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The morning after the election
I went to my favorite coffee shop in town.
The sign and windows were
covered up. They had just officially closed that morning due to
bankruptcy. A chain of over three stores and some of their site locations
were virtual money machines because they were so busy. And the ultimate
bankruptcy is the personal bankruptcy of the owner of the chain. This
man was one of the most prominent and wealthy citizens in town. Owned a bunch
of other previously successful businesses. Now bankrupt. Too much debt
that he could no longer sustain especially due to the present financial
meltdown. Where was our government to bail this fellow out in his direst
need?
Are you happy to see the
government bailouts?
I know I am. It’s about
time the government recognized the importance of industries that are
suffering & need billions of dollars to sustain their business. Where
were the government bailouts when so many other worthy industries in the past
were dying and struggling for their very existence?
Where were the government
bailouts when the horse and buggy industry was fighting to keep up with the
newly invented automobile? Where were the bailouts when the US textile
industry all went east and west and every other direction but home? To
my understanding, today, there is not one shirt manufactured from scratch in
the US.
Remember the prosperous
whaling industry just a century ago? Whales provided the oil for every
lamp in every home and business. The whaling industry employed over 70,000
people. Those were real jobs, but the government refused to prop up the
industry and today not a single lamp uses whale oil to light the night sky.
Look at the print
industry. The newspaper and magazine are going the way of the
dinosaur. Replaced by digital print. And who is there to
care? And what happened to typewriters and Smith Corona? Smith
Corona was a staple name just 30 years ago.
“…finance executives in
challenged industries are in a precarious position. Publicly, they must tout
their companies' commitment to innovation and long-term goals. Yet instead of
investing in new technology, they can become enamored of their current
business model—especially if it is successful. And their unrelenting focus on
shareholder value can blind them to the fact that they may be facing a
Waterloo moment.” cfo.com/printable/article.cfm/3786531
The typewriter probably
represented American industry more than any other tool. And again, the
government refused to step in to prop up the industry. And today?
No more typewriters.
“In November 1992, the
company's (Smith Corona) CEO, G. Lee Thompson, told the Wall Street
Transcript, "Many people believe that the typewriter and word-processor
business is a buggy-whip industry, which is far from true. There is still a
strong market for our products in the United States and the world." When
asked what new products and services the company planned to introduce, he
replied, "Nothing right now.” cfo.com/printable/article.cfm/3786531
But who needs industry and
factories any way? Right? Our wealth is measured in our 401K
plans and our homes. And for the really dirty work we just import cheap labor
from south of the border. I’ll tell you another dying industry that
needs desperately government help. Have you noticed the lack of public
pay phones today? Well, there aren’t any and this fact is a crying shame.
Lots of jobs for coin collectors no longer exist. A tragedy.
But, seriously. Getting back
to the horse and buggy issue.
So now, thankfully, we are at
last finally seeing our government learning to support institutions that have
failed. The financial institutions that created this mess are being bailed
out and propped up to make even more mistakes down the road. Plenty of
time for them to fail again. But maybe now that the government has
learned to stabilize dying industries perhaps they could revive the most
important industry we need to see rise again. Yes, the horse and buggy
industry must be brought back and nationalized. As the oil supply declines
what better and proven transportation device can replace the oil guzzling
automobile?
Blacksmithing, wheel wrights,
wagoneers, stagecoach drivers… These were real jobs and real payrolls
supporting generations of workers. And because the government failed to
help with even a single dollar all these professions disappeared into the
dustbin of history.
This important national
industry disappeared 80 years ago. In the 1890s, the Alliance Carriage
Company of Cincinnati made more than 10,000 horse & buggy carriages a
year.
The Studebaker Carriage
Company manufactured more than 10,000 horse buggy vehicles in 1873 and they
tripled this number to 30,000 a mere ten years later. And by 1900 this
single transportation company was producing 100,000 carriages a year.
In 1910 the Durant-Dort Carriage Company produced 56,000 vehicles. This past
industry was creating real jobs and helping to support the economy of a
nation.
The automobile could have been
merely a passing fad had the U.S. government had the wisdom to keep the horse
and buggy industry afloat.
And back to reality. Can
you now relate to the humble working class who go into the grocery store and
debate whether to buy a half gallon or a full gallon of milk? Can
you empathize with those families who are struggling to make ends meet and
fighting each day rising prices and a shrinking paycheck? Or maybe even
no paycheck.
The growing disparity between
the rich and the poor. Between those struggling financially to overcome
too small a paycheck and that other class with money flowing out their
ears. Today as never before a growing gulf exits between the haves and
the have nots.
This financial meltdown has revealed
just how fragile many households were. Lots of folks who thought they were
doing pretty well in just a short moment of time watched their hard earned
retirement savings plummet to the ground. Many portfolios are down over 60%.
And house valuations are down by as much as 50% in some areas of the country.
How many over the past 20 years have come to measure their wealth in the
rising appraisal of their home and the increasing value of their stock
portfolio? Yet, in just a quick breath all this disappears in a heartbeat.
These are the times that try a soul. These are the times when you fall easily
between the cracks and struggle to hold on by a thread.
The vast majority have been
indoctrinated for over 20 years that debt is OK and that asset prices can
only go in one direction. Up. And because of that impaired
thinking so many are “up side” down with their mortgage loans, bank accounts
and personal finances. This is the land of perpetual & unlimited
prosperity. Unlimited opportunity. Enough to go around for all. Just
max your credit. The middle class is finding its “class” to be quickly
dying. I think we are closer to another French Revolution than we
realize.
But the brainwashing
continues. I watched Larry Kudlow and other money gurus take hold of the
recent stock market rallies this past week or so and wipe their
brow. Happy that the bad times are over and the economy is climbing back
to strong health. I don’t think so. The hedge funds continue selling
every asset class to raise cash. Over 50 trillion dollars worth! Washington
is trying to save the economy in its usual convoluted way. Support the
failures and ignore the winners.
Washington is now pumping
billions of dollars into institutions that have clearly failed. These
collapsing institutions haven’t invested in America. If these banking,
insurance and brokerage companies were adding so much value to our economy
then where are the jobs? Where is the new industry? Where are the new
factories? Successful investment is that which brings real growth to an
economy. Not just an inflated stock portfolio whose value can disappear over
night.
Our financial community sure
hasn’t been bullish on America. Just every where else. The bullishness
focused on greed and complicated financial instruments that only generated
more paper. It’s interesting. GM made the decision years ago to
concentrate more on the loan business than making cars. And now they are
close to bankruptcy.
But hold onto your gold and
silver. The worst is still ahead down the road waiting.
Click here to order Gold
Letter
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