domesticated animals such as the shepherds of the biblical lands. This technology allowed us to feed ourselves marginally better than hunter-gatherers, and thus reproduce better. Then came the first agriculture where hunter-gatherers would spend some amount of time in one location to grow some foodstuff, so again a new technology increased our ability to survive. And then came substance agriculture in the golden crescent of the biblical lands with wheat grain, and in China with rice grain. With this new technology, food production was sufficient for people to remain permanently in one location, with a few people being displaced by this technology to become artisans and make things for others.

Only then did we develop writing and recorded history, and only after many millenniums of technology displacement did we see a significant increase in survival and propagation of our species, something which became known as the industrial revolution. Only then did we have a world that begins to look remotely like the world we now know. Like a brick wall, our world is built up from a foundation of those earlier “technology bricks”, one stacked upon another, each giving strength to the other to form one wall. So what bricks do you pull out to stop technology displacement?

In trying to stop the growth of technology, to stop technology displacement, we face one insurmountable obstacle . . . there isn’t an individual or small group making the decisions. No one is in control, rather decisions are made as the sum of thousands . . . tens of thousands of individuals making decisions in their own self interest. Other than a totalitarian state, there isn’t any way to control technology or limit displacement. The reality is we must continually adapt and change ourselves to an every changing world. We must be ready to move into new jobs and responsibilities, knowing that we will be moving again as technology again displaces us.

So what is to happen to the preponderance of people who will be excess baggage to America if we lose the oil? History has shown it’s usually rather unpleasant- just look at what happened to the Native Americans. One thing is for sure, no one in the government has any ideas, indeed haven’t really given it any thought. And this is rather surprising since the recipe for making obsolete people is so simple. You just:

Look for segments in the labor market with chronic low performance, identify the intellectual functions, then develop and adapt the technologies to replace those upper level functions of most, if not all, of the labor force.

Problem gone . . . or is it!

POWER COMPANY ASSOCIATION INDICATES DOMINICAN REPUBLIC OWES THEM $800 MILLION FOR POWER SUPPLY USAGE..

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By: Economic & Finance Report

The Dominican Electricity Industry Association (ADIE) has specified to the Dominican Republic that it is owed $800 million dollars for power supply usage at national electrical plants  and facilities. The association has indicated that the government owes power supply producers the vast of the $800 million due. They have threatened to cut of power and electricity on the island if the money is not soon to be repaid.

 Govt analyst believe a sure blackout could occur, and would put a halt on the activities and largely effect the economy in DR. The government in DR has not paid the power suppliers for more then eight months, and the association does not want to extend anymore credit or “produce anymore lifelines for the country”, until they are fully paid.

So far government officials have not come with any solution on how to finance nor start repaying the power suppliers. -SB