While most of the politically insensitive emails I receive are recycled bad jokes about the current President, the decline of the manufacturing sector since 1955 has occurred during both Democrat and Republican administrations; evidentially, there is  a paucity of knowledge of basic economic theory among some of the most successful businessmen. Those who do understand have failed to protest against government policies that destroyed their competitive advantage, and they simply chose to move some, most or all of their productive capacity to China or Mexico.

            It was relatively easy to make money in real estate between 1989 and 2006, and while retailers and importers were floating on the abundance of cheap dollars, high consumer debt, and a devaluing fiat currency during those years, jobs were not being created in production. As a result, the immediate future will provide us with record unemployment and a tidal wave of inflation.

            The British press hasn’t been singing Kum-Bah-Yah as has the US news service. According to the Telegraph.co.uk the labor force in the U.S. contracted by 661,000 and the U6 unemployment rate is up to 17.3%.  In housing, repossessions are 300,000 a month and 1 million Americans became homeless in the fourth quarter of 2009; also, adjustable low interest rate mortgages are due to reset higher.       Investors or second home buyers who jumped into this market now, believing the hype that the real estate bottom is here, will have a rude awaking in 2010 when current prices loose their fiat stimulated values.  The next shoe to drop will be commercial real estate. That is until the Chinese convert their 3.1 billion in U.S. Treasuries into U.S. Dollars. This recovery is different from every prior recovery because the manufacturing sector will not create jobs that create wealth.  Consider just three commodities that were once dominant domestic industries.

            The furniture industry lost 60% domestic capacity during the Bush administration.  Imports are now 70% of the U.S. Market. The printed circuit board industry shrank from $11 billion in 2000 to $4 billion in 2007. Globally this vital industry was growing, but the U.S. share of the market was under 10% by the end of the Bush administration, which represented a loss of 300%. The U.S. Steel industry produced 91.5 million tons of steel in 2008 down from 97.4 million tons when Bush took office. This doesn’t look so bad until you consider the fact that China’s steel industry in 2008 produced 500 million tons, which is more than 5 times the production of the United States.

            Those who are pinning  your hopes on green jobs should consider the fact that in the solar industry there was only one American company (First Solar) in the top 10 worldwide for photovoltaic cell production as of 2007.  On the other hand there were 80 major chemical plants costing more then $1 billion on the drawing boards or under construction in 2008, but none of them were being built in the U.S.  2% of all new semiconductor fabrication plants [fabs] under construction in 2007 were in the U.S. while 30% were being built in China, 25% in Taiwan, and 22% in South Korea.

            Yes but “we can survive on a service economy”. If you still believe that lie, then you really don’t want any further information from this source.