by Tyler Durden
Sep 6, 2016 6:30 PM
Why does it seem like almost everything is made in China these days? Yesterday I was looking at some pencils that we had laying around the house and I noticed that they had been manufactured in China. I remarked to my wife that it was such a shame that they don’t make pencils in the United States anymore. At another point during the day, I turned over my television remote and I noticed that it also had “Made In China” engraved on it. With Labor Day just hours in the past, I think that it is quite appropriate to write about our transition from an industrial economy to a paper economy today. Since the year 2000, the United States has lost five million manufacturing jobs even though our population has grown substantially since that time. Manufacturing in America is in a state of stunning decline, our economic infrastructure is being absolutely gutted, and our formerly great manufacturing cities are in an advanced state of decay. We consume far more wealth than we produce, and the only way that we are able to do this is by taking on massive amounts of debt. But is our debt-based paper economy sustainable in the long run?
Back in 1960, 24 percent of all American workers worked in manufacturing. Today, that number has shriveled all the way down to just 8 percent. CNN is calling it “the Great Shift”…
In 1960, about one in four American workers had a job in manufacturing. Today fewer than one in 10 are employed in the sector, according to government data.
Call it the Great Shift. Workers transitioned from the fields to the factories. Now they are moving from factories to service counters and health care centers. The fastest growing jobs in America now are nurses, personal care aides, cooks, waiters, retail salespersons and operations managers.
No wonder the middle class is shrinking so rapidly. There aren’t too many cooks, waiters or retail salespersons that can support a middle class family.
Since the turn of the century, we have lost more than 50,000 manufacturing facilities. Meanwhile, tens of thousands of gleaming new factories have been erected in places like China.
Does anyone else see something wrong with this picture?
At this point, the total number of government employees in the United States exceeds the total number of manufacturing employees by almost 10 million…
Government employees in the United States outnumber manufacturing employees by 9,932,000, according to data released today by the Bureau of Labor Statistics.
Federal, state and local government employed 22,213,000 people in August, while the manufacturing sector employed 12,281,000.
The BLS has published seasonally-adjusted month-by-month employment data for both government and manufacturing going back to 1939. For half a century—from January 1939 through July 1989—manufacturing employment always exceeded government employment in the United States, according to these numbers.
You might be thinking that government jobs are “good jobs”, but the truth is that they don’t produce wealth.
Government employees are really good at pushing paper around and telling other people what to do, but in most instances they don’t actually make anything.
In order to have a sustainable economy, you have got to have people creating and producing things of value. A debt-based paper economy may seem to work for a while, but eventually the whole thing inevitably comes crashing down when faith in the paper is lost.
Right now, the rest of the world is willing to send us massive amounts of stuff that they produce for our paper. So we keep producing more and more paper and we keep going into more and more debt, but at some point the gig will be up.
If we want to be a wealthy nation in the long-term, we have got to produce stuff. That is why the latest news from Caterpillar is so depressing. In addition to the thousands of layoffs that had been previously announced by the industrial machinery giant, it appears that a fresh wave of layoffs has arrived…
Hundreds of mostly office employees received layoff notices at one of the largest Caterpillar Inc. facilities in the Peoria area this week, just as the company announced plans to close overseas production plants and eliminate thousands more positions.
A total of 300 support and management employees at Building AC and the Tech Center in Mossville this week received job loss notifications that included severance packages, 60 days notice and mandated Illinois Worker Adjustment and Retraining Notification Act letters.
During this election season, you will hear many of our politicians talk about how good “free trade” is for the global economy. But that is only true if the trade is balanced. Unfortunately, we have been running a yearly trade deficit of between 400 billion dollars and 600 billion dollars for many years…
When you have got about half a trillion dollars more going out than you have coming in year after year that has severe consequences.
Let me try to break it down very simply.
Imagine that I am the United States and you are China. I take one dollar out of my wallet and I give it to you and then you send me some stuff.
After a while, I want more stuff, so I take another dollar out of my wallet and send it to you in exchange for more products.
But that stuff only lasts for so long, and so pretty soon I find myself taking another dollar out of my wallet and giving it to you for even more stuff.
Ultimately, who is going to end up with all the money?
It isn’t a big mystery as to how China ended up with so much money. And when we can’t pay our bills we have to go and beg them to let us borrow some of the money that we sent to them in the first place. Since we pay interest on that borrowed money, that makes China even richer.
This is why I am so obsessed with these trade issues. They truly are at the very heart of our long-term economic problems.
But most Americans don’t understand these things, and they seem to think that our debt-based paper economy can just keep rolling along indefinitely.
In the end, history will be the judge as to who was right and who was wrong.
November 17, 2013
It’s a fairly pleasant Sunday morning here in Ft. Worth. It rained a little last night and it’s about 60 degrees outside … pretty darn nice.
I read a piece this morning GOP: Obama lied about health insurance law and I can’t say I’m “stunned” at the content but the piece clearly demonstrates how willing people are to be deceived. It’s like being “blinded by the light”, despite the fact that Barack Obama’s “light” is brilliant only to himself. He is like unto a once great chandelier with a thousand, one hundred watt bulbs brightly lighting up the dance floor … now reduced to a single, seven watt night-light leaving people stumbling around, looking foolish still trying to dance to a worn out tune.
The writer of the article definitely is one of the folks stumbling around the dance floor. He points out in the article that Sen. Ron Johnson (R) of Wisconsin, whom the author referred to as the “designated attacker” for the GOP, as much as said Obama lied when he repeatedly assured the public, “If you like your doctor, you will be able to keep your doctor. Period. If you like your health-care plan, you will be able to keep your health-care plan. Period. No one will take it away. No matter what.”
“As much as said” …
Here is what the good Senator said: Here
The president may look incompetent on Syria. But his behavior fits his strategy to weaken America abroad.
by Norman Podhoretz
It is entirely understandable that Barack Obama’s way of dealing with Syria in recent weeks should have elicited responses ranging from puzzlement to disgust. Even members of his own party are despairingly echoing in private the public denunciations of him as “incompetent,” “bungling,” “feckless,” “amateurish” and “in over his head” coming from his political opponents on the right.
For how else to characterize a president who declares war against what he calls a great evil demanding immediate extirpation and in the next breath announces that he will postpone taking action for at least 10 days—and then goes off to play golf before embarking on a trip to another part of the world? As if this were not enough, he also assures the perpetrator of that great evil that the military action he will eventually take will last a very short time and will do hardly any damage. Unless, that is, he fails to get the unnecessary permission he has sought from Congress, in which case (according to an indiscreet member of his own staff) he might not take any military action after all.
Summing up the net effect of all this, as astute a foreign observer as Conrad Black can flatly say that, “Not since the disintegration of the Soviet Union in 1991, and before that the fall of France in 1940, has there been so swift an erosion of the world influence of a Great Power as we are witnessing with the United States.”
Yet if this is indeed the pass to which Mr. Obama has led us—and I think it is—let me suggest that it signifies not how incompetent and amateurish the president is, but how skillful. His foreign policy, far from a dismal failure, is a brilliant success as measured by what he intended all along to accomplish. The accomplishment would not have been possible if the intention had been too obvious. The skill lies in how effectively he has used rhetorical tricks to disguise it.
The key to understanding what Mr. Obama has pulled off is the astonishing statement he made in the week before being elected president: “We are five days away from fundamentally transforming the United States of America.” To those of us who took this declaration seriously, it meant that Mr. Obama really was the left-wing radical he seemed to be, given his associations with the likes of the anti-American preacher Jeremiah Wright and the unrepentant terrorist Bill Ayers, not to mention the intellectual influence over him of Saul Alinsky, the original “community organizer.”
So far as domestic affairs were concerned, it soon became clear—even to some of those who had persuaded themselves that Mr. Obama was a moderate and a pragmatist—that the fundamental transformation he had in mind was to turn this country into as close a replica of the social-democratic countries of Europe as the constraints of our political system allowed.
Since he had enough support for the policies that this objective entailed, those constraints were fairly loose, and so he only needed a minimum of rhetorical deception in pursuing it. All it took was to deny he was doing what he was doing by frequently singing the praises of the free-enterprise system he was assiduously working to undermine, by avoiding the word “socialism,” by invoking “fairness” as an overriding ideal and by playing on resentment of the “rich.”
But foreign policy was another matter. As a left-wing radical, Mr. Obama believed that the United States had almost always been a retrograde and destructive force in world affairs. Accordingly, the fundamental transformation he wished to achieve here was to reduce the country’s power and influence. And just as he had to fend off the still-toxic socialist label at home, so he had to take care not to be stuck with the equally toxic “isolationist” label abroad.
This he did by camouflaging his retreats from the responsibilities bred by foreign entanglements as a new form of “engagement.” At the same time, he relied on the war-weariness of the American people and the rise of isolationist sentiment (which, to be sure, dared not speak its name) on the left and right to get away with drastic cuts in the defense budget, with exiting entirely from Iraq and Afghanistan, and with “leading from behind” or using drones instead of troops whenever he was politically forced into military action.
The consequent erosion of American power was going very nicely when the unfortunately named Arab Spring presented the president with several juicy opportunities to speed up the process. First in Egypt, his incoherent moves resulted in a complete loss of American influence, and now, thanks to his handling of the Syrian crisis, he is bringing about a greater diminution of American power than he probably envisaged even in his wildest radical dreams.
For this fulfillment of his dearest political wishes, Mr. Obama is evidently willing to pay the price of a sullied reputation. In that sense, he is by his own lights sacrificing himself for what he imagines is the good of the nation of which he is the president, and also to the benefit of the world, of which he loves proclaiming himself a citizen.
The problem for Mr. Obama is that at least since the end of World War II, Americans have taken pride in being No. 1. Unless the American people have been as fundamentally transformed as their country is quickly becoming, America’s decline will not sit well. With more than three years in office to go, will Mr. Obama be willing and able to endure the continuing erosion of his popularity that will almost certainly come with the erosion of the country’s power and influence?
No doubt he will either deny that anything has gone wrong, or failing that, he will resort to his favorite tactic of blaming others—Congress or the Republicans or Rush Limbaugh. But what is also almost certain is that he will refuse to change course and do the things that will be necessary to restore U.S. power and influence.
And so we can only pray that the hole he will go on digging will not be too deep for his successor to pull us out, as Ronald Reagan managed to do when he followed a president into the White House whom Mr. Obama so uncannily resembles.
Mr. Podhoretz was the editor of Commentary from 1960-95. His most recent book is “Why Are Jews Liberals?” (Doubleday, 2009).
A version of this article appeared September 9, 2013, on page A15 in the U.S. edition of The Wall Street Journal, with the headline: Obama’s Successful Foreign Failure.
And we’re still at risk of it happening all over againby Adam Taggart Saturday, March 30, 2013, 12:42 PM
Then, when the Fed’s fire hoses started spraying an elephant soup of liquidity injections in every direction and its balance sheet grew by $1.3 trillion in just thirteen weeks compared to $850 billion during its first ninety-four years, I became convinced that the Fed was flying by the seat of its pants, making it up as it went along. It was evident that its aim was to stop the hissy fit on Wall Street and that the thread of a Great Depression 2.0 was just a cover story for a panicked spree of money printing that exceeded any other episode in recorded human history.
David Stockman, The Great Deformation
David Stockman, former director of the OMB under President Reagan, former US Representative, and veteran financier is an insider’s insider. Few people understand the ways in which both Washington DC and Wall Street work and intersect better than he does.
In his upcoming book, The Great Deformation: The Corruption of Capitalism in America, Stockman lays out how we have devolved from a free market economy into a managed one that operates for the benefit of a privileged few. And when trouble arises, these few are bailed out at the expense of the public good.
By manipulating the price of money through sustained and historically low interest rates, Greenspan and Bernanke created an era of asset mis-pricing that inevitably would need to correct. And when market forces attempted to do so in 2008, Paulson et al hoodwinked the world into believing the repercussions would be so calamitous for all that the institutions responsible for the bad actions that instigated the problem needed to be rescued — in full — at all costs.
Of course, history shows that our markets and economy would have been better off had the system been allowed to correct. Most of the “too big to fail” institutions would have survived or been broken into smaller, more resilient, entities. For those that would have failed, smaller, more responsible banks would have stepped up to replace them – as happens as part of the natural course of a free market system:
Essentially there was a cleansing run on the wholesale funding market in the canyons of Wall Street going on. It would have worked its will, just like JP Morgan allowed it to happen in 1907 when we did not have the Fed getting in the way. Because they stopped it in its tracks after the AIG bailout and then all the alphabet soup of different lines that the Fed threw out, and then the enactment of TARP, the last two investment banks standing were rescued, Goldman and Morgan [Stanley], and they should not have been. As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games, such that Goldman Sachs got $10 billion dollars for the fiscal year that started three months later after that check went out, which was October 2008. For the fiscal 2009 year, Goldman Sachs generated what I call a $29 billion surplus – $13 billion of net income after tax, and on top of that $16 billion of salaries and bonuses, 95% of it which was bonuses.
Therefore, the idea that they were on death’s door does not stack up. Even if they had been, it would not make any difference to the health of the financial system. These firms are supposed to come and go, and if people make really bad bets, if they have a trillion dollar balance sheet with six, seven, eight hundred billion dollars worth of hot-money short-term funding, then they ought to take their just reward, because it would create lessons, it would create discipline. So all the new firms that would have been formed out of the remnants of Goldman Sachs where everybody lost their stock values – which for most of these partners is tens of millions, hundreds of millions – when they formed a new firm, I doubt whether they would have gone back to the old game. What happened was the Fed stopped everything in its tracks, kept Goldman Sachs intact, the reckless Goldman Sachs and the reckless Morgan Stanley, everyone quickly recovered their stock value and the game continues. This is one of the evils that comes from this kind of deep intervention in the capital and money markets.
Stockman’s anger at the unnecessary and unfair capital transfer from taxpayer to TBTF bank is matched only by his concern that, even with those bailouts, the banking system is still unacceptably vulnerable to a repeat of the same crime:
The banks quickly worked out their solvency issues because the Fed basically took it out of the hides of Main Street savers and depositors throughout America. When the Fed panicked, it basically destroyed the free-market interest rate – you cannot have capitalism, you cannot have healthy financial markets without an interest rate, which is the price of money, the price of capital that can freely measure and reflect risk and true economic prospects.
Well, once you basically unplug the pricing mechanism of a capital market and make it entirely an administered rate by the Fed, you are going to cause all kinds of deformations as I call them, or mal-investments as some of the Austrians used to call them, that basically pollutes and corrupts the system. Look at the deposit rate right now, it is 50 basis points, maybe 40, for six months. As a result of that, probably $400-500 billion a year is being transferred as a fiscal maneuver by the Fed from savers to the banks. They are collecting the spread, they’ve then booked the profits, they’ve rebuilt their book net worth, and they paid back the TARP basically out of what was thieved from the savers of America.
Now they go down and pound the table and whine and pout like JP Morgan and the rest of them, you have to let us do stock buy backs, you have to let us pay out dividends so we can ramp our stock and collect our stock option winnings. It is outrageous that the authorities, after the so-called “near death experience” of 2008 and this massive fiscal safety net and monetary safety net was put out there, is allowing them to pay dividends and to go into the market and buy back their stock. They should be under house arrest in a sense that every dime they are making from this artificial yield group being delivered by the Fed out of the hides of savers should be put on their balance sheet to build up retained earnings, to build up a cushion. I do not care whether it is fifteen or twenty or twenty-five percent common equity and retained earnings-to-assets or not, that is what we should be doing if we are going to protect the system from another raid by these people the next time we get a meltdown, which can happen at any time.
You can see why I talk about corruption, why crony capitalism is so bad. I mean, the Basel capital standards, they are a joke. We are just allowing the banks to go back into the same old game they were playing before. Everybody said the banks in late 2007 were the greatest thing since sliced bread. The market cap of the ten largest banks in America, including from Bear Stearns all the way to Citibank and JP Morgan and Goldman and so forth, was $1.25 trillion. That was up thirty times from where the predecessors of those institutions had been. Only in 1987, when Greenspan took over and began the era of bubble finance – slowly at first then rapidly, eventually, to have the market cap grow thirty times – and then on the eve of the great meltdown see the $1.25 trillion to market cap disappear, vanish, vaporize in panic in September 2008. Only a few months later, $1 trillion of that market cap disappeared in to the abyss and panic, and Bear Stearns is going down, and all the rest.
This tells you the system is dramatically unstable. In a healthy financial system and a free capital market, if I can put it that way, you are not going to have stuff going from nowhere to @1.2 trillion and then back to a trillion practically at the drop of a hat. That is instability; that is a case of a medicated market that is essentially very dangerous and is one of the many adverse consequences and deformations that result from the central-bank dominated, corrupt monetary system that has slowly built up ever since Nixon closed the gold window, but really as I say in my book, going back to 1933 in April when Roosevelt took all the private gold. So we are in a big dead-end trap, and they are digging deeper every time you get a new maneuver.
Is the U.S. economy about to experience a major downturn? Unfortunately, there are a whole bunch of signs that economic activity in the United States is really slowing down right now. Freight volumes and freight expenditures are way down, consumer confidence has declined sharply, major retail chains all over America are closing hundreds of stores, and the “sequester” threatens to give the American people their first significant opportunity to experience what “austerity” tastes like. Gas prices are going up rapidly, corporate insiders are dumping massive amounts of stock and there are high profile corporate bankruptcies in the news almost every single day now. In many ways, what we are going through right now feels very similar to 2008 before the crash happened. Back then the warning signs of economic trouble were very obvious, but our politicians and the mainstream media insisted that everything was just fine, and the stock market was very much detached from reality. When the stock market did finally catch up with reality, it happened very, very rapidly. Sadly, most people do not appear to have learned any lessons from the crisis of 2008. Americans continue to rack up staggering amounts of debt, and Wall Street is more reckless than ever. As a society, we seem to have concluded that 2008 was just a temporary malfunction rather than an indication that our entire system was fundamentally flawed. In the end, we will pay a great price for our overconfidence and our recklessness. (Read More….)
Freedom was illegal in the Colonies in 1776 and Freedom is still illegal in America today. Those that signed the Declaration of Independence knew that a tyrannical government would never relinquish its power without resistance.
Governments are supposed to protect the rights of the people, but if they are not held in check, they will begin to abuse the people that they were created to protect. Rather than protecting the people, governments tend to protect the ruling class and enslave everyone else. This scheme will work as long as the people cling to the illusion that they are free.
Goethe, a well known German philosopher, once stated “None are more hopelessly enslaved than those who falsely believe they are free.”.
It has been the job of the media and government schools to indoctrinate the people into believing that they are free. Slaves are much more productive and easy to control than individuals that know that the financial elite are calling the shots.
The clock is ticking. Massive tax hikes are threatening to push America’s already declining economic freedom over the “fiscal cliff,” a politician-made economic catastrophe.
President Obama’s proposal to avert the fiscal cliff is a $1.6 trillion tax hike plus new stimulus spending, along with expanded power for himself to raise the debt ceiling without congressional approval. The House Republican leadership has offered a counter to the President’s frivolous proposal, but the counterproposal appears to cave on tax increases and punt on entitlements. Heritage’s Alison Fraser and J. D. Foster point out that “the Republican counteroffer, to the extent it can be interpreted from the hazy details now available, is a dud. It is utterly unacceptable. It is bad policy, bad economics.”
Such bad policies and economics will have a drastic impact on our economic freedom, which is already in trouble after four years of the “Yes, We Can” Administration’s programs and spending. Since 2008, America’s economic freedom has been declining at alarming rates: America has fallen from fifth freest economy in the world to 10th freest. (continues below chart)
As the Heritage Foundation’s Index of Economic Freedom demonstrates, economic freedom is the path to prosperity. The decline of America’s economic freedom means that our economy is losing its capacity to achieve dynamic and sustained economic growth. That’s bad news for American individuals, families, and entrepreneurs, who will reap fewer rewards for their hard work in the future.
Waning economic freedom means lost opportunities for average Americans. The opportunity cost of bigger government is paid for in the loss of economic vitality. A future with fewer jobs and lower incomes can wait at the bottom of the fiscal cliff, or it can follow just as surely from ill-designed policies to avoid it.
There is a better way. The Heritage Foundation has proposed Saving the American Dream, a sweeping pro-growth tax and spending reform roadmap designed to grow the economy and restructure entitlement programs to provide real economic freedom and long-term security for the American people.
As Heritage’s Kim Holmes noted in Understanding American Prosperity, “All of us—not just our politicians—must be vigilant, determined to safeguard liberty and the American Dream. And that means understanding that the foundation of American prosperity rests in economic freedom.”
Posted in Enterprise and Free Markets