ECONOMICS 001

[spartacus53]

Bigscoop, yes indeed demanmd rules. The only other way to create demamd is to hire a marketimg genius, create a useless product and dupe people into buying it. I guess an example would be the Pet Rock

 

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[Frankn]

Spart, You got it right. The manufacturer creates demand, but you missed one point. He can do it by LOWERING prices. Did you ever notice how a sale attracks a crowd? You jest proved my prior posts !
Frank

 

[spartacus53]

Spart, You got it right. The manufacturer creates demand, but you missed one point. He can do it by LOWERING prices. Did you ever notice how a sale attracks a crowd? You jest proved my prior posts !
Frank

I think you missed the point that bigscoop and I have been making, if there is no value, or use of any product, there is no demand...

Car accidents also attract large crowds, having a crowd does not constitute a sale of any product.

You also seem to be hung up on fuel and fuel costs, but due to rising fuel costs "all" products and commodities cost more because of fuel costs. Depending on he terms of sale it's either costing the manufacture, or vendor to get his goods from point A to point B... This additional cost is not being absorbed by either of those parties, nor covered by a price reduction as you would think.. It is passed on to the consumer... Like Sccop said, if there is no market, or demand, any product will sit until you give it away.. Even being free, some products aren't worth carrying home.

 

[bigscoop]

I think this topic has been hit on in other post, from different directions perhaps, but ultimately driving toward the same issue....the current and future state of our economy. Clearly it's not getting better, right off hand I can't think of any necessity that's getting cheaper, such as water, food, fuel, medical, etc.,......and in the face of this wages are still decreasing and jobs are still disappearing, much of what is being purchased is still being purchased on credit, and this includes our own government. What Americans are not understanding is that we have finally outgrown our ability to sustain ourselves at the high level of living most Americans have enjoyed in the past. That standard of living can never be fully recovered because we no longer have the infrastructure to sustain it.

 

[Frankn]

Spart, I think you are missing the point. I am giving specific examples and you are giving generalities.
Give me some live examples of non -necessity items that are going up.
Here are more examples of price REDUCTIONS. A golfcart dealer has an ad offering $100 off all carts on his lot. Almost every mag. that I get has a Harbor Freight ad with a $20 coupon. All of my mags. that I get cost only $12 or less a year. One just sent me a 3rd renewal request for $8 a year.
What is happening is that the manufacturers of non essential items are cutting their profit margins to the bone in order to stay in business. This is cutting into the profit of big oil and big food. It will take months but their prices will drop. When you live long enough you see that everything happenes in cycles. and recession is no different I have seen them before. Frank

 

[deepskyal]

Last time fuel spiked over $4.00 our company added a fuel surcharge to the bill. At the same time, our biggest customer asked us to drop our rates because their orders had dropped off and they were laying off and idling their plants. Our competetors took a cut but our company pres. refused to play money games. We didn't lose any business and outperformed our competition as we always do.

It's no different now. Now, the company wants us to perform work in half the time we used to which just isn't physically possible. They have cut their maintenance budget and layed-off again. They want 100 man hours of work done in 24 hours. Simply not possible. Now they are realizing it's gonna bite them in the behind.

When I bought my very first calculator in 1975, it was over $100.00. New technology!. A couple years later that same calculator sold for around $30.00. Not so new technology anymore and a lot more competition.
Once the initial production is started and costs are recouped, prices come down based on demand and sales.
At one time we paid for cell phones by the minute...now most plans are unlimited.

More US products have been outsourced overseas with cheaper labor and even if the assembly plant is in the US, parts are shipped in from overseas saving labor costs.

Companies are constantly looking for cheaper ways to manufacture with a greater profit margin while still maintaining affordability to the consumer. Robotics, outsourcing, etc....that affects cost!

A cheese plant I worked for years back saved money by adding more water to their cheese. Their theory Water was virtually free saving them huge $$$.

And look at stuff you buy at the supermarket.
Packaging has gotten smaller but the price has remained the same. You don't buy a quart of icecream anymore! Even McDonalds quit putting 2 slices of cheese on their double cheeseburgers. Can you imagine how much their savings are?...and the burgers are a few cents cheaper.
Companies don't make money on inventory. Most manufacturers have dropped their inventorys.

Again, our biggest customer has in stock huge motors that are worth tens of thousands of dollars but don't have to pay for them til they actually use them. What do you think that does to the company that made the motors? Suppose those motors sit for a year or 2? And they do, btw! But...without those motors on hand, our customer stands to lose tens of thousands of dollars every hour they don't run. That's the price of business!

Our economy is controlled by Wallstreet and nothing else. Futures are bought on forcasts by "experts" that predict rising prices. Buy now and sell for a profit in a few weeks. It's a gamble but that's what wallstreet is. It people's retirements and bank assets that are being gambled. Why do you think there is such a to-do over pension funds everywhere anymore? It's the greed of wallstreet sticking billions of profits into the high-stakes roller's pockets and screwing the average guy out of his retirement.

The recession is not going away any time soon and we haven't seen real inflation yet. I'm sure we will.
Our economy has evolved to a point of no return and things will change.

Al

 

[spartacus53]

Give me some live examples of non -necessity items that are going up.

Off the top of my head I would say some books and magazines... Books will now be forced to reduce their prices because of Kindle. Like was even said before, volume in products is rapidly shrinking and the price may stay the same, or increase slightly.. Either way, you are paying more. Other examples were also given, like new electronic gizmo's. New product will bring top dollar for a while until the market is satisfied, once demand drops, so does the price.

deepskyal also mentioned what I did earlier, passing on the FSC to the vendor, who so kindly passes it on to you product. Coffee is not a necessity and cost for the beans has also risen.

Like most said, if there is a demand for a product, people will pay for it, whether it is a necessity, or not

 

[Frankn]

Spart, what do you mean,coffee is not a necessity. If I didn't get my two pots a day with my flavored creamer, I would die! It is part of the food chain and has high medical values. The studies are just cumming out.
As for new introductions, they always drop after the novelty factor wears off. Your still thronging generalities. Nothing specific except the mags and you are wrong on them. As I stated before I am getting 12 mags. a month all for $12 a year or less and I am talking the popular mags like Mechanics,Science, etc.
Frank

 

[bigscoop]

Last time fuel spiked over $4.00 our company added a fuel surcharge to the bill. At the same time, our biggest customer asked us to drop our rates because their orders had dropped off and they were laying off and idling their plants. Our competetors took a cut but our company pres. refused to play money games. We didn't lose any business and outperformed our competition as we always do.

It's no different now. Now, the company wants us to perform work in half the time we used to which just isn't physically possible. They have cut their maintenance budget and layed-off again. They want 100 man hours of work done in 24 hours. Simply not possible. Now they are realizing it's gonna bite them in the behind.

When I bought my very first calculator in 1975, it was over $100.00. New technology!. A couple years later that same calculator sold for around $30.00. Not so new technology anymore and a lot more competition.
Once the initial production is started and costs are recouped, prices come down based on demand and sales.
At one time we paid for cell phones by the minute...now most plans are unlimited.

More US products have been outsourced overseas with cheaper labor and even if the assembly plant is in the US, parts are shipped in from overseas saving labor costs.

Companies are constantly looking for cheaper ways to manufacture with a greater profit margin while still maintaining affordability to the consumer. Robotics, outsourcing, etc....that affects cost!

A cheese plant I worked for years back saved money by adding more water to their cheese. Their theory Water was virtually free saving them huge $$$.

And look at stuff you buy at the supermarket.
Packaging has gotten smaller but the price has remained the same. You don't buy a quart of icecream anymore! Even McDonalds quit putting 2 slices of cheese on their double cheeseburgers. Can you imagine how much their savings are?...and the burgers are a few cents cheaper.
Companies don't make money on inventory. Most manufacturers have dropped their inventorys.

Again, our biggest customer has in stock huge motors that are worth tens of thousands of dollars but don't have to pay for them til they actually use them. What do you think that does to the company that made the motors? Suppose those motors sit for a year or 2? And they do, btw! But...without those motors on hand, our customer stands to lose tens of thousands of dollars every hour they don't run. That's the price of business!

Our economy is controlled by Wallstreet and nothing else. Futures are bought on forcasts by "experts" that predict rising prices. Buy now and sell for a profit in a few weeks. It's a gamble but that's what wallstreet is. It people's retirements and bank assets that are being gambled. Why do you think there is such a to-do over pension funds everywhere anymore? It's the greed of wallstreet sticking billions of profits into the high-stakes roller's pockets and screwing the average guy out of his retirement.

The recession is not going away any time soon and we haven't seen real inflation yet. I'm sure we will.
Our economy has evolved to a point of no return and things will change.

Al

Middle America is in real trouble.

 

[Frankn]

Looks like I have few that agree with me on this topic except the facts!
I stopped in at my electronics dealer who is also a Whites dealer and noticed that he has dropped his prices $100 on the Prizm line of Whites. That's $100 on a detector that sells from $299 to $699. As I predicted electronics are dropping in price. Now here's a surprise, gas just fell from $3.59 to $3.49 in a week here. So if enough money is shifted to nonessentials that gas price will continue to fall. I will stick to my slow recovery prodiction. Frank

 

[Dave44]

As for the housing industry, demand was falsely created by government, then the banks were told What To Do, and they made instruments to make money on the regulations of government. That did not work well, in my humble builder's opinion. We are seeing the shake out now.

 

[Frankn]

Yesterday a paving contractor just stopped by my home and tried to sell me a load of crush and run for about 50% of the going rate. I think my theory is correct. Things have bottomed out so far that people will accept lower profit margins. With lower price bargains floating around spending will shift from necessities to non necessities causing price drops in necessities. In other words, as the lower cost supply increases demand will follow. Check pricing in your area for non necessities, I think you will be surprised. Frank

 

[Dave44]

I agree to a point Frankn, The manipulation of markets causes big highs and then big lows. And the extra illegal labor in the country with nothing to do will drive down costs even more, because they can still make more in this country and be safer than in their original country. That does not help our cause as the markets will not come down fast enough for my profession to survive, at least not legally.

 

[Frankn]

Only those that are willing to and are able to lower their profit margins will survive. I have been selling art work and this area of the economy has just about totally dried up. Most artist that are selling now are loosing money on each sale if you figured in their time. Frank

 

[bigscoop]

Only those that are willing to and are able to lower their profit margins will survive. I have been selling art work and this area of the economy has just about totally dried up. Most artist that are selling now are loosing money on each sale if you figured in their time. Frank

Was at a show Sat, got a fantastic volume offer from a lady out of NC whose known to buy truck loads at a time, problem is, I can no longer make the items and sell them to her at a competitive wholesale price and still make even a meager profit. I can still make items and sell them, the demand is still there, but the profits are dropping like a rock while the cost of materials and all the other expenses continue to climb like a rocket. The manufacturing and lower wholesaling selling of lower priced consumer products is not always a sign of a recovering economy, this would only be the case if materials and expenses and labor cost were declining at even a higher rate. Wages are on the decline, however, the ever weakening dollar against the international market and the cost of those needed materials and other expenses is still increasing. And housing, sure housing sales showed a slight increase, but just about all of these sells are at very noticeable, real number crunching, "losses!" I hope you're right Frank, I really do hope the economy is starting a slow recovery. I guess the debate all comes down to time.........because only time will tell.

 

[Frankn]

Bigscoop, it is going to be a slow recovery and start in selected areas. I have gotten sale fliers from Blick on art supplies and from Woodworkers supply that have impressive price drops. I have pulled my work from the local galleries because the monthly fees have gotten to high to justify against sales. In effect my artwork is in hibernation. I am going to consecrate on my "Archaeological search & recovery" work in private old yards. The business cards look impressive. I work on a 50/50 split of the finds and fee for conserving their items. I am working my way Thru an old town. Frank