Sunday, February 22, 2009

I have been thinking about this "Stimulus" package. I did not see anything that is going to promote manufacturing, or mining, or agriculture. These are the ONLY three things that create real wealth. If you desire, see the economics part of my book "China's War on the American Economy."

If we fund a new bridge, the crew is hired, the bridge built, and the job goes away. During this time the person building the bridge weekly buys his or her smokes, a six pack, and spends the rest - after taxes - on their family. In a few months they are unemployed again. There is also a lot of money to be spent on political friends, I'm sure. What will they do with their cash to create more real jobs? More houses in the Hamptons, Aspin? When those are built, then what?

It really goes back to the old saw, "Give a man a fish and he will be hungry again soon (and vote for more of the same), or teach him to fish and he will be self sustaining. (Not beholden to anyone?) Would not good manufacturing jobs be a real long term stimulus? Particularly if they are in America?

How about a tax reduction on business to 10%. And, a tax reduction to zero in blighted areas for a specific time for real value adding manufacturing? Nahhhhhh that's too simplistic.

Interesting to see companies in Houston departing to headquarter in other countries where the tax burden is less. I was told that Exxon pays more in tax to the US Government than they earned in their US business. About six months ago Emirates Air flew a couple of times into Houston. Now, daily. People are leaving California at the rate of 100,000 per year to flee taxes. People will move to get away from taxes. One reason I'm in Texas.

So lets cover our deficit of 5 trillion by raising taxes more. Soon, those remaining will be working for one huge government and paying their full wages as a tax to pay for the government they work for. If you are the last one out, I doubt if you will have to turn off the lights. They have been turned off for a long time already!

Your thoughts?

Saturday, February 21, 2009


Six or seven years ago, I was fortunate to have worked with a manufacturing company in Mexico. The plant I was working with was located in the central part of Mexico with a workforce of about 400. They were at work by 7AM and, as I left the plant at 7PM many were still working. Saturday was no exception. The wages were meager to say the least at that time. The city was clean, organized, and relatively safe. I vividly recall about 2 PM one day, having to go to the office and ask the AC be turned on as my skin had turned bright red and was not sweating. Yet, the people remained hard at work in the plant. I was told that "You get used to it."

The economy was governed by the very wealthy, there was little or no middle class, and a huge working class, living under Catholic education, and producing more working class. Due to pay and living conditions in the US and Canada, it was a given - from any study of economics - that there would be a push by the people to balance the incomes of the Americas. After all, the value added by an employee in Mexico was just about as much as that value being added in the US and Canada. yet the wages north of the border were ten to fifteen times higher.

With China coming to the fore with wages ten times lower then Mexico, the Mexico jobs went to China as did most manufacturing jobs in the US and Canada. This sucked the main producer of wealth into China from North America.

This left those very hard working Mexicans with families and no way to adequately feed and clothe their children. There were two options, first to flee across the border to America and Canada, which has been estimated I believe to be about 5+ million people, and take jobs that no one else wanted to do. Roofing, gardening, slaughterhouse work, construction, pouring and working concrete, all come to mind.

Still, there remained a large workforce that did not want to leave their homes and come north to work crossing a dangerous border to do so. With the push in South America to limit the drug trafficking from South America direct to the US, the road was opened up to go through Mexico. The loss of jobs in Mexico left an intelligent, willing, hardworking, and certainly able group of people to go into the underground armies of smuggling drugs north. After all drug smuggling to an affluent market in the US paid very well.

Now, not only are the major Mexico cities located on the major drug routs controlled by these underground armies, they are now moving and targeting resistance in the US and Canada. I read today where the police chief in Juarez, south of El Paso resigned because of the in ability to protect his officers.

Having worked in manufacturing for all of my career, I know the devastation caused in families by our present drugs of choice, cigarettes and alcohol. I have seen many a good career ended. So, consequently, I do not take the solution I propose lightly.

The founding fathers of the US believed in individual freedom and individual responsibility. There are some remaining in the US that still believe that our founding fathers were right, though the light is flickering and about to go out. In the early 20th century, we, the citizens of the US, started turning our responsibilities over to our government. This included taking care of our neighbors and educating our children among other things. For giving up these responsibilities, we gave up some of our freedom. We chose federal taxation to remove some of our compensation for our work effort to pay our government to do these things for us. Once this started, it never stops. Did you ever hear of any government that has reduced its scope, income, and reach into the lives of its people. (China?).

Now, because our government believes it has the soul responsibility for protecting its people, because they are basically irresponsible, for their own protection, we spend billions of dollars, fill up our jails, and are destroying Mexico by our total focus on protecting our people from the use of drugs. We tried this with alcohol back in the 1930's, and we have tried it with cigarettes - to little or no avail.

Let's get serious and face it. No government can legislate morality. Borne in an immoral world, either we learn what our family stands for morally as young children, or we go the way of our immoral world. Given our present view of instilling legislated morality in Wall Street where Stanford and Madoff are shining examples, to our federal government where numerous appointees have failed to pay their taxes, to our state government where senate seats are attempted to be sold to the highest bidder; we have hard examples of legislated morality. Consequently, we have no example that our war on drugs will bear any more fruit than our education system, government regulation, churches, or society in general has on achieving and enforcing morality.

Yet, like you, I have no desire to pay anymore to the government to medically assist those that have injured themselves by knowingly to have taken or consumed alcohol, cigarettes, or drugs. This means that if you wanted to take the personal risk to ride a motorcycle (without a helmet, the docs call them organ donors), you must have covered yourself personally for insurance to take care of you medically should have an accident. The same is in effect in order to drive a car in the US. This is a simple act of personal responsibility. It is not a society responsibility. Likewise, the same for alcohol, cigarettes, and - if you desire -drugs. If you knowingly do something that impacts you personally, you should pay for the act yourself.

This means that if you have to get medical attention for ingesting some chemical you know was dangerous and, because of your individual freedom, did it anyway, you should be individually responsible enough to have medical coverage or damage coverage to have protected yourself with insurance.

So what does this have to do with Mexico and the US situation? Simple, admit we have lost the drug war, that we can not stop our citizens from using their individual freedom, (listed under our Bill of Rights) to use what ever they really want, as long as it doesn't impact the individual freedom of another citizen.

Therefore, let our drug stores sell taxed drugs and call the drug wars over; recognizing our government is defeated in stopping people from doing what they want to do, as long as they don't hurt others physically or financially.

What does this do for the US? It ends billions of needless dollars of government spending and allows that money to be used to build infrastructure on both sides of the borders and put good people to doing real work in manufacturing and construction as well as medical rehabilitation. It allows tax collection on the sales of drugs that might be used for drug education or medical insurance for those unable to afford it. It will substantially reduce the cost of our courts, prisons, and allow our police to concentrate on terrorism, corruption, personal injury, and fraud.

In Mexico, it will allow the present drug distributors and their present armies to become legitimate, and use their distribution knowledge legitimately by selling into a regulated market. It will allow the good hardworking people of Mexico to get back to a normal and hopefully better life than constant fear they presently live under.

If this is not done, if we continue to pay huge amounts of out tax money in the unworkable attempt to legislate morality, we will loose in the end, we will continue to spiral downward in our standard of living, and the wave of violence will continue to sweep north and west until we all live in the same fear as do our neighbors to the south.

What do you think?

Wednesday, February 18, 2009


We have seen the results of the carnage created or being created by Stanford Investment and Bernard Madoff's firm in bilking investors out of billions of dollars. This has caused most investors to loose faith and trust in our financial institutions. By observing the posturing and mistruths of our government leadership ("there is no pork in the stimulus bill"), it is difficult to maintain faith in what government leadership says vs what government does.

It has been my experience that once faith has been lost in anything, nothing will be able to replace it. This translates to faith in a friend, faith in a leader, faith in a business, faith in our legal system, or faith in our government. Once we have lost faith, faith will never fully return. There will always bee a nagging doubt, and caution, in dealing with the entity that has caused a loss of faith.

Now, take a dollar bill out of your pocket. That dollar is backed by the full faith and trust in the US Government that issued the "Federal Reserve Note". As opposed to the former Silver Certificate issued many years ago that could be traded for actual silver, this note can be traded for anything you and I, both operating with the same or similar levels of faith, think this Federal Reserve Note is worth.

The US Government has just issued another trillion plus of these notes because the leaders in our government wanted to put as many of our population into slavery to the US Government as possible so there would be full and complete dependence on the government, the party in power, and the president. Nothing different than a slave working for the 'massa', and a slave working and voting to keep the political group in power so they can continue to rely on the government 'massa' to take care of them for life. Certainly these slaves should not have to do anything themselves to improve their lot such as work or gain more education. They just have to breed and show up to collect their dole from their 'massa'.

This will work as long as the world investment community believes and has faith in the Federal Reserve Note being a sound investment and worth something.

But what happens when, one day, you or I wake up and say "I no longer believe that the Federal Reserve Note is even worth the paper it is printed on?

Would this mean that the US government then have to have the entire population working for the US government. Would this mean that this government doles out food, medical care, housing, and status to the slaves depending on their affiliation to the leadership of the political party in power? In this scenario, faith is bypassed. Without the individual having to make economic decisions, and suffering when the decisions are bad, the government then can decide what cars will be designed and driven, where your kids will be educated, what your kids will be taught, whether or not you will be eligible for health care provided by the government. The government will decide where you will work and for what wage. As in the past, your wage credit will be good only at the government store. The Internet will be policed, as will be radio and TV so no disruption thoughts will be unleashed on the slaves that might cause a potential revolt.

Oh wait!

That sounds like China, Russia, and Cuba about 15 - 20 years ago. Now, by giving our manufacturing base to China, they own a key source of our wealth. Russia has tilted toward an entrepreneurial society, but is having trouble throwing off the last vestiges of communism. Poor Cuba has yet to figure it out. Limited government with limited taxes, a strong unwatered down currency, sound education in the basics, individual freedom in financial decisions, coupled with the risk and reward of those decisions, is what drives a country to prosperity.

So - do you maintain your faith in our government? Do you maintain faith in our government leadership? Do you maintain faith in our financial institutions? Do you have faith in our currency? I would suggest that if you can not be positive in your faith in our government and its leadership, you can not have faith in our currency. If you do not have faith in our currency to be something of value, then why should the lenders in other countries, that are keeping our economy afloat such as it is, continue to lend their hard currency to us and purchase our T Bills?

What are your thoughts?

Tuesday, February 17, 2009

China Buys US Businesses, Fires US Managers

I got mail from an old friend I had consulted with a number of years ago. He departed that company and went to work in another company. That company dropped their US manufacturing and moved it to China. He was sent to China to teach the people how to manufacturer their products. He did very well in this task.

His mail stated he was out of work as the Chinese company had purchased the US company recently and fired him.

This is exactly what I had predicted in my book "China's War on the American Economy".

Some days it hurts to be right. I wish him well and told him I would send him a copy of my next book "How to find your dream job in a nightmare economy."

Sunday, February 15, 2009

Export Jobs and Wealth

Over the past several years, we have exported well over 5, 000,000 manufacturing jobs excluding the millions of support jobs such as distributors and sales people calling on manufacturing companies. By the Department of Labor numbers, the difference between a manufacturing job and a service job is $20,000 per year. This means we have exported well over $ 100,000,000,000 annually in wages, decimated small towns supported by the tax revenue from manufacturing companies and their employees, and virtually eliminated the middle class in this country. You can read the research in my book "China's war on the American Economy" available at

The US government thinks this was caused by the rush to lower wages. What a stupid thought and is indicative of the uninformed elite educated government officials. Actually the companies were leaving the restrictive regulations that were hidden taxes on manufacturers not paid by their foreign competitors. Rather than police this hidden tax by charging importers a comparative tax reflecting the hidden taxes paid by American Manufacturers, the flood gates were simply opened to allow cheap goods into the US without regard to the conditions allowed in the countries sending in the cheap goods. Child labor laws, environmental laws, workman's compensation laws, product safety laws, overtime laws, OSHA laws, ADA laws, etc. - all non existent in importing countries sending in the vast amounts of cheap goods.

Now as a country that is expected to buy our way out of the mess we find ourselves, buy what? We don't need much else. Buy with what? Our wages enabling our spending were exported. Buy for what reason? To save our economy?

I think most are simply going to save their money, only spend it on well made products manufactured in the USA, and buy for their homes, and families immediate needs. What do you think?