The lovely Miss Puddy accompanied me to the movies a few weeks ago for a viewing of “Unstoppable” with Denzel Washington. In the movie Washington, a 30-year veteran locomotive engineer saves the day by not listening to the bureaucracy and trusting his instinct honed by years on the job. It is the story of a simple journeyman veteran who knows his trade well from 30 years on the job who saves the day. Washington represents the typical workingman who is fast disappearing in this country. He plays a blue-collar professional who has dedicated his entire working life to his career. I read the other day that the average young person entering the workforce today will have three different careers throughout his working life – not 3 different jobs but 3 different vocations. How can anyone obtain proficiency in 3 different careers in one lifetime? I feel that if this country’s manufacturing/mining/farming economy is to be saved it will be by people like Washington’s character. Even the ordinary newspaper delivery guy can take pride in his job. Google David Bond’s short article, “The Dog Biscuit Miracle” and see how any job can be done with dignity and pride.
Unfortunately everyone seems to be looking for Uncle Sam to be the hero and to rush in and save the day. Our old uncle is in poor shape and is hardly able to help anyone these days.
“The nation is badly insolvent and lacks legitimate income sources, something economists fail to grasp.” ~ Jim Willie
“The US has lost 42,400 factories since 2001. The US has lost 32% of its manufacturing jobs since 2000.” ~ Peter Grandich
We have allowed multi-national corporations to move our factories offshore and left our markets wide open. We were sold the idea that “we” could “think” and “they” could “work”. The idea that factories and mines were dirty and should be moved offshore while we could operate clean financial services, distribution and other service industry jobs was sold to us. We were taught that our economy was based on consumption. The federal reserve drove down interest rates and encouraged everyone to mine the equity out of their homes and to spend our accumulated wealth on new cars, vacations and other mindless consumer goods.
And don’t just blame the democrats. Phil Gramm’s wife worked hard to repeal the Glass-Steagall act that allowed banks to operate in other financial markets. You would have thought we learned something from the 1930’s. All through the last 30 years our local banks have been gutted and monster national and international banks have taken over the local bank branch in your neighborhood. There was a reason that the very special business of banking with all its special privileges was only allowed to operate locally on a county basis just a few decades ago. A banker from 1980 looking at today’s mess would be astounded at what has happened. The gradual changes in banking over the past decades have been a travesty.
The Federal Reserve is now printing money with QE I (just creating money out of thin air; counterfeiting), QE II and QE to infinity. There will be no end to monetizing the debt. Stock outflows by investors have been high over the past year. Now bond outflows are alarming. The fed is quickly becoming the buyer of last resort for US bonds.
David Stockman says that our $800 billion defense and homeland security establishment will be forced to de-mobilize by the world bond market.
Bond vigilantes will force the US to finally balance their budget. The US cannot afford higher interest rates. The only other option is default. The fed cannot monetize the debt forever without the dollar falling apart (a default on the dollar itself).
“Any bartender could explain the situation. Bernanke is watering down the whiskey.” Bill Bonner
We are now facing a deadline with the debt ceiling. Tim Geithner says if the debt ceiling is not raised soon the US will begin to default on its obligations. Of course they have to raise the debt ceiling. Otherwise they have to cut spending by 1/3rd and balance the budget immediately. Congress doesn’t have the will to cut that deeply – YET. I predict there will be much posturing and many fine speeches but in the end they will raise the debt ceiling.