Non-Prophet

Made in China

Funny. Saw this tonight at an elementary school function. What isn't made in China these days?

Economic Woes

More and more economic indicators are pointing toward a rough road ahead. The housing market is crumbling, oil prices are hitting record highs, the term "stag-flation" is all the rage. In some sense I feel like we've been bombarded with bad news since 9/11, or even for a year or so before that. I'm finding myself alternately weary and numb toward the doom and gloom prophecies, and somewhat worried about all the numbers that keep coming out. I feel like I've lost -- assuming I've ever had -- the ability to translate economic news into an appropriate level of concern.

What do you think about all of this?

AP:

WASHINGTON (AP) — Employers slashed 63,000 jobs in February, the most in five years and the starkest sign yet that the country is heading dangerously toward recession or is in one already.

The Labor Department's report, released Friday, also indicated that the nation's unemployment rate dipped from 4.9 percent in January to 4.8 percent last month as hundreds of thousands of people — perhaps discouraged by their prospects — left the civilian labor force.

Job losses were widespread, with hefty cuts coming from construction, manufacturing, retailing, financial services and a variety of professional and business services. Those losses swamped gains elsewhere, including education and health care, leisure and hospitality and the government.

The latest snapshot of the nation's employment climate underscored the heavy toll of the housing and credit crises on companies, jobseekers and the overall economy.

The Case for Breaking Up Wal-Mart

Alternet has a very interesting, very... l o n g essay posted that examines the idea that perhaps Walmart has grown so large and powerful that it is now a funtioning monopoly that needs to be dismantled. I think that the whole idea that a retail business can grow using fair and legal tactics and be so successful that it is acutally harmful an interesting possibility that probably needs to spend more time in the spotlight. At what point, when a business emerges as a clear winner, is a free market no longer technically free?

From Alternet.org

One of the basic premises of the free-market system is that actors are free to buy from or sell to a variety of other actors. In the case of Wal-Mart, no one can deny that every single firm that supplies the retailer is, technically, free not to do so. But is this true in the real world? After all, once a firm comes to depend on selling through Wal-Mart's system, just how conceivable is the idea of walking away? Producers own and maintain machines, employ skilled workers, lease land and buildings. Even with careful planning, most would find the sudden surrender of 20 percent or more of their revenue to be extremely disruptive, if not suicidal.

Another basic premise of the free-market system is that the price of a commodity or good carries vital information from actor to actor within an economy -- say, that cherries are scarce, or vinyl floor tiles abundant, or the latest iPod includes a new technology. Again, no one can deny that, technically, every firm that supplies Wal-Mart is free to ask whatever price it wants. But again, we must ask whether this holds true in the real world. Every producer knows that Wal-Mart is, as one of its executives told the New York Times, a "no-nonsense negotiator," which means the firm sets take-it-or-leave-it prices, which as we know from the previous paragraph are far harder to leave than to take. Every so often Wal-Mart will accept a higher price, but then the retailer's managers may opt to punish the offending supplier, perhaps by ratcheting up competition with its own in-house brands. Price, within the consumer economy, increasingly carries but one bit of information -- that Wal-Mart is powerful enough to bend everyone else to its will.

Peak Oil

As gas prices climb through the roof the talk about peak oil has returned. Some claim that the all time peak in oil production has already happened while others claim that this is all just a bunch of environmentalist propaganda. I think that a much more likely scenario to exist today is that we have reached "peak surplus", where production of oil compared to the need for oil may be low and decreasing from here on out. This will result in the end of black gold being purchased dirt cheap. With the rates of economic growth we've seen in India and China over the last decade, coupled with our own growth here at home, I think many of the warnings that the peak oil watchdogs are proclaiming may finally be on their way.

Dr. Ralph Metzner recently sent me the following speech by Mike Ruppert which was given at the Local Solutions to the Energy Dilemma Conference back in April. There is doom, there is gloom, but it is interesting and quite possibly very important reading.

If peak oil is not here now, is it more so a matter of when than it is one of if?

Fair Tax?

Looking over the plan at the website for Americans for Fair Tax I have a really hard time thinking up reasons why doing away with the tax code entirely in favor a national sales tax is not a good idea. As long as the tax code is graduated based on income and household make-up I think that this is a fantastic idea. It is a 23% tax on whatever you spend, there is a check mailed to you based on your income and home stats... that is it.

Other than a horrible name that immediately begs suspicion -- like the "Patriot Act" -- what is wrong with the Fair Tax?

from fairtax.org:

The FairTax was created by first asking the American people what they wanted out of a tax system, and then having a team of respected economists design a tax system that met those demands. The FairTax replaces the income tax and all other federal taxes with a national consumption tax. The FairTax is levied only once, at the point of purchase on new goods and services. The simplicity of the FairTax frees Americans from our current overwhelming tax code and unshackles the U.S. economy.

Dobbs on China

Lou says:

China has now arrived, and we no longer refer to our series on China's rapid economic and military build-up as "Red Star Rising." The title of that reporting is now "Red Storm."

But the Red Storm cannot be blamed for its continued manipulation of its currency, for its record $202 billion trade surplus with the United States or for buying up American businesses and hard assets around the globe while restricting access to its market and economy.

The fault lies entirely with the U.S. government, our lack of strategy and our failed policies. This administration and U.S. multinational corporations have lost sight of the national interest. This administration and the Republican-led Congress have permitted the dismantling of America's manufacturing base and created a dependency on China for our clothing, computers, consumer electronics and a host of other products that is greater than our dependency on foreign oil.

Make no mistake: Our leaders are the fools, and China's leaders are not to be blamed for taking advantage of this administration's commitment to faith-based economic theories and so-called free trade that permits the Chinese access to the world's richest consumer market while China denies our businesses access to its emerging market.

But I think Lou is only telling half of the story. The fault doesn't lie with our elected government ultimately, I think the future lies in the reality of the free market. The truth is that China is far better equipped for low cost manufacturing than we are and with globalization and technology bringing us all together we're going to have to share the pie. The only thing the government can partially control is how soon.

Chinese Cars are Coming

I bought a new DVD player today. It will play just about anything I put in it, from a CDR with MP3's burned on it to every DVD-R format created under the sun. It even has my beloved fiber-optic audio to make my Dunlavy speakers sing in beautiful DTS 5.1 surround goodness. If I had a progressive-scan HDTV it'd make that thing happy as well. Hell, I think if I put a slice of bologna in this thing it would play something wonderful. It was $60 at Best Buy. That's less than half of what I was expecting to pay for the features I wanted. Ah, China mixed with modern manufacturing, you're so good to us. I welcome the rise of the third world and all that shall come with it. There isn't a thing we can do about it and those hard working people deserve to be upwardly mobile.

With Ford and General Motors already tanking, what would it take to really put a stake in the heart of the American manufacuring sector? I think it is going to be cheap, high quality Chinese automobiles. The world is flattening, as Thomas Friedman is fond of saying, and nothing is going to flatten it more than the second largest purchase you'll ever make coming from China. It will be a gradual process over a decade or so, but I think we are going to get our butts kicked on this one, fair and square.

From The World Peace Herald:

WASHINGTON -- Chinese companies are racing to enter the U.S. auto market.

One manufacturer previewed this week at the North American International Auto Show, and another plans to hit dealerships by the end of next year.

"For sure, nobody needs another manufacturer, if all we were going to do was manufacture another car. But we are going to make a dramatic change in the price [structure] of higher-priced cars," said Malcolm Bricklin, the 66-year-old chief executive of Visionary Vehicles, a New York City company that has long-term plans to sell 1 million cars a year built by China's Chery Automobile Co. in the U.S.

Mr. Bricklin plans to introduce midlevel cars, competitive with Japanese and Korean sedans and crossovers, to the U.S. by the end of 2007, he said yesterday from his New York office. Cherys, which will be sold under a yet-to-be-determined name, will be priced about 30 percent less than competitors.