FedUpUSA

Archive for the ‘Industry’ Category

When asked what socialism was, Lenin responded, “The power of the Soviet State and electrification of the country.” Apparently, the leaders of North Korea haven’t made it to that page in the Little Red Book yet.

<— If you believe that the only way a country can have a properly running infrastructure to include roads and energy is through a big, giant government that controls everything… explain this!

In the simplest terms, socialism is defined as “State ownership of the means of production” where every economic action is centrally planned and centrally controlled by the government. In comparison, capitalism is defined as “private ownership of the means of production” where every economic action is controlled by the business owner responding to the demands of the market and not the government.

The US economy is currently a mixed economy of capitalism and socialism that would best be described as fascism, or the marriage of corporations and government. Mussolini said, “This should properly be called corporatism.”

The state of Michigan has determined that it is time to “put all of its chips on green” with a new energy mandate declaring that by the year 2025, 25% of the state’s energy must come from renewable or green energy sources. There are a multitude of reasons ranging from providing clean energy to creating jobs. For an understanding of job creation through government stimulus, read the first part of this article.  click here

The politicians constantly tell the uneducated serfs that the government knows what is best and that we should just listen to their wisdom. We are constantly told that only a government can provide all of these things that could never come about in a market economy. There is just no way! The whole lie is glossed over with Newspeak terms such as Public-Private Partnerships (remember fascism from above) or Government Investment. When was the last time one of these investments sent the people a dividend check? It’s all bull.

As far as government being an investment firm, I would like to withdraw all of my funds and close my account. The Public-Private partnerships are nothing more that the public picking up the tab with the profits remaining private. Considering that so many subsidized firms go bankrupt, the government is the worst investment firm in the world as evidenced here by the number of green energy companies that have gone belly-up and the money that has been flushed down the drain with them. Solyndra is not an isolated incident.

This malinvestment is not restricted to the 20^th and 21^st centuries. In the 1800’s, the common belief was that the only way for railroads to exist was with the full force of the government throwing money at it. James J. Hill built the Great Northern Railroad without a single tax dollar – it was privately financed. Instead of having the army “clear the land,” Hill negotiated rights of way with the Indians and other inhabitants. Hill was able to provide such a great service that his rates were lower than his subsidized (tax eater) competitors. When the subsidized firms were going bankrupt, Hill turned a profit while charging lower rates. The difference between Hill and the others was that he was a market entrepreneur where the others were political entrepreneurs. Hill did the things that the competition was either unwilling or unable to do. They got their financing by sucking up to and cutting deals with their political patrons. Most of them would have been more suited to running dress shops in Boston rather than running railroads. For more on Hill and other market entrepreneurs, click here

Why does the government invest in these companies? Because no investors in their right mind would! Think of a company such as Apple or Microsoft looking for capital investment. Based upon their successes they could probably self-finance, but if they did seek outside funds, they would not have too much of a problem because of their successful track records. The investor would of course do his/her due diligence to make sure that the investment was safe to ensure that the investment was profitable. In order to survive, private investors cannot take many losses. They will go out of business quickly… or seek a government bailout.

The government does not operate on the profit motive. The government operates on the public opinion and vote purchasing motives. The government does not need to show any results… only the appearance of results. This can easily be done by shifting money around, showing neat graphs, juking statistics, and an endless media onslaught of horizontal enforcement telling us, “The government is doing the right thing.”

The solution

It’s time to take the government out of the equation. It’s time to abandon the idea of central planning and central control of the means of production. It’s time to end the political favoritism granted to political entrepreneurs which is malinvestment at best and money laundering at worst.

Stop the mandates. If something is such a good idea and will be profitable, it does not require a mandate. Mandates and laws can never create an outcome that was not already possible. “If the world is round, can the king declare it to be flat? And if it is flat, can the parliament pass a law that makes it round?” ~St. Thomas More

Stop the social engineering. The purpose of energy companies is to provide energy and turn a profit, not to create jobs. The jobs will come as a byproduct of this economic activity. Let the different types of energy compete on the open market. The best form(s) will win out and provide the best value. It could be coal, solar, natural gas, industrial hemp, or something that has not even been discovered yet. Without an energy source proving itself, we will never really know. Why would we put so much hope into something that is unproven?

Licensing, permits, and regulations must go. The idea that these things protect the consumer and provide safety is nothing but a myth. People can be protected from harm by fully enforcing property rights. If a company contaminates a person’s land, that company should be held liable and make restitution for the loss to the actual victim. Regulations have actually been used by the political entrepreneurs for their own benefit. That’s why they hired the lobbyists to write the regulations and get them passed. Licensing, permits, and regulations serve only one purpose – to keep new actors from entering the market protecting the politically connected existing firms.

There are two ways to make money in the market. 1. Offer a product that people will voluntarily exchange money for, or 2. Use your political connections to cripple your competition with regulations. This was done against Hill in the form of the Interstate Commerce Act of 1887 which enforced minimum pricing regulation, in other words… price fixing.

“When buying and selling are controlled by legislation, the first things to be bought
and sold will be legislators.” ~P J O’Rourke

Intellectual Property laws, meaning patents need to go. Patents are nothing more than a government granted monopoly to engage in commerce and a strict prohibition against everybody else from engaging in the same commerce. An idea is not a physical thing and cannot be considered real property. For a really good explanation of IP laws, see this article.

Stop the exclusivity of markets. Yes, multiple firms can service the same city. It works with every other type of industry. It can and has worked with utility companies in the past. This restriction of the market has eliminated competition and the value that competition brings to the consumer. If monopolies are bad, why do people support them for certain industries? The Myth of Natural Monopoly

Stop the subsidies, stop the government malinvestment, and stop the looting of the taxpayers. The history of subsidies has been horrible at best. The price for some things may be lower at the cash register but the difference is made up from your paycheck. By propping up these dinosaurs, the creativity of the market has been stifled. If these new energy sources are worth their salt, they will distinguish themselves as so. If something is viable, private investors will flock to it. And no, the greedy capitalists that would sell their own mothers for a profit are not keeping new technology off the market to protect Big Oil. If something new came along that was more profitable, those greedy capitalists would sell out the existing firms… for the profits. Greed is good.

The most important thing is for the people to stop believing in The Myth of the State. These politicians are not wise and all-knowing. Most of them are idiots and have little understanding of economics or energy. They do understand lobbyist money, vote purchasing, and appealing to the emotions of the masses. They do not have your best interests at heart.

“How can we blame the free market when we haven’t even tried it yet?”
Franklin D. Roosevelt

A couple of years ago, Spain “put their chips on Green.” They have a 25% unemployment rate. Is that the real meaning of 25 by 25?

Lou – Freedom Feens

The paradox of an advanced post-industrial economy is that the number of jobs needed declines even as the cost of living rises.

The fundamental dynamic of America’s job market is simple: we need relatively few workers to provide the absolute essentials of life even as the cost-basis of the economy inexorably rises. In other words, there are fewer jobs even as the costs of maintaining a “middle class” life rise.

Let’s start by observing how all the financial data in the world does not necessarily describe the primary dynamics of an economy. There are a number of factors that cause this disconnect between the primary forces at work beneath the surface and the data.

One is that economists tend to focus on situations with abundant, easy-to-interpret data. If you’re only looking for roses, then you ignore everything that isn’t a rose. So economists seek dynamics that can be easily explained by available data, and financial factors that they are paid to examine. Everything else is ignored, especially if the act of examining it casts a skeptical light on a self-serving Status Quo.

One key reality that is rarely if ever discussed is that the number of workers needed to provide the bare essentials of life to the 313 million residents of America is modest. Let’s stipulate that bare essentials include food, heat in winter, clean water, sewage and waste disposal, public health (innoculations against pandemics, etc.), public safety and enough energy to fuel these essentials. If life were suddenly reduced to these basics, and no energy were available for anything but these essentials, then how many full-time workers would be needed?

Roughly 1% of the workforce raises the vast majority of our food, and a modest number of workers maintain the water and sewage systems, natural gas pipelines, furnaces, etc., A similarly modest number of workers maintain public health and safety and provide transport of essentials.

Of the official workforce of 154 million, how many fall into this “absolute essentials of life” category? Perhaps 10% or 15 million people? Even if we double that to include all sorts of non-essential but “critical” goods and services, then that’s perhaps 30 million workers, roughly 10% of the population and about 12.5% of the real workforce of 240 million (the Federal government has relegated roughly 88 million working-age people to the zombie-status of “not in labor force” to keep the official unemployment rate low).

We all know the dynamic behind this dramatic reduction in the number of people needed to provide the essentials of life: enormous increases in productivity based on abundant fossil fuels and advanced technology.

Even well-made infrastructure requires maintenance, but this process of replacing aging transmission lines, water mains, highways, refineries, etc. requires a relatively modest number of workers because machines do much of the work.

If you doubt this, stop and count the workers on a major repaving project or the construction of a highrise building. A very large multi-story building is generally assembled by about 100-150 workers, more during certain stages and less during others. Most of the components are fabricated in factories where machines do most of the work.

Ask how many frontline police officers are on your local force. Cities of a few hundred thousand might have 200-300 officers, larger cities might have 800-1,000. It’s not a large number.

On a macro-scale, the challenge in advanced economies is creating “make-work” for 80% of the working age population. This is not an issue in developing economies, as most of the workforce is non-market and does not participate much in the cash economy. For example, only 7% of India’s vast workforce of hundreds of millions of people gets a paycheck. The other 93% survive via barter, raising their own food, a bit of trade or occasional labor for cash, etc.

Before industrialization, roughly 50% of the U.S. population and workforce lived and worked on farms. The surplus of their labor fed the other 50% who lived in urban areas, and that cash supplied the few essentials the rural dwellers needed.

The paradox of post-industrial economies is that the cost of living rises even as the efficiencies of providing essentials reduces the number of essential jobs. Some of this may be due to Baumol’s Disease, a topic I have covered before (Productivity, Baumol’s Disease and the Cliff Just Ahead, December 8, 2010).

Baumol’s cost disease is named after economist William J. Baumol, who with William G. Bowen described a critical difference between goods-producing and labor-intensive work.

Baumol and Bowen noted that if productivity/wages rose by 2.2% a year and costs rose by 2%, then over time workers could buy more of everything–goods, services and government services paid for with taxes.

They also observed a critical, long-term difference between the rates of productivity growth in goods-producing industries and labor-intensive industries such as nursing and teaching. (I would also include the Armed Forces as an example.)

Goods-producing industries could achieve very high productivity growth as labor-saving automation and supply-chain efficiencies scaled up, while nursing and teaching required the same number of hours with patients or students as in years past. In other words, productivity in labor-intensive services has intrinsically lower rates of productivity increases than goods-producing industries.

Baumol and Bowen then described the peculiar result of this: as GDP increased due to goods-producing improvements in productivity, the relative share of low-growth-productivity services would rise.

Thus machine-produced TV sets and computers fall in price while labor-intensive healthcare costs rise.

While this is undoubtedly one causal factor, it is not the only causal factor. I think there is an implicit assumption being made on both a policy and cultural level that higher costs are acceptable because it “means more people are being put to work.”

So when the cost per military fighter aircraft leaps from $56 million each (the F-18) to $200 million and $300 million (the F-22 and F-35), then we accept this as OK because we assume more jobs will be created as costs rise.

Gross waste and inefficiency is thus accepted as the “cost” of creating more jobs.

The problem with this implicit pact is that a rising percentage of these jobs are friction: they do not increase productivity or wealth, they merely consume wealth. In the case of fighter aircraft, the cost has leaped so dramatically that it is now apparent the nation cannot afford a fleet of these hyper-costly (and apparently troubled) aircraft.

Will 100 of these aircraft prevail over 1,000 dirt-cheap drones? How about 10,000 drones? If the future of warfare is increasingly powerful unmanned networked drones (and it clearly is), why are we spending $1 trillion+ on hyper-costly aircraft that are essentially designed for a previous era?

We’re not building miltary dominance with these programs, we’re sinking money down ratholes, just as we’re not “buying” more health with our 17% of GDP spent on sickcare, we’re simply managing more chronic diseases.

In the case of healthcare, patients being issued $1,000 a month in medications are not necessarily “getting better,” rather many thousands are dying of accidental overdoses. Though the U.S. spends twice as much as other advanced democracies as a percentage of GDP on healthcare, Americans are arguably less healthy in aggregate than the citizens of Japan and Australia, nations that spend about 8% of GDP on healthcare while the U.S. spends 17% of GDP.

These are but two examples of trillion-dollar friction that is sapping the nation’s wealth and vitality. Since the nation cannot actually afford to spend $1 trillion on the F-35 program or $2.5 trillion every year on a healthcare system of which at least 40% is fraud or paper-pushing, then we have been borrowing $1.5 trillion every year to maintain the illusion that these trillion-dollar sinkholes are sustainable.

The solution to the post-industrial decline of labor is not unproductive “make-work” jobs and borrowing trillions of dollars until the system implodes, it’s lowering the cost basis of the entire economy and culture. The central paradox of an advanced post-industrial economy is that the number of jobs needed declines even as the cost of living rises. The only way out of that paradox is to radically reduce the cost-basis of the entire economy, which means eliminating all the systemic sources of unproductive friction.

I will discuss this further in the days ahead.

Charles Hugh Smith – Of Two Minds

Very few things illustrate how dramatically America has been deindustrialized than the stunning decline of the U.S. auto industry.  Once upon a time, the United States literally taught the rest of the world how to make cars.  We were the ones that invented the assembly line.  We were the ones that showed the rest of the world what mass production could do for an economy.  For decades, we produced more cars than anyone else and we sold more cars than anyone else.  Detroit was known as “the Motor City” and our manufacturing prowess dominated the planet.  But now all of that has changed.  Japan makes far more vehicles than we do today.  So does Germany.  As you read this, state of the art production facilities are going up all over China.  Meanwhile, the U.S. auto industry continues to rot and thousands upon thousands of good automotive jobs continue to leave our shores.  The rest of the world is making cars better than we are, they are making them cheaper than we are and they really don’t care that many of our formerly great manufacturing cities are turning into rotting, stinking hellholes.  The U.S. auto industry was once a symbol of American dominance, but now it is just a symbol of American decline.  If we want to remain a great nation, then we need to start becoming great at making things once again.

The following are 17 facts about the decline of the U.S. auto industry that are almost too crazy to believe….

#1 The average age of an automobile in the United States has gone up more than 50% since 1990 and is now sitting at an all-time record of 10.8 years.  The average length of a marriage in the United States that ends in divorce is only 8 years.

#2 Germany made 5.5 million cars in 2010.  The United States made less than half that (2.7 million).

#3 When you add up salary and benefits, the average auto worker in Germany makes $67.14 an hour.  In the United States, auto workers only make $33.77 an hour in salary and benefits.

#4 Back in 2000, about 17 million new automobiles were sold in the United States.  During 2011, less than 13 million new automobiles were sold in the United States.

#5 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe?  Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts with the rest of the world of $110 billion.

#6 Japan builds more cars than anyone else on the globe.  Japan now manufactures about 5 million more automobiles than the United States does.

#7 In 2010, South Korea exported approximately 12 times as many automobiles to us as we exported to them.

#8 According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to new tariffs.

#9 U.S. car companies are spending hundreds of millions of dollars building shiny new automobile factories in China.

#10 In 1970, General Motors had about a 60 percent share of the U.S. automobile market.  Today, that figure is down to about 20 percent.

#11 The combined U.S. market share of the “Big Three” American car companies fell from 70% in 1998 to 53% in 2008.

#12 Detroit was once known as the “Motor City”, but in recent decades automobile production has been leaving Detroit at a staggering pace.  One analysis of census figures found that 48.5% of all men living in Detroit from age 20 to age 64 did not have a job during 2008.

#13 Today, only Chrysler still operates an automobile assembly line within Detroit city limits.

#14 Since Alan Mulally became CEO of Ford, the company has reduced its North American workforce by nearly half.

#15 Today, only about 40 percent of Ford’s 178,000 workers are employed in North America, and a significant portion of those jobs are in Canada and Mexico.

#16 The average Mexican auto worker brings in less than a tenth of the total compensation that a U.S. auto worker makes.

#17 In the year 2000, the U.S. auto industry employed more than 1.3 million Americans.  Today, the U.S. auto industry employs about 698,000 people.

Sadly, it is not just the auto industry in America that is falling apart.  In fact, almost everywhere you look in our economy (and in our society as a whole) there is decay and decline.

For example, our infrastructure was once the envy of the entire globe.  Today, U.S. infrastructure is ranked 23rd.

Recently, I wrote an article entitled “24 Statistics To Show To Anyone Who Believes That America Has A Bright Economic Future“.  In that article, I discussed many of the long-term trends that are systematically destroying this nation.

Just because we have had it so good for so long does not mean that it will always be that way.

As a nation, our wealth is declining.  A decade ago, the United States was ranked number one in average wealth per adult.  By 2010, the United States had fallen to seventh.

We lived off the wealth created by previous generations for a long time, but that was not enough for us.  We always wanted more.  Eventually we started going into massive amounts of debt so that we could keep this bubble of “false prosperity” going.

Today, when you add up all forms of debt in America, it comes to over 50 trillion dollars.

We are a great nation that is in an accelerating state of decline.

We have got to quit living off of the past accomplishments of previous generations.

We have got to quit being so lazy and decadent and spoiled.

There is absolutely no guarantee that America will always be a great nation.  In fact, when great nations fall, it usually happens very quickly.

I’m still proud to be an American, but the decay and the decline that I see all across this country sickens me.

And it should sicken you too.

The Economic Collapse

The Institute for Supply Management released the December 2011 Manufacturing ISM Report On Business® “The PMI registered 53.9 percent, an increase of 1.2 percentage points from November’s reading of 52.7 percent, indicating expansion in the manufacturing sector for the 29th consecutive month. The New Orders Index increased 0.9 percentage point from November to 57.6 percent, reflecting the third consecutive month of growth after three months of contraction. Prices of raw materials continued to decrease for the third consecutive month, with the Prices Index registering 47.5 percent, which is 2.5 percentage points higher than the November reading of 45 percent. Manufacturing is finishing out the year on a positive note, with new orders, production and employment all growing in December at faster rates than in November, and with an optimistic view toward the beginning of 2012 as reflected by the panel in this month’s survey.”

Expiring Business Tax Credits Partially Responsible

Looking for an explanation for the rise in December? I have one (and was aware of a likely jump in PMI in advance): 2011 Expiring Business Tax Incentives

Expiring Business Tax Incentives

1. 100% Bonus Depreciation – The bonus depreciation  deduction for qualifying property placed into service after September 8,  2010 and through 2011 was increased to 100%. Once the incentive expires  the depreciation rate reverts back to 50% bonus depreciation.
2. Self-Employment Tax Reduction – In 2011, the  self-employment tax was reduced on a temporary basis. Individuals who  are self-employed only need to pay a Social Security tax of 10.4%  (reduced from 12.4%) and 2.9% Medicare tax on qualifying income.  Self-employed individuals can also take a deduction for the 6.2%  employer’s share of Social Security with a 1.4% employer’s share of  Medicare as an above-the-line deduction.
3. Section 179d Depreciation Provisions – The increase  in expensing limits under Section 179d for 2011 at $500,000/$2,000,000  (equipment/property) will be phased out at the end of 2011. In 2012, the  rates will reduce to $125,000/$500,000 (equipment/property) until  December 31, 2012..
4. 15 Year Straight Line Depreciation – This allows  property owners and lessees to depreciate qualifying improvements to  commercial office spaces, as well as restaurant leasehold improvements  and new restaurant development.
5. Enhanced Charitable Deductions. This tax credit  allows C-Corporations the opportunity to claim an enhanced charitable  deduction for qualified computer contributions, book inventories to  school and food contributions to food depositories.
6. Employer Wage Credit for Active Military Reservists– This tax credit provides eligible small businesses (companies with 50  or fewer employees) with a credit against the company’s income tax  liability for a taxable year in an amount equal to 20% of the sum of the  wage payments made to activated military reservists..
7. New Markets Tax Credit – This tax credit offers a  39% credit on an equity investment to a Community Development Entity  (CDE) that is claimed over a 7 year compliance period. The CDE must then  make a Qualified Equity Investment or loan to a Qualified Business in a  Qualified Low Income Community (LICs). Most commercial and mixed-use  real estate development located in LICs are considered Qualified  Businesses. The credit is designed to encourage investment in LICs that  traditionally have limited access to debt and other sources of  investment income.
8. Credit for Construction of New Energy Efficient Homes  – This tax credit provides an eligible contractor which constructs a  qualified new energy efficient home a credit of up to $2,000 per home.  The credit is available for all new homes, including manufactured homes  constructed in accordance with the Federal Manufactured Homes  Construction and Safety Standards.
9. Energy Efficient Appliance Credit. This tax credit  is available to companies that manufacture or produce qualifying models  of refrigerators, dishwashers and washers/dryers. The credit is  available for models produced in 2008, 2009, and 2010. The amount of the  credit is dependent on the efficiency of the model and date the  appliance was manufactured.
10. Alternative Fuel Vehicle Refueling Property Credit.  This tax credit provides a 30% credit of the cost of any alternative  fuel vehicle refueling property placed into service in 2011 (not  including hydrogen stations). The credit is limited to $30,000 per  location for commercial clean fuel property, and $1,000 per location for  residential clean fuel property.

Some of the above incentives are minor but others likely had a major impact.

Think manufactures did not bring massive amounts of production forward to take advantage of these expiring credits?

Enjoy it While You Can As US Decoupling Won’t Last

Manufacturers are producing at an unsustainable rate. The global economy is rapidly cooling led by Europe, Asia, and Australia. That is a lot of downside leadership.

Please note that Eurozone Manufacturing Contracts 5th Straight Month; New Orders Fall Faster than Output

The US will not decouple this year as noted in Major Slowdown in Global Trade Coming Up; Think the U.S., China, Germany, or U.K. will Be Immune?

Expiring tax incentives provided a nice, but unsustainable pop in manufacturing. Notice how prices and backlog of orders did not follow.

Regardless of how much tax credits affected the ISM numbers, the global slowdown will take a toll on US manufacturing.

Mike  “Mish”  Shedlock – Global Economic Analysis

Did you know that we buy about a half a trillion dollars more stuff from the rest of the world than they buy from us?  The U.S. balance of trade is not only mind-blowingly bad – it is the worst in the world.  It is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.  That would be an increase of more than 11 percent from last year.  As I have written about previously, the United States is the worst in the world at a lot of things, but as far as the economic well-being of our nation is concerned, our balance of trade is particularly important.  Every single month, far more money goes out of this country than comes into it.  Tax revenues are significantly reduced as all of this money gets sucked out of our communities.  The federal government, state governments and local governments borrow gigantic piles of money to try to make up the difference, but all of this borrowing just makes our debt problems a whole lot worse.  In the end, no amount of government debt is going to be able to cover over the fact that our national economic pie is shrinking.  We are continually consuming far more wealth than we produce, and that is a recipe for economic disaster.

The “current account balance” is one key indicator of how a country is doing economically.  The following is how the CIA World Factbook defines “current account balance”….

This entry records a country’s net trade in goods and services, plus net earnings from rents, interest, profits, and dividends, and net transfer payments (such as pension funds and worker remittances) to and from the rest of the world during the period specified.

If someone were to ask you what countries in the world have strong, thriving economies right now, what countries would you think of?

Would countries like China, Germany, Russia and Saudi Arabia come to mind?

Well, all of those nations have huge positive current account balances.  In fact, China has the best current account balance in the world at +$305 billion.

So who is on the other end of the scale?

The following information comes directly from a CIA World Factbook chart….

190 Turkey $ -48,420,000,000

191 Canada $ -48,500,000,000

192 India $ -51,780,000,000

193 France $ -54,400,000,000

194 United Kingdom $ -56,190,000,000

195 Spain $ -63,650,000,000

196 Italy $ -67,940,000,000

197 United States $ -470,200,000,000

The United States is rated dead last at number 197.

Just take a close look at those numbers for a minute.

The U.S. had a current account balance of negative 470 billion dollars in 2010.  That figure was almost 7 times worse than the next worst country (Italy).

Not only does the United States have the worst current account balance in the entire world, the truth is that no other country is even in the same ballpark as us.

We are bleeding wealth so fast that it is hard to even describe it.

But perhaps a real life example can help put this all into perspective.

One 22-year-old Saudi Arabian student has a collection of sports cars that is worth more than 12 million dollars.  Reportedly, his collection includes at least three Lamborghinis, five Ferraris and five Porsches.

And guess who paid for it?

You did.

Every month, billions of dollars go out of the United States to help pay for the insane lifestyles of the ultra-wealthy oil barons of the Middle East.

Meanwhile, dozens of major U.S. cities are degenerating into hellholes.

Once upon a time, Detroit was one of the greatest industrial cities that the world has ever seen.  It was the envy of the entire globe.

But now Detroit is an utter nightmare….

*An analysis of census figures found that 48.5% of all men living in Detroit from age 20 to age 64 did not have a job in 2008.

*If you can believe it, the median price of a home in Detroit is now just $6000.

*Only 25 percent of students in Detroit graduate from high school.

So what happened to Detroit?

Well, just as has been happening in so many other U.S. cities, industry has been leaving at an astounding pace.

As I have written about previously, an average of 23 manufacturing facilities a day were shut down in the United States during 2010.

Overall, the U.S. has lost a total of more than 56,000 manufacturing facilities since 2001.

This country is bleeding middle class jobs profusely, and neither major political party seems to care.

American family budgets are being stretched tighter and tighter these days.  There are not nearly enough good jobs to go around and yet the cost of everything just seems to keep going up.

Many families are going into massive amounts of debt in an attempt to make ends meet.  According to a recent CNN article, credit card use in the United States is experiencing a major upswing once again….

Purchases made with credit cards rose 8.2% in the first quarter of 2011, 9% in the second quarter and 10.6% in the third quarter, according to First Data.

Of course American consumers were out in force on Black Friday once again this year.  They gleefully filled up their carts with cheap plastic crap made overseas, and many racked up huge credit card balances in the process.

But most of us never stop to think about those that make all of these cheap plastic products for us.

Thanks to the globalization of the economy, big corporations and corrupt governments can make stuff in countries where it is legal to pay slave labor wages and then ship their products into the United States for free.

It is important for all of us to learn what actually happens to these people that are working so hard for slave labor wages.  The following comes from a recent article in the Guardian….

At the Hung Hing factory the researcher found that the 8,000 workers put in up to 100 hours of overtime a month, far in excess of the legal maximum. Workers say they have to sign a document agreeing to work additional overtime on top of the legal maximum. The basic wage was £132 a month (up to £250 with maximum overtime payments) but wages were paid up to three weeks late.

Workers complained of inadequate training with the factory machines and last year one worker died when he fell into a machine. They said there were frequent injuries and concerns over the chemicals used. There were also complaints about the standard of the dormitories, where water for washing and flushing toilets is turned off at 10pm.

How in the world are American workers supposed to “compete” for jobs at those wage levels?

As I have written about previously, Professor Alan Blinder of Princeton University is warning that 40 million more U.S. jobs could be sent offshore over the next two decades if nothing is done to stop this.

But instead, our “representatives” in Congress just keep pushing more “free trade” agreements as the answer to our problems.  Congress has passed new free trade agreements with South Korea, Colombia and Panama, and the Obama administration has made “the NAFTA of the Pacific” a very high priority.

Well, if “free trade” is supposed to create so many jobs, then why was last decade the worst decade for the creation of jobs since the Great Depression?

If you can believe it, zero jobs were created between 1999 and 2009.  The following comes from an article in Washington Monthly….

“If any single number captures the state of the American economy over the last decade, it is zero. That was the net gain in jobs between 1999 and 2009—nada, nil, zip. By painful contrast, from the 1940s through the 1990s, recessions came and went, but no decade ended without at least a 20 percent increase in the number of jobs.”

But our leaders don’t care about us.  In fact, even the members of Obama’s “jobs panel” have been shipping jobs out of the United States at a very rapid pace.

The U.S. has run a negative balance of trade with the rest of the globe every single year since 1976.  During that time, the U.S. has run up a total trade deficit of more than 7.5 trillion dollars with the rest of the planet.

That 7.5 trillion dollars could have gone to support U.S. workers and U.S. businesses.

But it didn’t.  Instead, it went out of the country and it made foreigners wealthier as our own cities slowly rotted.

Now we are actually passing laws that encourage wealthy foreigners to come in and buy up pieces of the United States.

For example, there is actually a bill in Congress that would automatically give residence visas to any foreigners that are willing to spend at least half a million dollars to buy houses inside the United States.

The idea behind the bill is that this will get the housing market moving again.

There aren’t enough Americans with good jobs to buy houses, so we have now decided to beg foreigners to buy them.

How bizarre is that?

Until our horrendous balance of trade is fixed, the employment situation in this country is going to continue to get worse.

Any politician that tries to sell you on a “jobs plan” that does not address our balance of trade is either totally incompetent or is straight out lying to you.

The economic infrastructure of America is crumbling a little bit more every single day.  If something dramatic is not done, we will continue to bleed businesses, bleed jobs and bleed wealth.

Please share this information with as many people as you can.  The American people need to understand what is happening to the economy.  We need to work to wake up as many people as we can before it is too late.

The Economic Collapse

The United States is negotiating one of the biggest free trade agreements in history and there is barely a peep about it on the news.  Years ago, Ross Perot warned that if NAFTA was implemented there would be a “giant sucking sound” as millions of jobs left this country. It turns out that he was right. Starting on Tuesday, the next round of negotiations on the Trans-Pacific Partnership (also known as the “NAFTA of the Pacific”) will begin in Chicago.  We have already seen the Obama administration push hard for free trade agreements with Panama, South Korea and Colombia and the administration is making the Trans-Pacific Partnership a very high priority.  Membership in the “NAFTA of the Pacific” already includes Brunei, Chile, New Zealand and Singapore.  The United States, Australia, Peru, Malaysia and Vietnam are scheduled to join.  Canada, Japan and South Korea are also reportedly considering membership.  So once this “free trade” agreement is ratified, will we hear another “giant sucking sound” as millions more of our jobs are shipped overseas?

Look, it is not really that complicated.  If you are a giant U.S. corporation, you can either make stuff here, or you can make stuff overseas where it is far, far less expensive to do so.

To greedy corporate executives, there are a lot of advantages to moving operations out of the country….

*It is legal to pay slave labor wages in many of these other countries.  After all, why pay an American worker 10 or 20 times as much as a worker on the other side of the globe?

*In many of these other countries you do not have to provide any health care for workers.

*In many of these other countries there are virtually no environmental controls to worry about.

*In many of these other countries there are virtually no labor standards to worry about.

*In many of these other countries you only have to deal with a fraction of the “red tape” that you have to deal with in the United States.

By merging our economies with the economies of societies that are far different from our own, we have created a “race to the bottom” that is incredibly destructive to the U.S. economy.

In Vietnam, one dollar an hour is considered to be a very good wage.

So how do you plan to compete against that?

These “free trade agreements” are direct assaults on the big, juicy paychecks of American workers.

If you do not know about the Trans-Pacific Partnership, you need to get educated.

The following is a basic introduction to the TPP from Wikipedia….

The Trans-Pacific Partnership (TPP), also known as the Trans-Pacific Strategic Economic Partnership Agreement, is a multilateral free trade agreement that aims to further liberalise the economies of the Asia-Pacific region; specifically, Article 1.1.3 notes: “The Parties seek to support the wider liberalisation process in APEC consistent with its goals of free and open trade and investment.”[1] The original agreement between the countries of Brunei, Chile, New Zealand and Singapore was signed on June 3, 2005, and entered into force on May 28, 2006. Five additional countries – Australia, Malaysia, Peru, United States, and Vietnam – are negotiating to join the group.

Apparently, one of the goals of the TPP is to reduce all trade tariffs among member nations to zero by the year 2015.  The proponents of “free trade” are absolutely thrilled.

We have all enjoyed the flood of cheap products from overseas.  It is nice to pay a little bit less for things.

But these cheap prices have come at a very high cost.  We are literally destroying the American economy.  If you walk into just about any store today and you start turning over products, you will find that almost all of them are made out of the country.

If our middle class jobs keep getting shipped overseas, our prosperity is going to vanish.  If the American people allow this to continue, the standard of living of American workers is going to continue to fall toward the level of workers in third world countries.

Arthur Stamoulis, the executive director of Citizen Trade Campaign recently had the following to say about why he is opposed to this new free trade agreement….

“They’ve shipped our jobs overseas. They’ve reduced the tax base, they’ve driven down the wages and benefits for the jobs that are left. We’ve had enough”

As you can see from the chart below, we have seen a massive decline in manufacturing jobs in the United States over the last few decades….

It is absolutely amazing that the Obama administration continues to tout more “free trade” agreements as a way to increase employment in the United States.

Sadly, nearly half the country is still going to run out and vote for the guy in the next election.

Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

So the answer is to ship even more of our jobs overseas?

Apparently the Obama administration actually believes that we don’t want those jobs.  The following is what U.S. Trade Representative Ron Kirk told Tim Robertson of the Huffington Post recently….

Let’s increase our competitiveness… the reality is about half of our imports, our trade deficit is because of how much oil [we import], so you take that out of the equation, you look at what percentage of it are things that frankly, we don’t want to make in America, you know, cheaper products, low-skill jobs that frankly college kids that are graduating from, you know, UC Cal and Hastings [don't want], but what we do want is to capture those next generation jobs and build on our investments in our young people, our education infrastructure.

Can you believe that nonsense?  He believes that there are things that “we don’t want to make in America”?

Why is nobody calling for him to resign immediately?

Manufacturing jobs have traditionally been high paying jobs that can support middle class families.

But now we are losing millions of those jobs and the Obama administration simply does not care.

Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

America is being deindustrialized at warp speed and most Americans don’t even understand what is happening.

Look, even if U.S. firms wanted to stay in the United States and try to compete, they face almost insurmountable obstacles….

*Many foreign nations deeply and directly subsidize national industries and the U.S. government lets them get away with it.  That puts our industries at a vast disadvantage.

*The United States has the highest corporate tax rate in the world.  That puts our corporations at a vast disadvantage.

*Many foreign nations do not require businesses to provide health care for their employees.  That puts our businesses at a vast disadvantage.

*Many foreign nations impose very little regulation on businesses.  That puts businesses in the United States at a vast disadvantage.  In the U.S., we have some of the most restrictive regulations in the world.

The truth is that even the “next generation jobs” and the “green jobs” that Obama keeps talking about are rapidly leaving the country.

For example, the third-largest producer of solar panels in the United States, Evergreen Solar, is leaving America.

Evergreen is shutting down its factory in Massachusetts, laying off 800 American workers and moving production over to China.

A recent New York Times article explained why Evergreen is making this move….

Evergreen, in announcing its move to China, was unusually candid about its motives. Michael El-Hillow, the chief executive, said in a statement that his company had decided to close the Massachusetts factory in response to plunging prices for solar panels. World prices have fallen as much as two-thirds in the last three years — including a drop of 10 percent during last year’s fourth quarter alone.

Chinese manufacturers, Mr. El-Hillow said in the statement, have been able to push prices down sharply because they receive considerable help from the Chinese government and state-owned banks, and because manufacturing costs are generally lower in China.

We are losing the “jobs of the future” and Obama is doing nothing about it.

Last year, more than half of all the solar panels in the world were made in China.

China is absolutely killing us on the global economic stage and Obama does not even seem to think that it is a problem.

The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

Not only that, the United States now spends more than 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

So don’t listen to any of the nonsense that Obama is spouting about creating jobs.

Not that most of the Republicans are putting forward any good ideas either.

The reality is that our politicians have lied to us.  Globalism is absolutely destroying our economy.

Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe?  Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.

We are losing ground in almost every industry that you could name.  Even the “jobs of tomorrow” are mostly being created overseas.

Andy Grove, the former CEO of Intel, says that our advanced technology companies are creating far more jobs overseas than they are in the United States….

Some 250,000 Foxconn employees in southern China produce Apple’s products. Apple, meanwhile, has about 25,000 employees in the U.S. That means for every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods, and iPhones. The same roughly 10-to-1 relationship holds for Dell, disk-drive maker Seagate Technology (STX), and other U.S. tech companies.

When is someone going to wake up America?  If we are even losing “advanced technology” jobs, then what kind of jobs are going to be left?

In 2002, the United States had a trade deficit in “advanced technology products” of $16 billion with the rest of the world.  In 2010, that number skyrocketed to $82 billion.

Needless to say, that is not a good trend.

Our politicians promised us that the “global economy” would mean more jobs and more prosperity for us.

Well, that was obviously a giant lie.

Today, if you gathered together all of the unemployed people in the United States, they would make up the 68th largest country in the world.

If we allow all of this “free trade” nonsense to continue, our unemployment nightmare is going to continue to get worse and even more of our formerly great cities will end up looking like total hellholes just like Detroit does.

Sadly, virtually all of our politicians in both political parties are in favor of these “free trade” agreements.  In fact, most of them are pushing these kinds of agreements as one of the “solutions” to our problems.

The U.S. economy is being dismantled and deindustrialized right in front of your eyes.

If you plan on speaking out, you better do it now because it is almost too late to stop what is being done.

It is up to you America.

The Economic Collapse