Tech & Biz

Finally the Truth is getting out about the Economy!

by azer | April 20, 2009 at 08:54 am

91 views | 2 Recommendations | 2 comments

In his article "Putting the toothpaste back into the tube" by Andy Kessler on The Weekly Standard, we find a short and simple explanation of how our economy works - and what's been going wrong lately. As hinted by various commentators over the past couple of years, the problem has been leverage - unauthorized and uncontrolled:

A shadow banking system--Lehman, Bear Stearns, Merrill Lynch--was borrowing short-term in money markets at, say 2 percent, and instead of the classic 10:1 leverage of banks, they were levering up 30:1, sometimes 50:1, creating money out of thin air well beyond the intention of the Federal Reserve. It didn't show up in prices, mainly because of a huge and productive tech sector as well as the waves of cheap Chinese laborers who were providing cheap shoes and toys and furniture to Wal-Mart, "hiding" the over-creation of money. But it did create a shadow economy of home builders, linoleum layers, decorators, Home Depot Expo salesfolks, and on and on.

Folks: The above article is a must-read for those of us who are not in banking but still seriously want to understand what's been going on!

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johnlewismealer

at 09:10 on April 20th, 2009

It's not cheap Chinese laborers... It's Communist SLAVE Chinese labor.

India based child sweat shop labor...

Cheap Mexican labor.

In the USA, we have the UAW and AFL CIO and teachers unions and a host of labor unions that have driven the US Corporations into seeking easier inexpensive and lower regulated industry in other countries. Throw that in with the eco-nuts special interest driven regulations on US owned industry and major these US manufacturers are better off going overseas or to Mexico.

Mealer American Motors Corporation aka Mealer Companies LLC expects to change all of that. Sure.. we get to kiss the unions goodbye, but really wanted to be part of a union work state anyhow?

azer

at 10:11 on April 20th, 2009

A few years ago a guy in China sent me a note saying that he was making about $100 per month. Before that I was under the impression that $30 - $50 was normal in China. I hope that it's more now. The entire subject will disappear once the standards of living even out around the world.

For now, though, I am sometimes deeply bothered by things like bath towels for $3 at Walmart. I just don't use enough bath towels to justify paying less than $10 or $20 for one - why can't the guy making them figure that out and charge me more so that the exercise can be completed sooner?

Most people tell me I'm nuts for saying so - but ultimately I think the truth is best even if it's not popular.

Don't know much about your car company - my best wishes for all your efforts to make the world a better place.