How Sucking in Just the Right Places Can Stimulate Even the Limpest Economy: Part 1

In light of the current economy, I’ve decided to repost some articles originally written back in early and mid 2008. Enjoy…

“Made In America”
I remember as a man-child how those words represented a certain level of excellence, not necessarily quality, but they certainly carried an unexplainable, unassailable, indisputable pride. “Dude my bike is made in America” or “Man; my dad just bought a brand new Pontiac Firebird“. Phrases like this would be accompanied by a visible gleam from the eye of the speaker. You would never in a million years hear some kid on the school yard brag to his friends, “Guess what guys, my daddy just bought my mommy a brand new Japanese car!” Back then the phrase Korean car was about as common as the phrase African space shuttle is today.

This was the ’70s, a time when your TV was a Zenith, your jeans were Levi’s, and your ol’ man drove a Chevy. Our land was prosperous, and our standing on the global stage was envied. Our grandparents were well respected thugs and rightly earned the title “The Greatest Generation“, and our parents were horny bastards and proudly earned the title “Baby Boomers“. This was a time when American auto industry was the auto industry. Your mom was hip if she drove a Chrysler Minivan, and your dad was a sexy rebel if he owned a Trans Am. Now lets fast forward…

The lifeblood of any economy is its ability to manufacture goods and services that can then be exported to the rest of the world. The long term health of an economy rests on its ability to sell more than it buys, makes sense right? If you only earn $500 a week, but your weekly expenses equal $750 you may have a problem. Well that is the exact state of affairs in today’s America on a micro and macro level. In April 2008 we imported $216.4 billion in foreign goods and services; however, we only exported (sold to other countries) $155.5 billion in good and services, creating an April trade deficit of $60.9 billion, up from $56.5 billion in March. As I mentioned in the first paragraph, in the 1970’s the phrase “Made in America” was as common as the phrase “please press 1 for English… Por favor, pulse 2 para español” is today. However, it was during the 1970’s that we started posting a trade deficit, meaning importing more goods than we exported, and we haven’t looked back since.

The American consumer is riddled with debt, according to the Federal Reserve the average Atlanta consumer that called the department had approximately $29,300 in unsecured debt mainly in the form of credit cards (credit: CNNMoney.com). Our entire country is riddled with debt, with the total amount equaling $9.5 trillion dollars, that’s $31,100 per citizen; I guess Atlanta citizens are better at managing their finances than the average American… Incidentally 25% of the $9.5 trillion debt is held by foreign governments (mainly Japan and China).

Fortunately for us, we have a government and media that promote the idea of selecting our elected officials by the highly accurate scientific formula of “Who would you rather sit around and have beers with…” I’m sure that on a nice breezy summer day, Ted Bundy and Jeffrey Dahmer would have be great guys to share dinner recipes with over a cool brew-ski; however, chances are I would have opted to forego the opportunity if it were ever offered. These same scientifically selected officials haven’t yet figured out a way to tip the economic scales back in the favor of the American citizen; although, to their defense they don’t seem to give a damn… Probably too busy drinking beers.

Now hopefully you’ve heard of Warren Buffett, the universe’s richest human, and a man whose pockets are so deep that if he accidentally slapped you with is wallet you’d probably die from head trauma. The man has a personal wealth is greater than the GDP of several nations. Anyway, in an article he wrote for Fortune Magazine he highlights a method by which America can start back on the road to economic parity and eventual prosperity… Please read it, in his usual easy to understand way he makes a very complex situation quite easy to understand and educational, you owe it to yourself to read it. The title is:

America’s Growing Trade Deficit Is Selling The Nation Out From Under Us. Here’s A Way To Fix The Problem–And We Need To Do It Now. (Pretty direct title huh)

However, one of the things that Mr. Buffett doesn’t discuss in any detail in the article is the perceived quality gap between American and foreign goods. Whether or not it’s true, the current perception is that stuff made in America sucks, and that’s what American’s are thinking. And let’s be realistic here; buying a car built in America, stepping on the gas and watching your brand new Ford Taurus sh*t out the engine doesn’t exactly inspire confidence in American quality. Is this an unfair description? I guess it depends on your own personal experience with American cars; however, there is a reason that Toyota is quickly becoming the number one automobile made in America… perceived quality.

Welcome to 2008, a time when your TV is a Sony, your jeans are made in China or Taiwan, and your dad’s favorite car is a Lexus. We now compete in a global economy, an economy that is the cause of American service and tech jobs moving to India, increased competition between established and emerging markets, and ultimately a contributing reason for many of America’s economic woes. It’s amazing how drastically things can change in just 30 years.

Well, stay tuned for “How Sucking in Just the Right Places Can Stimulate Even the Limpest Economy: Part 2“, where, amongst other things, we will discuss the effects of inflation and danger of rising fuel prices.

Well I’m off to the United States Penitentiary at McNeil Island; I have an appointment to share breakfast recipes with Charles Manson and Mitt Romney over cold Miller Lights…

Max

Originally written by Max in 2008

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