Obama has proven once again that he, Washington and big business have no concept of reality during his short press speech before heading to the G20
Summit, the third G20 in his presidency to date.
It does not matter if there are one or one million regulation agencies to oversee Wall St. The problem with the global economy is not a matter of how
the global markets like NASDAQ and DowJones are doing. Sure, it is a gauge. But nothing more. Consumer Spending is a gauge, Unemployment is a gauge.
And both of those are far better factors to consider.
The US economy has never recovered from the Post War Boom of WWII, because no one with the capacity to affect economic policy has fully recognized it
as a Boom. Or in terms that we are all too familiar with today: a bubble that has popped.
Solutions have been to change from manufacturing based to a service based economy. But the question is to serve what exactly? Let's look at it in
simple bartering terms.
I raise chickens and you raise cows. I strike up a deal to trade you a dozen eggs for a gallon (3.8 liters) of milk. It is a fair deal and everyone is
happy. A service industry in this case would be a guy that carries the eggs and milk back and forth between us. For this, I give him 3 eggs and you
give him a glass of milk. I have to gather a few more eggs from a few more chickens and you have to milk another cow, but it is a fair enough deal
and everyone is happy.
Now there is a wheat farmer that has heard about our deal and would like to trade me a sack of grain for some eggs and trade you a sack of grain for
some milk. We both know that we can have the grain milled to flour by the miller for some eggs or milk and that service guy with the wagon is more
than happy to make all the trips for the 3 of us (4 if you count the miller) and every one is happy because now that service guy with the wagon is
calling himself a Teamster. And instead of just one meal a day for running eggs and milk he is getting 3 squares a day with milk, eggs, bread with jam
and bacon. Bread with jam and bacon? He must know some other people. Time to have a talk and see what we can find out.
Well it would seem that the Teamster knows some people in the next county that have a butcher and another that has an orchard and another that is a
baker and still another fellow that is a miner. And they only trade in gold coins over there. Because they have what they call a government that
negotiates contracts. And all contracts trade items for gold coins, which the government stamps to make them official. But what is strange, is that
the government makes you pay a portion of those coins back to him for negotiating the contracts. Now the next county over is pretty far away and
things sound a little complicated so that explains why we only see the Teamster twice a week while his son does all the routes the rest of the time.
Sure it is an over simplified parable, but notice how the Teamster is very much like big business. Starts out small, produces nothing yet is able to
profit from all negotiations. It becomes a matter of opinion as to if the farmers are working for themselves or for the Teamster in the end. In
dealing with government regulations in the next county, the simple farmers will either have to work through the Teamster or find a way to work with
the government of the next county to acquire gold coins which may have already regulated by the Teamster for importing at a lower tariff. In which
case the government might decide that the Teamster is too big to fail because of the lower cost import of raw materials because the baker and butcher
(that presumably feed the next county) need the lower priced animals, flour eggs and milk from the simple county. The butcher and baker might talk to
the miner about seeing if the simple county has silver or copper and then negotiate with the government to an exchange rate for silver or copper coins
to be minted for the simple country in hopes of more direct trade in their newly established local currency that they helped create. This would
increase the butcher's and baker's consumer base. And because the government still gets a percentage for contract negotiations (taxes) it benefits
the government as well.
Now in time, the simple county will see that now they have currency and have learned of baking and butchering, they can begin to do such things
domestically after forming their own government. Because the exchange rates of gold to silver or copper are more favorable in the poorer country, they
can begin exporting cheaper bread to the next county instead of just eggs, flour and milk. Sure it is day old bread, but if the government doesn't
regulate the import under equalizing tariffs the baker is going to be out of a job due to an inability to compete. Especially if the simple country
nationalized export production to cover a loss to enter the market. Much like China's textiles did to US textiles and made up for it in other
The US has over borrowed to prop up the domestic economy that is hurting from domestic spending. Much like the bakery that ran itself out of business,
he decided to cut overhead by eliminating bakers. Those unemployed bakers can't afford or will refuse to buy those loaves of bread and they will not
be able to afford the local butcher's selections as well. Especially if the best work they can find is to sell leather harnesses or wagon wheels to
the Teamster that might have been imported as well.
The US needs to focus on domestic manufacturing growth with the intent of domestic consumption. If a new technology is developed that will level the
playing field such as new forms of energy then it needs to hold it domestically. Always looking at the global market for consumers and production
without adequate protection for domestic jobs is what ultimately caused the economic problem that we have today. Borrowing money to prop up companies
such as investment firms and banks that do not produce anything nor are major employers has accomplished nothing but the movement of numbers in the
Ultimately the value of any single stock of being $2 or $20 means nothing unless cashing in the stock. The buying and selling of shares is really no
different than trading baseball cards as a kid. The only value is in the perception of the value and the particular desire between the parties. The
sad reality is that far too many place value in the wrong things.
Today we are looking at the possible end of unemployment benefits for a good number of people in the very near future. Sure it will save a few bucks
in the short term. But what is the crime rate going to do? What is the death toll of those incapable of survival going to be? We don't live in the
simple county folks. There are regulations against going out, claiming a plot of land and raising chickens and dealing in eggs are currency.
That is why I say it was never a matter of too big to fail but just too stupid to succeed.