search elliott

  • Google

Enter your email address:

Delivered by FeedBurner


  • Where From?
    free counters
Related Posts with Thumbnails

« Double Dip Watch: Brown Shoots? | Main | Exhaustion Gap »

Tuesday, March 23, 2010


Feed You can follow this conversation by subscribing to the comment feed for this post.


How does everyone interpret the concept of a "service economy"?

Duncan, you keep putting forward this theory that erst-while factory workers are going to be creating IP. How? More education? Education doesn't make a stupid person clever. Someone who, say dresses chickens, is now going to write software?

If you mean waiting tables, cleaning IP worker's houses, cars and clothes, flipping their burgers, etc I can see it. But is that any better than working in production? I don't think it is better or worse.

I am absolutely 100% against pointless efforts to preserve the status quo, the economy is going to go where it is going to go. It is global, better deal with it.

But sooner or later we are going to have to confront the issue of what the majority of the population is going to do with their time. As was pointed out above, machines and 'puters can do any repetitive / routine task better than any human. The corollary is that nearly every job can be engineered to be routine and repetitive. So what exactly are we going to do to provide some semblance of a fulfilling life for those who would otherwise likely resort to torches and pitchforks?

Aldous Huxley

So what exactly are we going to do to provide some semblance of a fulfilling life for those who would otherwise likely resort to torches and pitchforks?

One word: Soma.


You know what's really funny? Your comment on govt. workers. I am a govt. employee. When i came in there were 145 employees in my Division. Now we are 3 work centers with a total of 38 employees. We still have the same old equipment PLUS they have added other equipment and loaded us up with the responsibilities for logistics, coordination, contracts, etc, etc. My job used to be technical (repair). Now it's turned to technical managerial administrative. Believe it or not the increase in govt employees has not been on the GS side but on the contract side. I coordinate various groups of contractors. Maybe you should do further research because it's a common misconception that all Govt. employees are the regulars.


Event, it is really the other way around: clever people who create IP can then drag with them a lot of other employees. But the majority will not be unskilled workers off the farms, whether in Kansas or Juarez MX. They will be college educated filling engineering, marketing, design, business development, PR, etc. types of jobs. Think of who works at Facebook, or Google, or Apple.

So let me be clear: this is NOT a transition of existing factory workers into a new jobs. Fortunately, the transition down of them has been occurring for quite a while, a lot of US manufacturing jobs are highly-skilled positions. Let me put it this way: the auto industry south of the Mason Dixon line is doing much better than the unionized shops in Detroit. They make decent wages albeit their comp runs about 50% of the union comp all in. They build cars every bit as good as Detroit, and as a bunch are gaining share of autos vs Detroit.

What is driving autos these days is the value added layer: hybrids, more electronics inside, better safety, etc. Those jobs are still in the US, especially design shops in LA that design for the Japanese, or the many machine shops across the Midwest that do components; and of course the electronics makers that go into cars, like Bose systems.

The transition to value-added manufacturing started a long time ago. The Great Recession will accelerate it. Govt bail outs slow it down.

I added a new page to the left sidebar called Creative Reconstruction to let me expand on the them of this China post. I have changed the "IP LAyer" to "Value Add LAyer" since I think readers take a much more narrow view of IP than I do.


I found the fiscal insanity evidenced by a 61 year old woman in this article to be beyond comprehension.

She would have been better off buying a Ferrari Enzo - at least it's a limited availability, collector's item.


nmelendez, you make a very good point. I think we have lost 2.7M jobs since Obama took over and gained only 100k govt jobs of the GS sort. It is not the govt job per se that I worry about; I would say a lot of govt positions are the type of value-added work that the new manufacturing paradigm requires. It is the govt interference in the private sector, and burdening of innovation, that concerns me. 


Oracle, it turns out some enterprising Chinese have already begun your concept of open source from there! No reason they shouldn't, and it might benefit the US if they succeed. To repeat a clarification I mentioned in a prior comment, think of the IP Layer as not merely the creation of IP, but the whole slate of value-added work required in a place like Apple or Google to innovate, market and deliver the new products and services.


Newbie, actually, the Food Processing layer can make a lot more money selling a family of preparations of pork than the pig farmer. And they do! The value is in the higher layer, not the farming.

P3 Dude

What is Hochberg saying tonight?

Glenn Loser Neely

The neely shill DG...(aka neely's bitch).

"Contrary to what they seem to think, nothing they say bothers me."

Yea right...that is why he ALWAYS answers.. also... a person that anwwers "Go F@@@CK yourself" is because it is mad...

Again DG is liar and and idiot..and this is the proof.



P3, a three wave zigzag up from Feb lows, first wave done, now in the B, might break as a running triangle or expanded flat - then pop higher.


Yea right...that is why he ALWAYS answers.. also... a person that anwwers "Go F@@@CK yourself" is because it is mad...

You're assuming that the reasons you would do those things are the same reasons I do those things. Wrong.

Glenn Loser Neely

Neely's gay bofriend said:

"You're assuming that the reasons you would do those things are the same reasons I do those things. Wrong"'

Yes you are correct, you are not normal. You have mental problems and you are lonely gambler, who comes to this blog to get a life.

I can see you waiting every day for your boyfriend neely to post his neo garbage... like a dog waiting his master.

As long as there is people like you in the market, there will be people like me taking your money..... legally of course because...We need idiots like you!!!

See you tomorrow DG (Dog Neely?).. I have to run because I have a date with your mom.


Definitely one of your best Yelnick and I agree with just about everything you are saying. In fact I think it is our only path forward and we will go there even if it is with a lot of kicking and screaming.

Looking at the factors of production, China has created a huge global change to the labor component. The way to compete with that is to continuously move higher up the chain.

The chink (no pun intended) I see to all of this is this statement you made:

"We have already vastly increased the size and scope of our college-educated workforce, and the IP layer can absorb college graduates just as the assembly line absorbed unskilled labor off the farms."

I think you have over simplified here, and the reality is that vast segments of our population will never be productive again. The transition you talk of today is vastly different than past ones.

It would have made things a lot easier if we had run surplusses rather than deficits since 1980. Sadly, we are further from surplus than we have ever been.



Hock, appreciate your kind words. on the oversimplification, perhaps, but I think you would find if you could review the farm migration that it was largely made up of the young and healthy. It didn't happen overnight, altho it accelerated in the '30s due to people losing their farms and the dust bowl (global warming back then!). The problem we have now is with the over 50 workers. We went thru a steep downsizing of steel in 1979, and then a similar downsizing of aerospace in 1991, which in both cases had over 50 workers hit hard. The 30-somethings are more able to adapt and retrain.


Neely said in July of 2009 that he would bet hiss career on 666 not holding and being the low. 4-5 months later he called for some wacky triangle. You need to know that he has "expanding triangle with contracting lines".

Is that in a press release?


Hi Yelnick,

Here's a short-term analysis of Shanghai Composite:

Technical view -
Short-Term: Neutral, Medium-Term: Bullish, Long-term: Bearish

bob m

Did I just wake or something? I think what happened was that TARP and the stimulus were nothing but bold face robbery. Then this sort of legislation was passed taking a giant chunk out of the constitution. But now all that stolen money will be used to launch the stock market because we all know America will ignore losing its liberty as long as their IRA is growing.

Mamma Boom Boom

You can put me in with those that think 'you can't eliminate entire segments of economics (manufacturing) and have a successful society'. The absolute proof is the USA, today.

We are now a banana-republic.

bob m

Gold accelerating to the downside. Something has to give. Gold needs to start to follow stock or stock will stop and decline with gold.

Mamma Boom Boom


"As an economist, I am astonished that the American economics profession has no awareness whatsoever that the U.S. economy has been destroyed by the offshoring of U.S. GDP to overseas countries. U.S. corporations, in pursuit of absolute advantage or lowest labor costs and maximum CEO “performance bonuses,” have moved the production of goods and services marketed to Americans to China, India, and elsewhere abroad. When I read economists describe offshoring as free trade based on comparative advantage, I realize that there is no intelligence or integrity in the American economics profession."

Right-On! Right-On!



"The 30-somethings are more able to adapt and retrain."

Agreed. and while the 30 somethings may not lead, they can definitely follow and contribute. And it is not as if we must eliminate labor. We can marry it to technological advancement, such that its costs become benign. Boeing comes to mind here. Composite planes that require 1/3rd of the pop rivits. You can still do the pop riviting in Seattle because it has a much smaller impact on overall price.

But the world has changed. In 1970, one union produced 87% of the cars driven in NA. It was a feast for the high school dropout.

My concern is that you can lead a donkey to water, but you can't turn him into a horse. It's one thing to move a person from a field to an assembly line, but to move him from there to a cubicle, well good luck with that. And speaking as a chemical engineer, I'd go absolutely bonkers if I sat around and wrote code all day.



Anyone have a site that reports the TED Spread in delayed or real time? Bloomberg just pulled their feed for some reason (just when it was starting to look interesting). Coincidence?

bob m

Gold needs to fail here or I would expect it AND stocks to rally.


bob m, an even bigger bank robbery happened from the 2002-08 bubble. Greatest Bank Robbery in History?


Hock, the good news for you is the routine software is moving offshore! These new 'value added' jobs are much better work than the interminable routine of an assembly line. And the US college system with all its politically-corrct weaknesses produces much more creative and adaptive thinkers than the French or Asian cram systems.


"And the US college system with all its politically-corrct weaknesses produces much more creative and adaptive thinkers than the French or Asian cram systems."

Someone once said that the US has "the world's worst 18-year olds and the world's best 30-year olds".

I recall a conversation I had with an Indian colleague back in the early 2000's. I was working in the technology sector and it was clear that many of the coders were Indian and the project managers were whites. He said to give it a couple of decades and that would change. He was a very sharp individual and I think he's right. One of the main reasons I got out of technology was because of the downward wage pressure on even the highest-level skillsets, due to the emergence of the global technology labor pool.

bob m

Yelnick yeah I agree. But I think THAT was for greed. I think THIS one is for power and control of US sheeple.

bob m

By the way - THANKS GOLD!!! Love the effort!! Let's see some follow thru!!!!


Huge shift by asset-allocators out of Bonds the last few days and into US Equities.


Yelnick - 'The Fed is already easing out of QE, and if they really end it, the markets can then reverse.' That will surely happen only when the Fed starts to draw money back out of the system. What if they just leave it there - status quo of inflated prices remains, and no P3 (at least until the next crisis)!


Chab, if the upwards pressure eases, the market will drop, not hover. Think of it as a rate of change machine. Things will not stay constant. Money will rotate out. The market will chase yield.

Right now Michael noted how we seem to be in a movement out of bonds and into other assets, including stocks. Yields are spiking, the Euro is dropping, and the Yen appears to be next to fall. My next post will be on this topic.


Yelnick - very many thanks. When you do your next post, would it be too much to ask if you could build upon your comments of 'high yields', 'dropping Yen', 'fed raising the discount rate' etc to outline the perceived milestones to this process. It would help if we had some kind of road map if you have one in your mind. Chab.

Mr. Panic

Wow, market might not finish in the positive. Apple and Baidu both reversed down into the negative after making 52 week highs. We've had enough divergences in the new highs and RSI levels to get me bearish again. The last three days are the type of patterns I look for a top, that is if the market still stays positive by the close (forming massive shooting star--pattern at the $ndx top of March 24,2000----10 years ago when $ndx made a new high unconfirmed by qqqq/overall nasdaq index and $rut.) This three day pattern is evident in the smaller ballistic indices like the biotech and $rut indices. XLF 29 straight closes above the close four periods earlier. Nasdaq with 13 TD combo sell signal (the strictest and shortest of the TD sell signal which admittedly haven't been working but they are interesting to use to measure the market). McClellan Oscillator will be negative if breadth finishes negative. One of my favorite sell setups is the market making a new high with a negative McClellan Oscillator.


Labour (socialist) governments have a habit of ending like this ...

Thousands of public servants in Wales on 48-hour strike
Scots civil servants join first Budget Day strike
Rail unions announce strike dates
British Airways boosts flights for next strike

In Greece they get out on the streets and throw rocks. In Britain we go home and sit on our asses!

Mr. Panic

Breadth finished negative. $rut was never up big so breadth must have been narrowly positive when $indu $ndx and $spx were up big earlier. Breadth and up volume had been lessening on all of the big up days the last week or so another type of divergence.

I had been thinking that a sure sign of the market top would be when Dan Zanger ads would start appearing on the hard core E Wave sites. I had seen some of the ads on some general trading/TA sites during the last week but low and behold I saw not one but two DZ ads over at Daneric's site yesterday not to mention a penny stock advisory one also.


13 days from Jan high to Feb Low.
34 days from Feb Low to today.

Ratio(34/13) = 2.61 - Phi = 1. Whole is complete.


"McClellan Oscillator will be negative if breadth finishes negative. One of my favorite sell setups is the market making a new high with a negative McClellan Oscillator." - Mr. Panic

I love sticking with the classical technical indicators like the cumulative A/D line, which actually has been (finally) getting a bit "sloppy" up at these levels. The MACD on this classic technical indicator gave a BUY signal back on Feb. 16th and has kept you LONG all the way until today.


The comments to this entry are closed.