The Buy American Act (41 U.S.C. § 10a–10d) was passed in 1933, mandating preferences for the purchase of domestically produced goods in direct procurements by the United States government. Other pieces of Federal legislation extend similar requirement to third-party purchases that utilize Federal funds, such as highway and transit programs……

Air Force explaining tanker decision to Boeing tomorrow

WASHINGTON — The Air Force will brief Boeing tomorrow on the decision to spend $35 billion for air tankers using Airbus planes.

But he says Boeing will protest the decision only if it thinks there was an “irregularity” in the proposal phase.
.

Well; it was not pretty. But we can’t be all for free trade and then "female dog" when we are at the loosing end of the deal. The law does not allow the AIr Force to consider jobs, etc. If we want them to buy American (which I think they should), let’s just say it. And put tariffs on imports.

By the way, Air Force I is next. Don’t be surprise if the next plane to carry the chief is an Airbus.

But even Boeing has a bit of Bill Gates in them. The 787 is out sourced galore, like 90%. Boeing may of shot itself in the foot arguing that Airbus is foreign when they are too.

“The Air Force spokesman has blatantly stated that they didn’t take into account American jobs in their decision. With our economy nose-diving at the moment it is outrageous that our own government would not do everything possible to encourage job creation here at home.”

Housing market prop or not, support Boeing

http://murray.senate.gov/tankers/

You gave me data for my papers.

Here’s the news from today’s Stein Report:

“….Bill Gates, Corporations Lobby for H-1B Increase
“The April 1 deadline and an election year have given American industry renewed vigour to lobby for an increase in the annual quota of temporary skilled worker (H-1 B) visas. Microsoft founder Bill Gates is among industry chiefs headed for Capitol Hill to lobby for this increase. Alongside, Compete America, a coalition of industry, research and education institutions, have also begun pitching for an increase in the annual quota,” India’s Economic Times reports. “Experts say as this is an election year, not merely the presidential race, but also for the Congress, the industry may be able to persuade lawmakers to actively consider an increase. There are also reports of the Congressional Hispanic Caucus introducing a new immigration reform bill. This would focus on illegal immigrants, but hike in H-1 B numbers could be tacked along as well.”

This post at Old Atlantic Lighthouse points out that Virginia’s senators should oppose an H-1B increase. “There is no reason we need to import any nurses or doctors into this country. This has to stop. Senators need to learn loyalty to this country. We see your handiwork when we go to INOVA [Virginia Hospital] and get 3rd world medicine. We get the wrong drugs and the long waits because of immigrants, legal and illegal. We are not being fooled by you because we experience it with our own eyes and feel the pain ourselves or see it in the eyes of our family members. You need to stop pushing us down by H-1B and legal immigration and amnesties.” …”

The rest of the nonprofit United Way Organization’s URL:

http://www.steinreport.com/

My comment [sent to U.S News and World Report too]:

“…Wednesday, March 5, 2008
A 2008 Letter to U.S. News & World Report
America’s Recent Overpopulation Inflation Cannot Sustain Adequate Wages for Home Purchases

REGARDING, “NIGHTMARE ON MAIN STREET” [March 10]: I have never read so many lame brain excuses over the cause of the current housing bust in the last six months, when its obvious to me the root cause was unplanned overpopulation growth in America, with subsequent wage mitigation. It may have looked good to a lot of Americans to see unplanned American population growth with simultaneous sky-rocketing home inflation prices; but with all this short sighted greed blinding us, we forgot to notice the party’s suddenly done, wages have mitigated with overpopulation competition and there’s now a terrible piper to pay to bail this mess out. I noticed in 1990, America was overpopulated at 250 million people, yet gas was like under a buck a gallon and homes were about 1/3 the cost today, in approximate 2008 dollars too. Since then, we’ve added 25-45% people to America on a linear legal/illegal immigration population growth curve since 1990, clearly causing an exponential inflation growth of approximately 200%. I’d call population growth linear and the inflation it causes horrifyingly exponential. America’s wages did not go up even half the real core inflation rate since 1990; if you take housing costs, energy, college education, food, medical expenses, etc, etc into the equation. That’s why we’re in this mortgage mess. Its greed and uncontrolled legal/illegal immigration population growth. We need a break from immigration population growth in America now, or we’ll fall like Rome. If America can show the rest of the world how to depopulate as soon as possible, our example may likely be the world’s inflation cure too, assuming they follow our scientific environmental lead….”

My URL it came from:

http://overpopulation-softwarengineer.blogspot.com/

AndySeattle, this is not correct. The bump in the Seattle area is expected, but not confirmed, to take the local conforming limit to a little under $500K. Plus, it has not already happened – it’s going to take a while (month or two maybe?) for banks, lenders, computer systems, etc, to take the new limits into consideration.

Not that I disagree with your overall point – just want to correct a common misnomer with regards to the new FHA conforming limits.

Good call out and thank you for covering it.

I guess we’ll have to wait and see what happens, but not even the most optimistic observers in the Seattle area think that this change will actually make much of a difference.

This is where I get all fearful… I think the increased allowance will allow more people to justify the huge purchase. When, in my opinion, the prices are irrationally inflated and should go their natural course, down to more affordable levels. Maybe I’m fearing change; or rather, fearing change that adapts to an error. Does that make sense?

Right. After all the loan limit is one aspect of the “conformance” of the loans. It seems that the legislators in their infinite wisdom looked at “conforming” loans and said “wow, if only more loans were that low in rate” and thought they could just expand the limit and allow higher loans to get the same rate. What doesn’t seem to have crossed their minds is that the rate is lower for a reason: the risk is lower. So the formerly-Jumbo loans that are now conforming will likely have a higher rate, or some other fee structure in order to offset this additional risk.

The buyers of the mortgage backed bonds are not going to look at these new “conforming jumbos” in the way as the old lower limit loans. I guess we’ll have to wait and see what happens, but not even the most optimistic observers in the Seattle area think that this change will actually make much of a difference.

we don’t know how much higher than conforming the rates will be on these LFKAJ (Loans Formerly Known As Jumbo)

True. But I think an even bigger issue will be the lending criteria applied to these jumbos. If higher down-payments and better credit scores are required, then they might not help all that much. What the market really needs is to expand the pool of possible buyers. It doesn’t help to offer a new product, but then tighten criteria so fewer people will qualify.

The bump in the Seattle area is expected, but not confirmed, to take the local conforming limit to a little under $500K. Plus, it has not already happened – it’s going to take a while (month or two maybe?) for banks, lenders, computer systems, etc, to take the new limits into consideration.

Plus we don’t know how much higher than conforming the rates will be on these LFKAJ (Loans Formerly Known As Jumbo).

I understand that there are lots of cities that have good employment, what I’m saying is that the employers in Seattle are ‘above average’ (or special if you will). ie. Industry leaders / market makers. I don’t expect them to singlehandedly keep Seattle out of the house of pain, but our trip there should be less painful and shorter than say an economy based heavily on the traditional industrial manufacturing that America grew up on.

As far as Boeing being above average/special… GM, Ford, and Chrysler were posting huge profits in the 90s (the SUV craze), which also trickled down to the tier one and tier two suppliers (many of whom are in the Michigan/Ohio/Indiana area). It took two years of slow sales for that to fall apart, and look at where MI is now.

As Sniglet said, Boeing has a 5+ year backlog of orders, but what if the global air travel business starts losing money and canceling orders like they did in ‘02 (and several other times in prior decades)? It’d be very easy to see 1/4 to 1/2 of the Seattle area workforce laid off in short order. Wouldn’t be the first time.

M$ is not immune either.

AndySeattle, this is not correct. The bump in the Seattle area is expected, but not confirmed, to take the local conforming limit to a little under $500K. Plus, it has not already happened – it’s going to take a while (month or two maybe?) for banks, lenders, computer systems, etc, to take the new limits into consideration.

Not that I disagree with your overall point – just want to correct a common misnomer with regards to the new FHA conforming limits.

westsidebilly,

Not sure if you are debating me or not really. Basically I agree with what you just wrote.

Just adding to your point.

Again, I am not saying that these companies are bad (as companies go), just re-iterating that they aren’t immune from what happens to the global economy.

The world car market has skyrocketed in the past 10 years, yet we know the story about jobs in Detroit. The mediam income has gone DOWN in this country; high paying jobs are moving overseas. This is already happening. Your X-rays might be read by someone overseas and you will never know it. Your pathology work is probably done overseas; your MRI is read overseas, etc. It does not pay to move “low paying” jobs overseas. Families of 4 were supported very comfortably by those “low paying” jobs you are referring to; they are now in China (Mexicans got too expensive; bastards wanted a lunch break – imagine!!!)

Programming can be done from anywhere, and Indian are very qualified.

Outsourcing helps companies; companies = shareholders, PERIOD!!!

Ronald Reagan explained to the country that if Fat Cats got a tax break ; they will in turn, invest in you jobs for the peons and we would all benefit. “Trickle down economics”, he called it. Well, that was nice in the early 80s; but now trickle down economics has all but disappear. Give a tax break to the fat cats; and the fat cats will open a new factory……..IN CHINA!!!! Where do you think the government $600 stimulus check will end-up?? Those that will spend it, better spend it on beer, prostitution, or groceries; otherwise, the money will end up stimulating China.

And the Chinese are on notice already; if costs go any higher; there is Vietnam, so watch it!!!!

We are running out of industries to “re-invent” ourselves. The culture of “you’ll land on your feet” is coming to an end. There are less and less places to land on your feet.

I’m tired of the question even being asked.

The other obvious point is the simple math of it all… Why would Microsoft’s 45k local employees + Boeing’s 75k local employees prop up an area of 3.5 million people?

Frankly Silver9 nailed it with:

seriously, real estate price increases in the last 5+ years was NEVER about local jobs.

The reason prices went up so far and so fast was structural changes in home financing. This is also why you saw the same results in every city around the country and even much of the world.

And the sobering truth from our man b who said:

Seattle just turned the corner and people now know the gravy train is over, it won’t get ugly for you folks until later this year.

So while The Tim got us started on this silly subject, the fact of the matter is, no MS and Boeing won’t save us… The only thing that could slow the fall is new financing options that make ease of entry occur for everyone once again. Like the FHA bump from $417k to $729,750… Oops… That already happened.

No, the biggest threat to local jobs is a global economic contraction, and a significant decline in demand (be it for aircraft, new PCs/software, etc). A global recession would take the wind out of local businesses faster than anything else on the horizon.

1) Again; the biggest threat is jobs being outsourced. Rajish can do the programming much cheaper, and it is precisely the lack of US qualified programmers you all bring up, that makes the risk of outsourcing even higher. No better excuse to move operations than “we don’t have the qualified people here.”

2) Seattle DOES have an employer base that it’s the envy of the country, considering that it is NOT a top 10 city in population.

BUT, homes prices are completely out of whack!!!

The tanker loss will hurt jobs at Boeing (a few years from now) in Kansas, not Seattle.

It won’t take less than $20 for that to happen. MSFT has been stuck around $25-28 for the last several years, which means most of the people working there have options with strike prices around that zone (unless you’ve been there 10+ years). A return to their $25 average eliminates that option equity for most employees I would guess.

I know that many people believe the downturn in 2002 was primarily a fluke resulting from fear after 9/11. However, I think it was more a function of the temporary slow-down in the economy. Regardless, it was very instructive as to how quickly fortunes can change for Boeing.

Likewise, Microsoft was impacted by the downturn in 2002/2003. There was a de-facto (but not official) hiring freeze that made it VERY hard to fill positions without VP approval when someone left a team, and it the bar for approvals on new investment/features was significantly higher than it had been just a year or so earlier.

If there is a global recession, we will absolutely see a slow-down in PC sales and the upgrade cycle (both consumer and corporate) which will go right to Microsoft’s bottom line. Just look at companies like Google and Apple, who’s stocks are already being hurt because they are seeing the first hints of a slow-down.

Again, I don’t want to despairage either Boeing or Microsoft, but it is naive to think their businesses won’t be considerably impacted by a severe global recession.

By the way, just a downturn in Microsoft stock is enough to put a chill in the purchase plans of employees. I know many employees who have already delayed some purchases when the stock dropped below $30 a share. Wanna bet there will be even further retrenchment in employee purchases if the stock drops below $20 a share (which will certainly happen if the US stock market takes a big hair-cut when the recession kicks in)?

Again, this is not unusual. You seem to think that most of America is still manufacturing based. This was/is true of a few states in the Mid-West, but thats it. Any state on the coast, this is not true at all. Any large, established metro area is going to have at least two or three large industry-leading companies (Seattle hits the minimum). I used to live in Atlanta, home of UPS, Home Depot and a little company called Coca Cola. Ever heard of them? Hell, Charlotte, NC is home to several of the worlds largest banks! Like I said in an earlier comment, I live in Silicon Valley and you’d be hard pressed to find a larger conglomeration of “above average” industry leading technology companies in one area. Yes, that includes Seattle. Sorry, but AMZN+MSFT is nice but not close to GOOG+AAPL+MSFT (they are here too) +INTL+EBAY+CSCO+AMD+Everyothercompanyyouhaveeverheardofintechnology. Yet home prices here are falling starting to drop off a cliff. Sales are down HUGE, foreclosures are now higher than sales, and prices are off 10-20% since peak already with no end in sight.

Also, I have an explanation for the 18 month delay, but you won’t like it. Its my neighbors down here buying "chocolate"boxes in Oregon and Seattle because they were priced out of investment "chocolate"boxes in California. Its been that way for at least 30 years, California housing inflates big time, people want to start investing after it peaks and cannot here so they say “Hey, Seattle is nice I hear and its cheap there!! Lets buy 4 condos!”. Same thing happened in the early 90’s. California equity locusts dried up last year as the market here started to tank, Seattle/Portland are now running on the fumes of the locals who still think their "chocolate" does not stink.

I understand that there are lots of cities that have good employment, what I’m saying is that the employers in Seattle are ‘above average’ (or special if you will). ie. Industry leaders / market makers. I don’t expect them to singlehandedly keep Seattle out of the house of pain, but our trip there should be less painful and shorter than say an economy based heavily on the traditional industrial manufacturing that America grew up on.

Actually, now that I think of it, can someone explain the 18 month delay between Seattle and the rest of the country? I’ve seen that referred to a lot on this site and the graph sure makes it look true, but what is the commonly understood rationale behind this?

Always keep in mind that this economy can change on a dime. Very few people notice a recession until they are looking into a review mirror, standing in the unemployment line and wondering “What the hell just hit me?”

Solid employment is the norm in pretty much every metro area in the country. Places like Michigan and Detroit are the outliers, not Seattle.

Seattle’s employment base is solid and diverse… not invincible and definitely not immune to cycles, but solid non-the-less.

We are on the opposite end of the spectrum from Michigan because of this fact.

Not sure if you are debating me or not really. Basically I agree with what you just wrote.

Boeing laid off a lot of people from 2001 through 2004 as a result of the travel slowdown, as well as moved their HQ from Seattle to Chicago in 2001. However, since 2004, Boeing has hired at a pretty steady clip, picking up 22,000 jobs since its low point in July ‘04. A lot of these people were rehires/callbacks from the layoffs. However, Boeing is bringing people to the Seattle area to work. Very few, if any, of the jobs are significantly above median for Seattle, however.

As for the tanker contract, it has no real bearing on employment numbers. The 767 will dwindle and be mothballed circa 2012 with the space likely used for 787 work. No layoffs, and there wouldn’t have been a significant hiring wave if Boeing had received it. The real ramifications for Seattle are that the damage to the bottom line ($5 billion a year is always good for that) will impact the existing 74k employees in terms of bonuses and whatnot.

No matter how you slice it, Boeing employment does not support Seattle proper’s housing market at current prices. Most of the newer Boeing employees I know live in Renton, Federal Way, and other southern communities that are more affordable.

Even if Boeing/Microsoft remain healthy they can’t keep afloat a whole region on their own. Housing will still take a beating in the area.

The Bernanke activity from today is the type that has much more impact on the housing prices.

There is suggestion that the lenders should write down the principle on the loans.

Maybe in India…not even sure about China. The way the dollar is going, I doubt Canada looks too attractive (not to mention Europe).

-Boeing getting lots of orders doesn’t help the local economy because there are less jobs there than before, and anyway they only assemble here because they make most of the parts elsewhere.

-Boeing *not* getting a government contract will hurt the local economy (and housing) because it will make Boeing lose jobs.

If Boeing had been awarded the deal, would the conversation have been focused towards the angle that it would NOT help Seattle because we don’t make the planes here any more anyway?

The reason prices went up so far and so fast was structural changes in home financing. This is also why you saw the same results in every city around the country and even much of the world.

Those changes were unsustainable and we can see the results crashing around us with historical loses in the banking and investment communities.

unlike other assets like stocks, home prices are directly related to home financing. the bubble went up and now it is receeding.

you are foolish if you think “jobs” is going to offset the influence of the financial system. it is comparing a garden hose to a water main…

If we are (very) lucky, the financial problems will subside in a few years and we can return to discussions of traditional supply/demand factors like income, population growth, etc.

If employment was a major driver of housing prices, we would have seen the bubble during the dot.com boom, not years later.

For what it’s worth however, the key insight isn’t how profitable Microsoft is. I think it’s how their monopoly is coming apart at the seems. Technology and social influences are each moving to strip their monopoly. The next 5 years are likely to be crucial if they wish to keep a windows desktop monopoly. If they fail, the 5 years after that probably become crucial to keeping their office monopoly.

Microsoft Reports Record Second Quarter Results
Robust holiday sales and enterprise demand drive revenue growth of 30%
Microsoft Corp. today announced second quarter records for revenue, operating income and diluted earnings per share of $16.37 billion, $6.48 billion and $0.50, respectively. Compared to the year ago period, these figures represent growth of 30%, 87% and 92% for revenue, operating income and diluted earnings per share, respectively

My understanding is that Google is not setting up a “huge shop” in Kirkland. It’s pretty small – limited to technical people only. Mainly a way to pick off key Microsoft talent that doesn’t want to relocate.

Like 200 People small.