US economic decline

[billvon 3,090]

As most of you have heard, the US has lost its AAA credit rating from all three rating organizations due to, in their words:

"the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns . . .The new outlook also takes into account institutional features, including the constitutional separation of powers among the three branches of government that contributes to policy effectiveness over time and is relatively insensitive to events over a short period."

This will make it harder for the US to borrow money to increase its deficit - which is unfortunate, because Trump is asking for (and will likely get from the Senate) a $5 trillion increase in the debt limit.  The money they CAN get will come at higher interest rates and with more strings attached, which will of course accelerate the increase in the deficit.

In other news, the company Wolfspeed (formerly known as Cree) is declaring bankruptcy.  This was a company that was formed to bring cutting edge power electronics IC's back to the US, and had a foundry here that was pumping out power devices, mostly for EVs and solar applications.  With the CHiPS act being cancelled by Trump, and the loss of EV support, manufacturers are revising their estimates - and Wolfspeed's business plans no longer make sense.  So they will fold and that IC manufacturing will go back to Taiwan and South Korea.

[JerryBaumchen 1,451]

14 hours ago, billvon said:

As most of you have heard, the US has lost its AAA credit rating from all three rating organizations due to, in their words:

"the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns . . .The new outlook also takes into account institutional features, including the constitutional separation of powers among the three branches of government that contributes to policy effectiveness over time and is relatively insensitive to events over a short period."

This will make it harder for the US to borrow money to increase its deficit - which is unfortunate, because Trump is asking for (and will likely get from the Senate) a $5 trillion increase in the debt limit.  The money they CAN get will come at higher interest rates and with more strings attached, which will of course accelerate the increase in the deficit.

In other news, the company Wolfspeed (formerly known as Cree) is declaring bankruptcy.  This was a company that was formed to bring cutting edge power electronics IC's back to the US, and had a foundry here that was pumping out power devices, mostly for EVs and solar applications.  With the CHiPS act being cancelled by Trump, and the loss of EV support, manufacturers are revising their estimates - and Wolfspeed's business plans no longer make sense.  So they will fold and that IC manufacturing will go back to Taiwan and South Korea.

Hi Bill,

Re:   the US has lost its AAA credit rating from all three rating organizations

It is because every CongressCritter knows that he/she has to bring home the pork to get re-elected.

Until this changes, and I doubt that it ever will, this problem will just grow & grow.

Jerry Baumchen

[kallend 2,117]

On 5/22/2025 at 2:41 PM, JerryBaumchen said:

 

Until this changes, and I doubt that it ever will, this problem will just grow & grow.

Jerry Baumchen

Nah!  Trump's overhaul of the education system, support of universities and scientists, and efforts to attract the brightest foreign students to the US will ensure that we'll enter a new golden age of innovation and wealth creation. 

[JerryBaumchen 1,451]

2 hours ago, kallend said:

Nah!  Trump's overhaul of the education system, support of universities and scientists, and efforts to attract the brightest foreign students to the US will ensure that we'll enter a new golden age of innovation and wealth creation. 

Hi John,

And I thought I was the only person here who always considers the glass 1/2 full.

Jerry Baumchen

[dogyks 10]

11 hours ago, JerryBaumchen said:

Hi John,

And I thought I was the only person here who always considers the glass 1/2 full.

Jerry Baumchen

It's twice as big as it needs to be.

[JoeWeber 2,869]

On 5/21/2025 at 9:49 PM, billvon said:

As most of you have heard, the US has lost its AAA credit rating from all three rating organizations due to, in their words:

"the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns . . .The new outlook also takes into account institutional features, including the constitutional separation of powers among the three branches of government that contributes to policy effectiveness over time and is relatively insensitive to events over a short period."

This will make it harder for the US to borrow money to increase its deficit - which is unfortunate, because Trump is asking for (and will likely get from the Senate) a $5 trillion increase in the debt limit.  The money they CAN get will come at higher interest rates and with more strings attached, which will of course accelerate the increase in the deficit.

In other news, the company Wolfspeed (formerly known as Cree) is declaring bankruptcy.  This was a company that was formed to bring cutting edge power electronics IC's back to the US, and had a foundry here that was pumping out power devices, mostly for EVs and solar applications.  With the CHiPS act being cancelled by Trump, and the loss of EV support, manufacturers are revising their estimates - and Wolfspeed's business plans no longer make sense.  So they will fold and that IC manufacturing will go back to Taiwan and South Korea.

Okay, I have important news regarding bring manufacturing to the US. I have just now disassembled my MacAir to replace the screen. I can assure everyone that these new US based Apple factories will not be staffed with old DZO's unless they start using much larger screws.

[JerryBaumchen 1,451]

10 minutes ago, JoeWeber said:

Okay, I have important news regarding bring manufacturing to the US. I have just now disassembled my MacAir to replace the screen. I can assure everyone that these new US based Apple factories will not be staffed with old DZO's unless they start using much larger screws.

Hi Joe,

Oh, crap, more unemployment.

Jerry Baumchen

[JoeWeber 2,869]

20 hours ago, JerryBaumchen said:

Hi Joe,

Oh, crap, more unemployment.

Jerry Baumchen

Apparently, Senator Ron Johnson is now saying the BBB is a no go until Trump gets serious about reducing the deficit and that there are enough votes to kill the bill. In the same article Rand Paul was reported to have said: "Somebody has to stand up and yell, the emperor has no clothes, and everybody's falling in lockstep on this, passed the big, beautiful bill, don't question anything."

From memory, I think section 60094 of the ridiculous bill, Trump was given a $300,000,000 carve out from the FEMA budget for protection for each and every one of his properties. Can anyone consider that not serious?

[JoeWeber 2,869]

On 5/24/2025 at 12:09 PM, JerryBaumchen said:

Hi Joe,

Oh, crap, more unemployment.

Jerry Baumchen

First, so there is never any confusion, please imagine that I am starting every sentence with Trump is an asshole. Now we all, except the Orange Skidmark, know that on shoring giganzo factories to be staffed by old DZO's turning tiny screws is not happening anytime soon. Labor costs and rules, supply chains, and yada yada make excellent excuses for why it simply cannot be done all too easy. But you have to wonder if it is absolutely necessary for companies like Apple and Best Buy to off shore every possible job to survive. Today I made an appointment with Best Buy to replace the battery in my iPhone. The agent was in South Africa. 15 Minutes later when I called to cancel I was routed to an agent in the Philippines. Apparently operating a call center in the US isn't possible or is inordinately expensive, or won't justify company executives writing off international travel or something; it's better to pay the long distance phone charges I guess. Currently Best Buy operates internationally only in Canada where they have a solid presence but nowhere else internationally since 2010-2012 more or less. I don't know if in addition to the labor cost savings they are also able to tax expense that sort of thing but I do know that on first blush it seems a bit smarmy.

[gowlerk 2,260]

2 hours ago, JoeWeber said:

it's better to pay the long distance phone charges I guess

What decade are you living in?

[JoeWeber 2,869]

3 minutes ago, gowlerk said:

What decade are you living in?

Poor tongue in cheek, I guess. 

[nigel99 586]

5 hours ago, JoeWeber said:

First, so there is never any confusion, please imagine that I am starting every sentence with Trump is an asshole. Now we all, except the Orange Skidmark, know that on shoring giganzo factories to be staffed by old DZO's turning tiny screws is not happening anytime soon. Labor costs and rules, supply chains, and yada yada make excellent excuses for why it simply cannot be done all too easy. But you have to wonder if it is absolutely necessary for companies like Apple and Best Buy to off shore every possible job to survive. Today I made an appointment with Best Buy to replace the battery in my iPhone. The agent was in South Africa. 15 Minutes later when I called to cancel I was routed to an agent in the Philippines. Apparently operating a call center in the US isn't possible or is inordinately expensive, or won't justify company executives writing off international travel or something; it's better to pay the long distance phone charges I guess. Currently Best Buy operates internationally only in Canada where they have a solid presence but nowhere else internationally since 2010-2012 more or less. I don't know if in addition to the labor cost savings they are also able to tax expense that sort of thing but I do know that on first blush it seems a bit smarmy.

Call centres, check out operators and other low skilled jobs are an area that I believe government should incentivise businesses to create and keep locally. 

[gowlerk 2,260]

35 minutes ago, nigel99 said:

Call centres, check out operators and other low skilled jobs are an area that I believe government should incentivise businesses to create and keep locally. 

Why not telephone and elevator operators as well? But seriously how would these incentives work? 

[JoeWeber 2,869]

25 minutes ago, gowlerk said:

Why not telephone and elevator operators as well? But seriously how would these incentives work? 

One possibility is finding away to negate any tax advantage, if there is a visible deduction on their US returns. Maybe simply have a tax schedule that heavily estimates what the cost would be in the US and add the difference to their returns as gross income to be taxed. I think using our own tax system to incentivize companies selling into the US market might be better than clumsy tariffs.

[nigel99 586]

43 minutes ago, gowlerk said:

Why not telephone and elevator operators as well? But seriously how would these incentives work? 

It could be rebates to businesses that onshore call centres. I’d like to see supermarkets charged a ‘tax’ for each self checkout and make it less financially viable than employing people. 

I’m not certain of the dynamics in other countries but in Australia we’ve seen a huge erosion of job opportunities that disproportionately affect young school leavers, single moms and other disadvantaged people. I know many 16-25 year olds who have lost out and are now on Centrelink (welfare), I’ve got 2 of them sitting out back at the moment - despite regularly applying for jobs. 

Supermarket checkouts have been replaced by self checkouts and post Covid our supermarkets have switched from employing people to restock shelves at night (which gave lots of single moms an income source), to requiring workers to multitask and restock during the day. It’s got clear business benefits as there is less stock on the shelves, lower labour costs etc, but it has a social cost. 

One young girl I know mentioned how many elderly people used to chat at checkout, and would say how much they valued the social interaction that they didn’t get otherwise.

Businesses are profit driven, and although they “should” have some level of social responsibility they don’t. Meanwhile it’s the government’s role to balance the greater societal costs. 

You joke about elevator operators, but there are developmentally challenged people (my older brother is one), who would only just be capable of that job, but would love it. Similar with petrol pump attendants. 

Got forbid I partially agree with JD but giving people the opportunity for the dignity of work is a good thing. We shouldn’t remove the social safety net that exists- and ours is much better than that of the US. We have also lost sight of businesses need to operate.  

Our minimum wage is $25 an hour, which is good and I fully support, but penalty rates on the minimum wage raise it to between $30 and $60 for after hours, weekend or public holidays. Paying someone $60 an hour on a public holiday to make coffee isn’t sustainable and the consequence is that those opportunities have disappeared. School kids used to love the Christmas break as it was an opportunity to work the longer hours and make some cash.
 

Edited Tuesday at 12:38 AM by nigel99

[nigel99 586]

7 minutes ago, JoeWeber said:

One possibility is finding away to negate any tax advantage, if there is a visible deduction on their US returns. Maybe simply have a tax schedule that heavily estimates what the cost would be in the US and add the difference to their returns as gross income to be taxed. I think using our own tax system to incentivize companies selling into the US market might be better than clumsy tariffs.

Exactly. The tax system is an effective tool if used properly. 

[thelivo 13]

7 hours ago, nigel99 said:

incentivise businesses

Thats a tough one. I worked at a company where we had a development shop in the phillippines, and employee costs offshore can be literally a quarter what minimum wage would be in the US which was still a good wage out there. When you are employing hundreds of people in call centers that bill adds up fast.

HOWEVER - over time it all comes back. In the early 2000's everyone offshored to India, but now India has realised its value and those costs have risen to be much closer to onshore models, which means the distance negates any benefit.

[BIGUN 1,439]

3 hours ago, thelivo said:

but now India has realised its value and those costs have risen to be much closer to onshore models, which means the distance negates any benefit.

Not really. If you can save twenty-five cents per hour for 5,000 call center employees, that $2,500,000 towards your EBIT.

Edited Tuesday at 09:45 AM by BIGUN

[nigel99 586]

3 hours ago, thelivo said:

Thats a tough one. I worked at a company where we had a development shop in the phillippines, and employee costs offshore can be literally a quarter what minimum wage would be in the US which was still a good wage out there. When you are employing hundreds of people in call centers that bill adds up fast.

HOWEVER - over time it all comes back. In the early 2000's everyone offshored to India, but now India has realised its value and those costs have risen to be much closer to onshore models, which means the distance negates any benefit.

I agree it’s complicated. But I think social costs need to be considered, by those outside of businesses. It’s unrealistic to expect businesses to do things for the greater good.

Also being brutally honest, you’ll probably find your average Filipino works a lot harder than your average western low skilled worker. 

[BIGUN 1,439]

1 hour ago, nigel99 said:

But I think social costs need to be considered, by those outside of businesses. It’s unrealistic to expect businesses to do things for the greater good.

Bombas socks created a social impact wherein this generation now does business with those (social enterprises) who invest back into the commmunity. 

1 hour ago, nigel99 said:

Also being brutally honest, you’ll probably find your average Filipino works a lot harder than your average western low skilled worker. 

True statement. Average anywhere else. US business owners will tell you, "they want the money, but they don't want the work."

[nigel99 586]

1 hour ago, BIGUN said:

Bombas socks created a social impact wherein this generation now does business with those (social enterprises) who invest back into the commmunity. 

True statement. Average anywhere else. US business owners will tell you, "they want the money, but they don't want the work."

Thanks for the info on the Bombas socks, I see they are in Aus now. I like that kind of model. There’s an Aussie Mexican food chain Zambreros with a plate for plate initiative. It was part of the founding ethos and it’s a large part of why I tend to get their food over competitors. 

[kallend 2,117]

Back to the other end of the scale:

A stroll through any US research lab, government or industry, shows a disproportionately high number of immigrants with higher degrees from US universities in STEM disciplines.

Apparently foreign universities in Europe, and even Hong Kong(!)** are making attractive offers to top overseas students to study there instead of in the US, on account of the  hostility coming from the Trump administration. 

Reverse brain drain.

 

** Hong Kong has 4 universities ranking in the top 100 in the world according to USNWR rankings

[normiss 871]

I've built out a few call centers, nobody wants to work in that industry, but it seems to be profitable.

It's disgusting and full of cheats, lies, misleading, scapegoats - just too much dishonesty. The American cost of living tells me call center jobs for phone workers are shit as well. I would rather do IT work for outlaw biker clubs and mafia friends, they at least pay VERY well. It did make for some of the most interesting security video reviews though. It's disappointing to me to see how horribly disgusting human behavior can be.

I still find it entertaining to review IT data and immediately surmise "Yep! You're fired."

[olofscience 490]

13 hours ago, nigel99 said:

It could be rebates to businesses that onshore call centres. I’d like to see supermarkets charged a ‘tax’ for each self checkout and make it less financially viable than employing people. 

I’m not certain of the dynamics in other countries but in Australia we’ve seen a huge erosion of job opportunities that disproportionately affect young school leavers, single moms and other disadvantaged people. I know many 16-25 year olds who have lost out and are now on Centrelink (welfare), I’ve got 2 of them sitting out back at the moment - despite regularly applying for jobs. 

Supermarket checkouts have been replaced by self checkouts and post Covid our supermarkets have switched from employing people to restock shelves at night (which gave lots of single moms an income source), to requiring workers to multitask and restock during the day. It’s got clear business benefits as there is less stock on the shelves, lower labour costs etc, but it has a social cost. 

Why just tax supermarkets? Microsoft, who destroyed thousands and thousands of jobs of secretaries, typists gets away with paying little tax.

Amazon, who destroyed thousands of jobs in small shops, gets away with paying relatively little tax too.

I love technology and automation. I've destroyed a few jobs too with the stuff I've automated - but I'm going to get away with it paying relatively little tax too, because the tax system has more and more loopholes the more money you have.

13 hours ago, nigel99 said:

You joke about elevator operators, but there are developmentally challenged people (my older brother is one), who would only just be capable of that job, but would love it. Similar with petrol pump attendants. 

We need to disconnect money from the need to work. The concept of a minimum wage needs to go - it distorts the market. Minimum wage needs to be removed, and replaced by a universal basic income, or a really, really good social security safety net.

This means that people like your older brother CAN do those jobs they *want* to do, but it's not tied to keeping them alive, but rather something fulfilling for them. Because of technology, the actual *monetary* value of those jobs is very little, but their value to people's self-worth is more (and still worth having even if the monetary value is less).

 

How do we pay for it? We need to tax the rich more - AI is going to destroy a lot of jobs (or make them pay less) and that money will go straight to billionaires.

Edited Tuesday at 02:21 PM by olofscience

[JoeWeber 2,869]

14 minutes ago, olofscience said:

We need to disconnect money from the need to work. The concept of a minimum wage needs to go - it distorts the market. Minimum wage needs to be removed, and replaced by a universal basic income, or a really, really good social security safety net.

I'm going to need a bit of reprogramming before I'll be willing to believe that people who are given all they need to survive will work out of the goodness of their hearts or to benefit the greater good.