Middle America; Going, Going, Gone!
Good Morning
For those of you who read this column on a regular basis or have read my book, you know that I predicted a recession by late winter of 2007-2008, nearly a year before it occurred.
I also predicted the housing crash nearly two years before it occurred and the immigration debacle a year before it made the back page. I do admit to buying one of the new crystal balls with H.D. Not really, I attribute the accuracy of these predictions to a darn good 8th grade math teacher and an inherited grasp of common sense.
There are those anointed talking heads on TV news and the financial programs who have continually denied that recession was a possibility. The main difference between them and me is that they make a lot more money for being wrong than I do for being right. But then, they are being paid to lie and I tell the truth for free.
Economics is easy if you reduce it to
Let’s look at an example of simple economics; in this case, Starbucks with applied
Starbucks could only exist in a particular time and place. In other words, lucky is better than good. Starbucks built up a business in high visibility locations that conversely have high overheads. When you build a business with a high overhead around a cup of coffee…that coffee is damn expensive. No other way.
So what happens to a business that sells expensive coffee when the economy tightens up? When discretionary spending is pinched? And, when in a blind taste test, McDonalds coffee wins? Sure, exactly what is happening to Starbucks, you begin to sink slowly out of sight. The business climate necessary for survival no longer exists.
The former Big Three are still tying to figure out the answer to that question. And, while not down the drain, are certainly working on the issue from that end of the tub.
The Mexicans in the mean time are trying to determine whether a $1.25 per hour worker can compete with a $.30 per hour Chinese worker and are expected to have an answer later this year.
NAFTA and the World Trade Organization attempted to level the playing field for world commerce and both agreements are doing a commendable job of just that.
The concepts of both agreements were mathematically ludicrous, and regardless of which mathematical persuasion that you adhere to, these agreements double guaranteed the fall of
American manufacturer Dell Computers announced that it has entered into an agreement to purchase $52 billion in components from the Chinese over the next 24 months in an effort to cut costs. In the mean time the U.S. is in recession.
Once the playing field is successfully leveled and
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Hey Mike, Unfortunately Starbucks is not alone in the speciality niche. Our growth mentality has grown out of control for many years(as you have been pointing out quite well). This is just one of the many scary things that will exponentially distort our recession/depression to extremes.
Our huge sporting events industry will be taking big hits as will all the hundreds of side support groups like food and clothing. Our automotive industry, as usual, is in the worst position possible to weather the coming “downturn”. Their model selection is far too large, overweight, and uneconomical to survive amongst the foreign competition. Their huge retirement funding problems will be one of their lessor worries in the near future.
If I had some money for investment I’d start buying up or leasing all of the unused prairie possible and start growing Switch Grass for ethanol production. There will be a fortune to be made there. If you could find good farm land cheap, growing wheat will be a money maker for the near future also.
There will be a lot of small industries that will be more profitable as the giant conglomerate ones start choking on their own size. Kind of like the dinosaur extinction a few years back. The worst part of all of this is where the middle and lower class citizens will be pawns at the mercy and mismanagement whims of each industry. The interaction of industries will be quite volatile and unpredictable.
This alone will cause major shifts in the job market as to where and what employment will be available. Due to the high cost of moving around the country our work forces will be hard pressed to keep up with where jobs are available. It all adds up to a very big mess which will be highly unpredictable especially with our lame government being so clueless as to what needs to be done to help.
I think we as a nation are in a more vulnerable position than most third world countries since most of our population has lost most of their abilities to survive in a very basic world. I would not want to be foraging for food in this country when the food chain transportation links breakdown. Humans can get pretty ugly when they are faced with basic survival and are clueless about it. Well, you try to have a good one Mike!
Michael,
To your point, humans are only three days away from being barbarians. Three days without food and what ever it takes to get it…
I very much believe that farming will be very profitable as the third world industrializes and desires more wheat, corn, soy beans etc.
You are also correct about other foo-foo industries that are non essentials, and they will fold.
I used to believe that more thought should have been put into NAFTA and the WTO. I then realized that a whole lot of thought WAS put into it, those who benefited most thought it was okay to jettison Middle America.
Eventually all will realize that ethanol is not a viable avenue toward energy efficiency and the Egore green movement, just as good, healthy progress is not possible without participation from a armed and educated citizenry (I am talking about a large number of citizens).
It will take many years if at all, before we can ever get back to the life we once embraced. The worst is still in front of us and unfortunately most are in denial due to their lack of self education of our system and participation in it armed with the tools that self education brings.
I noticed that Glen Beck is finally waking up one day at a time with the discovery of where we are headed and what has lead us there. Better late than never the saying goes. He is now singing the same tune of preparedness you have been preaching for years now; and he is harmonizing quite well. Hopefully a majority will begin to enlighten themselves and begin to prepare for the future ahead which will be dramatically different than it is today.
There is very little in the way of freedom, even today. Eliminate debt, prepare for a long term disaster (then even if it turns out to be a tornado or hurricane you will be prepared), educate yourselves to how our system is supposed to work (not how it is being run right now) and participate by contacting you representatives with insightful direction. They do not want to be voted out of office and will do what is asked if enough educated Americans participate in the system. - bb