MasterPo says: This blog is about topics and issues that are of importance to me. I am not one of the countless blogging lemmings that are tripping over each other scurrying down the hill and off the cliff of blogging oblivion trying to write the greatest blog on the latest topic de'jour. Your comments are welcome.

September 29, 2010

Manufacturing is DEAD!

Get over it.

The American manufacturing industry, for all intents and purposes, is dead.

No matter what Washington says it’s going to do to help it won’t work. May was well try reviving King Tut.

Sure, there are still American manufacturing companies. Some are profitable and make a good product. But as a business segment – especially as a pillar of the American economy – manufacturing is dead and it’s not ever coming back!

MasterPo doesn’t blame President Obama, nor President Bush, nor President Clinton, etc. Nor was it in any way exclusively a Federal problem. States and localities too had a big hand in it.
This was a death by a thousand stabs. Like “Murder on the Orient Express” – they all did it! Doesn’t matter who was President, what party controlled Congress, who sat on the courts at the time. It all was, as the song says, just another brick in the wall.

A tax on this.
A regulation on that.
A requirement to do something.
A mandate to operate in a certain way.
Labor Board

And many more all have their finger prints on the murder weapon.

The death was a compounded effect over time. Any one or two of these taxs/regs/mandates would have been bad enough but in the longer run still manageable. But when more and more taxes/regs/mandates keep getting piled on year after year after year after year it adds up to disaster.

By contrast, a factory in China or India or the Philippians does not have to deal with any of this red tape. So they can respond quicker and cheaper to market demands and thereby produce a cheaper equivalent product. Under such conditions it’s the height of absurdity to think consumers are going to willfully spend 5-6-7-8+ times more for an American product than a foreign made product. Study the economic concept of “utility”.

It is not “greed” by corporations or CEOs for moving manufacturing jobs overseas. It’s reality: The global consumer (including the American consumer) simply is not going to pay the kind of price required for American manufactured products because of all the above reasons when they can buy the same or equivalent products cheaper manufactured elsewhere.

Eventually, 2 maybe 3 generations from now, those relatively cheaper foreign manufacturing areas will probably be nearly as expensive as American manufacturing now (maybe, the rest of the world has much more common sense about things that Americans do so MasterPo doesn’t expect all the same PC policies and taxes elsewhere, some but not all). But that doesn’t do us much good now.
Wishing for the glory days of American manufacturing just isn’t going to help. This is reality.

September 26, 2010

A River Runs Through It

By now anyone who has been paying attention to recent events had heard of more and more the government (at all levels) seizing private land, ostensibly for ‘the common good’ under the guise of Eminent Domain. But at least then the government is required by law (if they obey their own law!) to make “just compensation” to you for the land. In other words, they can’t just take it and toss you out in the street.

But what if, rather than taking the land, just declare it unusable? Isn’t that the same thing.

A few days ago some friends stopped by and told MasterPo their experience with this.

These people bought 15 acres of undeveloped land in upstate New York. The land is in a scenic valley near mountains and has a stream running through it. They intended to someday build a house on the property.

This year, out of the blue, they receive notice from the New York State Department of Environmental Conservation that because of the stream it has declared 14 of the 15 acres to be a “wet land” and therefore cannot be developed. Essentially their land is now worthless!

They tried to fight it but both the law and the legal costs were too great and they ended up selling the land literally for pennies on the dollar to a liquidator. A total loss to them.

MasterPo is all for protecting the environment. MasterPo is a sportsman (an avid sport fisherman).

But stop and consider the abject destruction of wealth this caused!

MasterPo doesn’t know what these people paid for that property. Surely 5-figures at least. Even if we presume no appreciation in value at all over the years (even in this real estate market) whatever it was the vast majority of the value is gone and not coming back. Who’s going to buy land you can’t do anything with??

So that is wealth that has literally vanished overnight!

Taking it further, if these people had constructed a house on the land just think of:

-The jobs created by the work crew and contractors building the house.
- All the business generate by purchasing building supplies.
- All the business generated purchasing appliances and fixtures (and sales tax paid!).
- The business the local utility companies would have received to supply electricity, fuel, etc.
- The business the local insurance company would have received for insuring the home.
- And don’t’ overlook all the property tax the local municipality would have received every year as the land is now developed.

But no. New York State killed all that with the stroke of a pen. All to “save” the environment.

Who’s going to save us from the state?

September 23, 2010

What Can the Republicans REALLY Do??

Sooooooo many people seem to have soooooooo much riding on a Republican sweep come the November elections. Same with the Tea Party candidates. Talk about ’hope’ and ‘change’!

While ‘hope’ in a good future outcome and ‘faith’ that things will get better after this or that event is a vital human need (if for nothing else than mental health and the will to go on) , blind hope is largely what got the nation into this mess in the first place! That is, putting all your future desirers and dreams on the line for one event is a recipe for sorrow.

But let’s try to be upbeat and presume the Republicans (and Tea Party) sweep the Congress in November. And for good measure, let’s presume a Republican majority in the Senate too.

Now what?

What exactly can the Republicans do Johnny-on-the-spot to even make a meaningful dent in the national problems?

National debt and deficit
Unemployment and the economyTaxes (including Obamacare)
Terrorism (including Iran)
Oil and energy
World opinion of the U.S.
Government corruption

Just to name a few problems…

What can the Republicans do?

Even if they all stick together on every single issue and vote (which rarely happens), even if they govern conservatively (hopefully they learned their lesson from 2006), even if they enact very austere and conservative legislation to address these issues (presuming it doesn’t get watered down in committee or savaged in the media), they do not have the votes to override an Obama veto which he will almost certainly do for the majority of their proposed legislation.

Indeed, with the number of czars (about 30 as of writing this!) and various other appointed/unelected administrators already working on this and that Obama agenda items, does any legislation really even matter anymore?

But presuming all the positives above of a Republican victory in November and the passage and signing of good legislation, things will still take a great deal of time to turn around. In many case it may be already too little too late.

MasterPo is all for a Republican victory in the November elections. Even if it results in just government grid lock that still would be preferable to going the way we are headed now. But a blind hope of grand and immediate expectations for a 180 turn around (or even a 90 turn) is desperate at best.

Vote your opinion in November, be it Republican, Tea Party, or Democrat.

But realize and accept that once the novelty of the win is over (very quickly) and reality sets in, not a whole lot will change.

September 19, 2010

We Are ALL “Employers”!

The current debate over taxes focuses a lot on how much employers will be hurt and that impact on hiring. With a 9.6% unemployment rate (as of writing this) the mere concept of some sort of “acceptable” level of ‘hurt’ in hiring itself is disgusting to even be contemplating! But, nevertheless, it is (which further goes to show how out of touch government is from reality, but let’s not digress on that).

However, MasterPo believes the term “employer” is way too narrowly defined.

An “employer” isn’t merely a business. Individuals are just as much employers as businesses.

Your car breaks down and you take it to a mechanic. You’re hiring the mechanic to fix your car.
Your home needs some sort of upgrade or repair. You hire a plumber or electrician or general contractor to do the work.

And, since the government loves to talk about jobs “saved”, you need to a new whatever so you go to the store to purchase one. Someone has to make it for you, transport it to the store, and sell it to you.

But what if you don’t have the money to hire the mechanic or plumber or general contractor or purchase the whatever? Those people don’t get paid unless someone hires them for work.

And “the rich” (defined however you want) are the greatest employers.

Do you think a “rich” person changes their own oil?
Or fixes a running toilet?
Or paves their own driveway?
Or catches their own lobsters?

In fact the argument is well made that “the rich” need employees far more than “the poor”.

That is why taxes on “the rich” do have a great impact on the employment market.

The two cannot be separated.

Perhaps not the kinds of jobs that you think should be paid to, but who are you to make that decision?

A nation can not have a growing healthy economy without someone getting wealth and keeping it.

September 15, 2010

Society Falls – Debt Survives?

On a blog dedicated to self reliance there was recently a very controversial (for the readers of that site at least) post. Someone said that if they knew for certain the collapse of our economy and society was definitely imminent wit in the next X-months they would max out all their credit cards and lines of credit, even open new ones and max those out, all to buy supplies and equipment they believed would be helpful to survive the aftermath of the collapse.

This comment brought a lot of very terse criticism from fellow blog readers. Most comments slammed the author as being a cheat, a thief, a wanting dead-beat, etc. To his defense (MasterPo presumes the author is male) he kept reiterating this was an end-of-the-world-as-we-have-know-it strategy and not a SOP way of life he leads now nor advocates people to lead now.
But it didn’t help. To many even the at the fall of the nation to run up debt with no intention of paying it off, even to purchase items for your family’s survival, was immoral and unethical.

MasterPo isn’t going to comment on this point of view. Not at this time anyway.

However, there is another angle to this story.

In addition to those slamming the author as a rotten person for purposely running up debt, several responders also commented their belief that even after such a cataclysmic event such as the author described there still would be people coming to try to collect on that debt!

That’s a pretty shocking thought!

That after the collapse of our society and economic, with aaaaalllllll the problems and chaos that will ensue, there still would be people pursuing repayment of debt!

MasterPo acknowledges that “collapse” can manifest itself in many different ways. Dropping immediately to a ‘Road Warrior’ level of apocalypse isn’t necessarily an absolute given. When the old Soviet Union collapsed, while there definitely was some uncertainty and turmoil, on the whole Russia did not become a barbarian wasteland (probably due in large part to the support of the rest of the world). So, in spite of the current global economic situation, there is a strong likelihood that if the U.S. suffered some kind of collapse the degeneration into total anarchy would be staved off (for the most part) presuming other countries lend a hand in a kind of worldwide “too big to fail” effort.
In that case then yes, the debt would remain open on someone’s books and eventually some kind of effort to seek repayment would be attempted to enforce.

On the other hand, if a “collapse” did result in more or less living in a ‘Mad Max’ society (at least for a while) then debt as we have known it becomes irrelevant, even absurd. One would hope (though not guaranteed, there are a lot of mindless zombies out there) if such a cataclysmic event happened the individuals operating on behalf of the creditor organization themselves would be more pre-occupied with their own survival than to worry about seeking repayment!

As previously stated, MasterPo isn’t weighing in (yet) on the morals of such an approach other than to analyze what the possible implications of having massive debt on a post-collapse society.

May we all never learn the real answer.

September 8, 2010

9/11 – How We have Forgotten Thee!

How long is a memory?

MasterPo doesn’t know for sure, but it seems to be less than 9 years. For here we are on the 9th year anniversary of the murder of 3,000 Americans and it seems our own leadership (MasterPo uses that term loosely) is more than willing – nay, eager! – to just sweep it under the rug. Water under the bridge and all that.

Long time readers of The Pofile know that MasterPo always devotes the 9/11 anniversary to honor those who were killed on 9/11, honor those who fought back on 9/11 aboard Flight 93, and those who have served (and sometimes died) in the prevention of another 9/11 attack. Yet this year 9/11 seems to stand for more than just (no levity intended) the anniversary of a terrorist (yes!) attack.

On September 11, 2001 the America changed forever. Today in 2010 the 9/11 anniversary seems to stand for yet another cross road of change. There is battle for the heart, mind, and soul of America being waged that puts 9/11 and all that it represents on the block.

The question is: Do we chop it? Or do we embrace it?

To chop it means to ignore the realities of the world we are living in.

To embrace it means to deal with the facts of life as we know it today:
  • There are bad people in the world!

  • There are some people who just can’t be reasoned with no matter how eloquent your speech!

  • There are times when the right decision isn’t the most popular decision but still has to be done.

  • There are times when you have to do what is best for your own charges and not care what the rest of the world thinks!

  • There are people who work hard and people who are lazy!

  • And there are many problems in life that government simply cannot resolve – people must resolve them for themselves! Sometimes that means spectacular failure.
On September 11, 2001 American was shoved down a path on the crossroads of life. Today we stand at another crossroad, this time of our own choosing.

Let us not dishonor the memories of the dead by choosing wrong.

September 1, 2010

Just Say ”NO” to TIPS

With concerns over national debt levels and the Federal Reserve printing money like confetti inflation worries abound (and not without good reason!). Traditionally physical ownership of precious metals, most notably gold, has been the main way to protect assets against inflation risk. However, today TIPS are being pushed as a “safe” (or “safer”?) way to get protection. The popularity of TIPS as mushroomed, fueled by both these concerns and eager financial gurus touting them as the best thing since beer in a can.

TIPS – Treasury Inflation-Protected Securities – for those who have yet not heard of them are U.S. Federal Treasury bonds that contain an inflation adjustment component to the interest calculation. They have a fixed coupon rate plus an inflation adjustment add-on to the principle amount. The purpose is to add (or decrease) the inflation adjustment to the principle amount (face value) rate annually. This results in increased (or decreased) semi-annual interest payments a s interest is computed on the adjusted principle amount, and, at maturity you receive the great of the face value of the bond or the adjusted principle.

Sounds like a sweet deal!

But all that glitters isn’t gold. The U.S. Treasury isn’t offering TIPS (and I-Bonds) out of the sheer grace of their over-paid Federal hearts.

TIPS, gold and inflation all have an intertwined history.

The double-digit inflation of the early 80’s saw investors and individuals flock to gold as a protection. They sold securities – most notably fixed income Treasury bonds – to raise the cash to buy gold. New cash was also put into gold instead of Treasuries. The result was obvious to happen: Gold reached then-record highs and the U.S. Treasury had a liquidity problem.

If the government printed more money that added to inflation. If they didn’t interest rates would have to rise to lure back investors to buy Treasury bonds. In the end a combination of approached worked to lower inflation and bring back Treasury investors. But the government learned a lesson.
Enter TIPS.

TIPS has the affect of essentially monetizing inflation. Rather than holding a real, physical, tangible and historically valuable item like gold as a protection against inflation and the unknown, now you can own paper as your protection. Oh joy! And now the Treasury can attract and keep more investors instead of losing them to gold (which is why in the current economy, while gold is at record highs, it has been a slower climb and not as high on an inflation-adjusted basis as the high of the 80’s).

The promise of one paper to protect you against loss of another paper. Seems rock solid to MasterPo!

But there are a few annoying things still nagging at MasterPo.

First, there’s the whole sovereign debt issue (a la Greece). The U.S. may be bigger but at $13.7 TRILLION in national debt (as of writing this) don’t think it can’t happen here.

Second, there’s the politics. The Obama White House announced there was no inflation in 2009. Phuleeze! And it’s been leaked they plan to say there will be no inflation in 2010 and 2011. How wonderful they can predict that!

But let’s go with Fantasy Land for this example. No inflation in 2009, 2010, or 2011 according to the White House.

So explain to an old MasterPo: If the White House says there’s no inflation how can the Treasury give an inflation adjustment to TIPS?!

Third, gold has real value worldwide. Unless something civilization shaking happens on a global scale there will always be an eager market for gold (and if something like that does happen cashing in your gold will probably be the least of your worries!). Can’t say the same for sovereign paper.

If all works out fine and dandy TIPS as a concept is great.

But TIPS are only paper. And what looks good on paper doesn’t always play out the same in the real world.

Nations come and go but gold survives.