A Rude Awakening ...

Like much of the nation, I woke up this morning to hear the President of the United States on the radio. When you have a problem so serious that the President is addressing the nation at 6:30 A.M. something is very wrong.

Bush's face was ashen. The strain of the weekend was apparent. His words were equally sobering. He made no promises that the bailout proposal worked out over the weekend would cure the nation's economic ills. As a matter of fact he said just the opposite. The President said in no uncertain terms that even if the bailout bill is passed the United States and by implication much of the world face perilous economic times ahead.

Bush confirmed the worst projections that had been circulating last week, that is that the credit market had completely exhausted its liquidity and that many businesses would not be able to meet this week's payroll. Dow future's were down 150 at the time that this blog entry was being written and Lord only knows what the market will do when it opens given the tone of Bush's speech.

These are the facts. Over the past four or five decades, America changed from a production based national economy to a consumer based global economy. When we were being sold the bill of goods called the global market we were told that only junk jobs held by unskilled workers would be exported. Think about that the next time you drive down the street in your Mexican assembled Japanese branded car or take a flight on a Brazilian or European manufactured mid-range airliner. The American auto and aerospace workers who could have made those products for you are now frying hamburgers or driving trucks shipping foreign products around the country. Those skills and jobs are lost forever. We traded good paying blue and grey collar highly skilled manufacturing jobs for minimum wage service sector jobs. The Chinese and the Asians who protected their own workers and manufacturing base are now laughing at us all the way to the bank ... and that bank has a sign out front that says, "Americans Not Welcome."

Since we don't build anything anymore, we are not creating wealth. We have sustained the economy of the past several decades by literally spending the accumulation of national wealth earned since the founding of the nation and when that was exhausted by borrowing the money to keep up appearances from foreign powers who do make things (like China) and who also save instead of borrow. Last week, the Chinese government instructed its banks to issue no more loans to American banks. So, our massive trade deficit with China is now a one way street and there is no way for us access the trillions of dollars we have invested in their manufacturing economy instead of our own.

Make no mistake. This is 1929 all over and it remains to be seen if we will be able to weather the coming storm with the same strength and courage of our forefathers.