The morning after the election I went to my favorite coffee shop in town.
The sign and windows were covered up. They had just officially closed that morning due to bankruptcy. A chain of over three stores and some of their site locations were virtual money machines because they were so busy. And the ultimate bankruptcy is the personal bankruptcy of the owner of the chain. This man was one of the most prominent and wealthy citizens in town. Owned a bunch of other previously successful businesses. Now bankrupt. Too much debt that he could no longer sustain especially due to the present financial meltdown. Where was our government to bail this fellow out in his direst need?
Are you happy to see the government bailouts?
I know I am. It’s about time the government recognized the importance of industries that are suffering & need billions of dollars to sustain their business. Where were the government bailouts when so many other worthy industries in the past were dying and struggling for their very existence?
Where were the government bailouts when the horse and buggy industry was fighting to keep up with the newly invented automobile? Where were the bailouts when the US textile industry all went east and west and every other direction but home? To my understanding, today, there is not one shirt manufactured from scratch in the US.
Remember the prosperous whaling industry just a century ago? Whales provided the oil for every lamp in every home and business. The whaling industry employed over 70,000 people. Those were real jobs, but the government refused to prop up the industry and today not a single lamp uses whale oil to light the night sky.
Look at the print industry. The newspaper and magazine are going the way of the dinosaur. Replaced by digital print. And who is there to care? And what happened to typewriters and Smith Corona? Smith Corona was a staple name just 30 years ago.
“…finance executives in challenged industries are in a precarious position. Publicly, they must tout their companies' commitment to innovation and long-term goals. Yet instead of investing in new technology, they can become enamored of their current business model—especially if it is successful. And their unrelenting focus on shareholder value can blind them to the fact that they may be facing a Waterloo moment.” cfo.com/printable/article.cfm/3786531
The typewriter probably represented American industry more than any other tool. And again, the government refused to step in to prop up the industry. And today? No more typewriters.
“In November 1992, the company's (Smith Corona) CEO, G. Lee Thompson, told the Wall Street Transcript, "Many people believe that the typewriter and word-processor business is a buggy-whip industry, which is far from true. There is still a strong market for our products in the United States and the world." When asked what new products and services the company planned to introduce, he replied, "Nothing right now.” cfo.com/printable/article.cfm/3786531
But who needs industry and factories any way? Right? Our wealth is measured in our 401K plans and our homes. And for the really dirty work we just import cheap labor from south of the border. I’ll tell you another dying industry that needs desperately government help. Have you noticed the lack of public pay phones today? Well, there aren’t any and this fact is a crying shame. Lots of jobs for coin collectors no longer exist. A tragedy.
But, seriously. Getting back to the horse and buggy issue.
So now, thankfully, we are at last finally seeing our government learning to support institutions that have failed. The financial institutions that created this mess are being bailed out and propped up to make even more mistakes down the road. Plenty of time for them to fail again. But maybe now that the government has learned to stabilize dying industries perhaps they could revive the most important industry we need to see rise again. Yes, the horse and buggy industry must be brought back and nationalized. As the oil supply declines what better and proven transportation device can replace the oil guzzling automobile?
Blacksmithing, wheel wrights, wagoneers, stagecoach drivers… These were real jobs and real payrolls supporting generations of workers. And because the government failed to help with even a single dollar all these professions disappeared into the dustbin of history.
This important national industry disappeared 80 years ago. In the 1890s, the Alliance Carriage Company of Cincinnati made more than 10,000 horse & buggy carriages a year.
The Studebaker Carriage Company manufactured more than 10,000 horse buggy vehicles in 1873 and they tripled this number to 30,000 a mere ten years later. And by 1900 this single transportation company was producing 100,000 carriages a year. In 1910 the Durant-Dort Carriage Company produced 56,000 vehicles. This past industry was creating real jobs and helping to support the economy of a nation.
The automobile could have been merely a passing fad had the U.S. government had the wisdom to keep the horse and buggy industry afloat.
And back to reality. Can you now relate to the humble working class who go into the grocery store and debate whether to buy a half gallon or a full gallon of milk? Can you empathize with those families who are struggling to make ends meet and fighting each day rising prices and a shrinking paycheck? Or maybe even no paycheck.
The growing disparity between the rich and the poor. Between those struggling financially to overcome too small a paycheck and that other class with money flowing out their ears. Today as never before a growing gulf exits between the haves and the have nots.
This financial meltdown has revealed just how fragile many households were. Lots of folks who thought they were doing pretty well in just a short moment of time watched their hard earned retirement savings plummet to the ground. Many portfolios are down over 60%. And house valuations are down by as much as 50% in some areas of the country. How many over the past 20 years have come to measure their wealth in the rising appraisal of their home and the increasing value of their stock portfolio? Yet, in just a quick breath all this disappears in a heartbeat. These are the times that try a soul. These are the times when you fall easily between the cracks and struggle to hold on by a thread.
The vast majority have been indoctrinated for over 20 years that debt is OK and that asset prices can only go in one direction. Up. And because of that impaired thinking so many are “up side” down with their mortgage loans, bank accounts and personal finances. This is the land of perpetual & unlimited prosperity. Unlimited opportunity. Enough to go around for all. Just max your credit. The middle class is finding its “class” to be quickly dying. I think we are closer to another French Revolution than we realize.
But the brainwashing continues. I watched Larry Kudlow and other money gurus take hold of the recent stock market rallies this past week or so and wipe their brow. Happy that the bad times are over and the economy is climbing back to strong health. I don’t think so. The hedge funds continue selling every asset class to raise cash. Over 50 trillion dollars worth! Washington is trying to save the economy in its usual convoluted way. Support the failures and ignore the winners.
Washington is now pumping billions of dollars into institutions that have clearly failed. These collapsing institutions haven’t invested in America. If these banking, insurance and brokerage companies were adding so much value to our economy then where are the jobs? Where is the new industry? Where are the new factories? Successful investment is that which brings real growth to an economy. Not just an inflated stock portfolio whose value can disappear over night.
Our financial community sure hasn’t been bullish on America. Just every where else. The bullishness focused on greed and complicated financial instruments that only generated more paper. It’s interesting. GM made the decision years ago to concentrate more on the loan business than making cars. And now they are close to bankruptcy.
But hold onto your gold and silver. The worst is still ahead down the road waiting.
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