Bright Spot for American Manufacturing & Jobs

GM went public this week and now enjoys a market capitalization of $50 billion.  And there's 1 main reason why that was even possible: the lifeline that the U.S. government made to GM in loaning them over $40 billion back in 2009.  Behind these numbers are are millions of American jobs that were saved.  Here's the full story:

What Do Germany, China, and India Have to Do with U.S. Unemployment?

In this straight-talk video, Austan Goolsbee explains how the U.S. economy stacks up against the other major economies of the world. 

I think he does a fair good job in explaining how Germany, China and India stack up to the U.S..  But I'd like to see him do a better job explaining what's at stake in these so-called "trade talks" and "trade agreements" between countries (practically inscrutable if  you follow the business press).  

I also would like him to do a better job of talking about why the U.S. has to start promoting manufacturing and export industries the way for example Germany has. As long as our corporations are making money, we haven't cared where goods are made or by whom.  And guess what, the chickens are coming home to roost now because not only have we lost manufacturing know-how but we have decimated our middle class so that over time our consumer power will erode and we'll become a less affluent nation.  

Grim?  Irreversible?  No way.  But the answers won't come from existing Fortune 1000 business leaders who are all too happy to send American jobs and factories overseas.

Fed Takes a Shellacking

The business press has been reporting about the "shellacking".   No, not that one, this one is being administered to the US Federal Reserve bank by foreign governments.  So I guess the Fed Reserve must be doing something wrong, right?  Wrong.

The Fed Reserve is finally standing up for the American economy against currency manipulation (by the Chinese) and lack of demand spurring policies (Germany) that have sealed the fate of the American economy.

Here's what British Economist Roger Boutles recently said:

" The fundamental fact we have to bear in mind all the time is that America has been supporting world demand, and most of the countries in Asia have been doing the opposite. And that as far as I'm concerned means that the Americans are the good guys and the Chinese and the other Asians are the bad guys. In simple terms, they've been living off the fruits of demand created in America and the Anglo-Saxon world and it can't go on. Germany should be in the dock as well."

Mr. Boutles continues:

"The fact that German demand is as weak as it is, is Germany's fault. Who else's fault is it? The British fault? The American fault? How can we control German domestic demand? The fact of the matter is, this is a country - and China's another one - which adopt mercantilist principles; that's to say, they think it's perfectly okay to get richer at the expense of other countries. Well of course, for the world as a whole, that can't work and we are coming to pay back time."

What do voters want? What do voters think?

Here's a sampling of results from exit polls during the November 2, 2010 U.S. general elections:

Do You Support the New Health Care Law?

• Yes 47%
• No 48%

 What Should be Congress's Highest Priority?

• Spending to create jobs 37%
• Reduce the budget deficit 39%

 Should the Bush Tax Cuts Be Extended?

• No 60%
• Yes 40%

How Many of You have An Unfavorable View of:

• Democrats: 53%
• Republicans: 52%

 Who Do You Blame Most for the Economic Problems?

• Wall Street Bankers 35%
• President Bush 29%
• President Obama 23%

Source: http://www.nytimes.com/2010/11/06/us/politics/06myths.html 

America's New Addiction: Outsourced Jobs

As President Obama was departing for an overseas trip to Asia this week, he commented:

"The primary purpose is to take a bunch of U.S. companies and open up markets so that we can sell in Asia, in some of the fastest-growing markets in the world, and we can create jobs here in the United States of America."   - President Obama

I believe the President but I'm not sure the problem is closed markets.

Over 200 business executives will accompany President Obama on the trip.  They are the same executives that have fired American workers and replaced them with workers in Asia during the Great Recession.

According to a poll conducted by San Jose State University researchers (see chart to the right), 2 out of 5 Silicon Valley households have been hit by job losses since the Great Recession began nearly three years ago.  

Tech had done well during the Great Recession

During this same 3 year period, the NASDAQ has returned to par (not bad for a recession) and tech headliners like Apple have soared. In other words, while American CEOs have argued that they must lay off workers because of the economic downturn, their companies have done quite well and weathered the Great Recession in flying colors.  That's a great testament to American business know-how.
 
While at lunch with a friend the other day he said I had buried my head in the sand and and wanted to know why I refused to accept that America's best days were behind us.  I believe that our enterprising nature will always find ways out of short term problems if given the chance.  I just wish more American companies would give American workers a chance.
   

Whitman & Fiorina Lose - Bad Day for Silicon Valley?

2 Silicon Valley tech CEOs were running for public office in California yesterday.  Both had served at blue chip, name brand companies, and both were financially very successful.  You could say they were poster children for the tech economy.  So what does it say that both Meg Whitman and Carly Fiorina lost? It's a good day for Silicon Valley entrepreneurs and Silicon Valley workers.

Both Ms. Whitman and Ms. Fiorina inherited businesses and rode the high tide to success.  Neither was a thought leader or visionary when it came to technology or how to make the technology economy work for America workers.  In fact both were comfortable outsourcing jobs abroad while lamenting the decline of skills in American workers - an overused, under-supported argument from American CEOs lately.  How exaclty can you expect more students to go into the sciences when the jobs are being sent to workers overseas?  So it is easy to see how some are saying that American students are making a very rational choice to shun jobs in the sciences for business degrees and jobs in consulting or banking. Wouldn't you?

Those who invest in America, such as Marc Benioff of Salesforce.com who just announced he is building a vast headquarters campus in San Francisco, are the better role models for Silicon Valley and for American business everywhere.

Do the elections of 2010 mean anything?

Yesterday's election in the U.S. may have changed who the Speaker of the House is, but the smart money hardly noticed as evidenced by the stock markets today.  The Dow was up just 0.24%

In the words of Benjamin Graham, "in the short run, the market is a voting machine but in the long run it is a weighing machine."

What this says to me is that while the topsy turvy world that is the American electorate voted to change their Congressperson as a way to vent, Wall Street doesn't believe that things will actually get any better anytime soon.  As there were more Democrats in Congress, it just makes sense that more of them were made to pay for the recession we are going through.  In American politics there has always been a very strong "throw the bums out" strain when things in the economy are going poorly.  So it was an outcome that was not a surprise as it has happened with regularity during midterm elections in the past.  In recent memory alone:

• Newt Gingrich (R) became Speaker during President Clinton's (D) tenure
• Nancy Pelosi (D) became Speaker during President Bush's (R) tenure

And so John Boehner will be the new Speaker of the House.  But one person cannot change the tough times we are in.  So what will John Boehner do?  Reading his past speeches doesn't instill much confidence he will do anything to move the country forward.  He was after all the architect of the "hell no" strategy intended to thwart any legislation proposed by the President.   He has proposed no new ideas, a cynical approach to leadership.  An obstructionist is the last thing we need in America right now.

So do the elections of 2010 meaning anything?  If it means anything at all it's that the recession caused by the mortgage bubble that tanked the economy in 2008 is still with us and has caused a lot of pain for American voters who want to "throw the bums out".   And they'll do it again in 2 years if things don't improve.

I still see the glass half full and believe that there is hope that things will improve but it won't be easy. The formula for turning things around involves just 2 actors: the private sector and the public sector, or the government.  Just today the Fed Reserve, the nation's central banker, announced it is buying $600 billion in debt as a way to bring down long term interest rates.  Now we need the private sector to hire Americans and not send jobs overseas.  American companies are sitting on a record amount of cash (Apple alone added $17 billion to its balance sheet last year) and without more investment the only other option is another stimulus bill from Congress which Mr. Boehner has already dismissed. At times like these we need leadership.  Will they answer the call?