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Many economic indicators have turned
less-bad during the first half of 2009. Before this point, many
indicators were heading toward supplanting the worst records in US
economic history. |
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Less bad indicates that people perceived
levels that were so terrible that the mass psychology said, "Things
are so very bad that they cannot get much worse. If not the bottom,
this must be near the bottom". This allowed bargain hunters to
rationalize the buying of stocks. This also allowed consumers to
shop for the things they passed up in fear over the prior several
months. Consumer goods that were considered less necessary over
recent months are now becoming near-necessary, thereby provoking
consumers to initiate buying. |
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Investors and consumers are ignoring, in
wide-eyed disbelieving ignorance and shock, the macro facts. A few
relevant macro facts include the government's increasing and active meddling in
corporate board membership and policy. The Federal deficit, the US
Congress, and the Federal Reserve's policies are, in common
vernacular, Out Of Control. TARP money is being more widely
distributed across more industries and more corporations. For
example, BAC's board -- not just its CEO -- are being actively
forced to change. Several major insurance companies are
appear willing to accept TARP funds. This, even after it is evident
that
the loss of control and short-term fix provided by TARP
funds opens the corporate doorway to US government control. |
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The United States is sailing in totally uncharted
waters while being steered by a government empowered unlike any
before it and holding to pseudo-idealisms wholly different from any
before in the US. |
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The naive willingness of insurance
companies and additional banks to accept TARP funds indicates a fundamental
breakdown and erosion of US capitalism and leadership of corporate
America. In prior times, these same companies would be led by men
who would automatically find non-government solutions to cash
shortfalls and business downturns. They might consolidate into
larger, stronger, more profitable entities. They might extend
borrowing. They might sell equity. They would definitely scale back
expenses. They would know that they need to survive and they would
survive. |
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Who reading this essay has not had an
economic setback, calculated how to survive, and then survived
stronger than before problems arose? |
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Today weakened managements are terrified
for their own personal survival. Therefore, on a one-by-one basis,
they are throwing in the towel, getting theirs, and damning their
organizations to an existence under fascistic Communism. And we used
to believe that model could not exist. It can in the new America
that is morphing from democracy and capitalism into this dark,
unprofitable, uninspiring, nasty model. |
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In a short-sighted, fascistic mode, the US
government is disposing of the US auto industry -- GM
and Chrysler. This naive action is being taken for political and
grandstanding reasons. It will mark the end of US industry since it
will have unimaginable, rippling unintended consequences throughout
the economy. The
trite slogan "Buy American" which had some meaning over recent
decades, will have little meaning -- or, at best, a new meaning. |
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Americans will produce -- and therefore only have
a choice to buy -- American-made products whose American employees
will work for foreign companies. An irony is that unions will
eventually fail and fall by the wayside even after all the bonuses
and handouts they are currently receiving. In the new American
industries, workers will be "discouraged" and, in reality, unable to
form substantive unions whereby they influence their wages,
workloads, and schedules. Foreign companies care little for unions
and establish work environments that obviate the need for them. |
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Today wise people invest from this realistic
perspective. If wrong, the investing perspective can be adapted
within a more optimistic context. However investing today while
assuming the usual American return to prosperity will position an
investor far out on a dead tree limb. |
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Add in to this mix the fact that the world's
economic engine is changing in every meaningful aspect from
capitalism to fascistic Communism. This is the unneeded -- the
superfluous -- final nail in the American economy's coffin. |
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An optimistic person will realize that fortunes
are often made during difficult economic phases. But often the
fortune earner must be more smart, more tenacious, and more
hard-working than the fortune grabbers fortunate enough to thrive
during the easy phases. |