Saturday, June 5, 2010

The Foundation of the U.S. Economy Remains Sturdy!

Go Long America

WITH THE LANDSCAPE LITTERED WITH FAILED banks and fallen corporate icons, and with U.S. households and Washington deep in debt, writing America's obituary is back in vogue.

I must say that it has been good material for my blog.

Just as popular is the coronation of China as the world's new economic superpower.

Oops. I thought we were supposed to be heckling China too. I certainly do. My bad.

From the ashes of the U.S.-led global financial meltdown, a new world order is in the making. According to popular opinion, America is declining, while China is rising.

Perhaps popular opinion has been swayed by numerous "Made in China" stickers?

The U.S. makes more goods in a year than any other country, although America's share of global manufacturing output was roughly 17.5% in 2008, down from 22.4% in 1990 and about 20.5% in 1980.

Perhaps popular opinion has been swayed by the objective and difficult to dispute clear trend in America's declining share of global manufacturing output?

Many U.S. manufacturers have held their own the past few decades, even in the face of stiff competition from Japan, Germany and China.

Yes, just as few realize that many Atlantic salmon kelts survive to spawn again (2% to 4% of the entire population), although post-spawning mortality is quite high.

The foundation of the U.S. economy remains sturdy.

If a sign was placed at the entrance to a bridge that said the foundation remains sturdy I would actually be tempted to look for alternate routes. I'm sufficiently paranoid that way.

Crews to shut down Ga. 25 in Port Wentworth today

Cracks in concrete

The bridge, built in 1939, has a foundation that remains sturdy, yet decades of rumbling trucks, many of them bound for the Savannah seaport from South Carolina, have taken a toll.

Most ominous are fissures that have formed at the top of the concrete overpass, according to Allen Morgan, general superintendant with Rogers Bridge Co., which is handling the $3.8 million project.

Talk of replacing the viaduct dates back at least six years, Holbrook said.

"It just wasn't built to handle the heavy loads they have now," he said. "There's no disputing that it needs to be replaced."


EconomicDisconnect said...

From the last section;

I love ZH but the comments section is mostly junk. Plenty of nuts for sure. I thought the TIPS article was pretty good.

Stagflationary Mark said...


I posted a bunch more of my thoughts on that in the last section.

Thanks again for bringing it to my attention. They sure beat up that poor author though.

I've been investing in TIPS and I-Bonds for 10 years so far.

The only real complaint I have is that TIPS have done too well (as investors piled in). Real yields are so low now that it will be harder to earn money off money from here on out.

In theory, these low real yields could support your case for gold and silver. That's assuming China doesn't implode though. If they go down and drag the whole commodity markets down with them, the deflationists will once again have their time in the spotlight.

Who knows!

EconomicDisconnect said...

Glad you found it useful.

I changed my outlook to officially nervous on Friday. As I wrote, in 2009 the markets were calmed because they thought the government could help them out. That's not so much the case anymore. It's just a mess all over the place right now.

Stagflationary Mark said...

One more thought.

Gold to Aluminum Price Ratio

The ratio continues to climb and has broken off the top of the chart I offered.

Gold trades at $1,220.00 per troy ounce. Aluminum trades at $0.8274 per pound. There are 14.5833333 troy ounces in a pound. The current gold to aluminum price ratio is therefore a whopping 21,500 to 1.

There certainly appears to be a bubble in that ratio, if nothing else. It's an extremely parabolic chart and as you know, I'm not much of a believer in long-term parabola stability.

This may also be telling. I had a coupon for aluminum foil at Costco and I actually managed to leave the store without buying any. I just have so much as it is and couldn't justify buying any more. That's how deflationary I seem to be right now.

It didn't stop me from hoarding other things though. This is a tough environment for making rational investment decisions. No doubt about it.

EconomicDisconnect said...

I believe the IMF will have to sell more gold because they do not have the cash for the bailouts they need. I do not think they stockpiled foil though, so I guess they are screwed, HA!

The gold:aluminum ratio is interesting; maybe aluminum has to go up in price? LOL

From the straight dope site, the most expensive thing in the world:

What's the most expensive thing in the world?
August 31, 1973
Dear Cecil:

What's the most expensive thing in the world?

— H.B., Baltimore

Cecil replies:

Some years ago what was then the Atomic Energy Commission held a special clearance sale on an element called californium-252, which they were letting go for a mere $1,000 per microgram, or about $350 billion per pound--just slightly higher than the price of sirloin.

— Cecil Adams
Thats nuts!

Stagflationary Mark said...

Here's Japan's list for what it is worth.

Rare Metals Stockpiling Program

Gold and silver didn't make the cut.

G.H. said...

"...Just as popular is the coronation of China as the world's new economic superpower.

From the ashes of the U.S.-led global financial meltdown, a new world order is in the making. According to popular opinion, America is declining, while China is rising."

Gingrich pitches no-tax zone to revive Detroit

"Gingrich also said Michigan needs courage to make real change -- or it will die.
'If you're not going to compete with China, you're not going to be successful.'
...he said another auto bailout may be necessary in 10 years if the domestic automakers don't figure out how to compete with the Chinese."

Detroit, you've been given your marching orders. Godspeed.

Stagflationary Mark said...


I'm going to use your link in a new post!