Check Out My 2008 Predictions

See the link to “2008 Predictions” on the right.  It’ll be fun to see how well I can predict the future!  I’ll update results quarterly.

Pete

The Rising Birth Rate

There was much ado on the national news last night about the fact that the birth rate in the U.S. has ticked slightly higher, to 2.1 children per female.  It was explained that “economists” see this as a good thing, because we need more younger people to support the older generation in retirement, alleviating (at least slightly) some of the huge projected social security / medicare deficit. 

It never to ceases to amaze me that “economists” can’t look far enough down the road and question what will happen if we keep “growing” the economy in this way.  It’s because they don’t understand that a smaller population will actually benefit the economy through improved per capita consumption.  In the meantime, slightly higher taxes and tariffs on over-populated nations is all that’s needed to eliminate the projected ss/medicare shortfall. 

Some Signs of Progress on Illegal Immigration?

It’s nice to see some good news for a change.

http://www.usatoday.com/news/nation/2007-12-22-immigration-leaving_N.htm

Hopefully, this is a trend that will spread to other states.  Our next president needs to accelerate the momentum. 

Pete

“Cheap” Imports?!?!

I went Christmas shopping for my wife yesterday and was looking at some expensive leather jackets.  They looked nice.  I then looked at the price tag – $360!  Then, expecting to see that they were made in Italy or some such place, I looked at the tag and saw “Made in China.”  “You’ve got to be kidding me!” I thought.  Being made in China, there can’t be any more than about $10 worth of labor in that jacket.  Only a few years ago, when these jackets were made in Italy or somewhere else in Europe, they sold for about $250.  Now, in spite of much lower labor cost, they sell for over $100 more!  Somebody is making a killing on these things!  And we’re supposed to be happy with globalization because, in spite of taking our jobs, we can at least get products at low cost? 

Needless to say, I didn’t buy the jacket. 

Pete

Will The Energy Bill Move Us Toward Energy Independence?

No.  See the following article about the energy bill that was approved by Congress yesterday.

http://www.usatoday.com/news/washington/2007-12-18-fuel-economy_N.htm

Don’t get me wrong.  This legislation is badly needed to stem the growth in our dependence on foreign oil.  But consider the following:  If our average fuel economy improves from 27.5 mpg to 35 mpg by 2020, then it will have improved by 27%.  So our use of oil will decline by 27%, right?  Wrong.  If our population continues to grow at its current rate, our population will grow by 14% by 2020.  By 2029, our population will have grown by over 27%.  So, nine years after this law takes effect, we will be even more dependent on foreign oil than we are now.  And we will have made no progress at all in reducing emissions. 

Improving energy efficiency is meaningless unless we also couple it with stabilizing our population. 

Pete

US Manufacturing is alive and well?!?

I read an interesting article written by Knight Kiplinger in the 01/2008 edition of his personal finance journal. He not only boasts that our annual output is greater than any other country but that improving productivity is actually earning factory workers higher wages and benefits. He says we are selling record amounts of American goods overseas. The link to the full article is below. I would love to hear your comments regarding this article. Thank you.

http://www.kiplinger.com/magazine/archives/2008/01/knight-kiplinger.html

Brian

Write Your Congressman

I’ve added a link to www.congress.org, a site where you can very quickly identify your Senators and Congressman and find out how to contact them.  (See “Write Your Congressman” under the category of “Important Related Web Sites” on the right side of this page.)

Everyone is encouraged to let their elected officials know how you feel about our trade deficit and immigration.  Write to them today!

Pete

Fed to Rest of the World: “Buddy, can you spare a dime?”

Following Wall Street’s chilly reaction to its miserly 0.25% cut in interest rates, the Fed literally went begging, asking the central banks of some key allies to contribute money to a fund that could temporarily loan money in the U.S. below the official interest rates in a desperate attempt to shore up the credit system.  Some of them took mercy on us and kicked in money for the fund.  The Fed has created a new rug under which to sweep the financial problems created by our trade deficit.  This may work for a while but, in the end, will only make matters worse. 

Pete

October Trade Deficit Expands to $57.8 Billion

Just released:  the October, 2007 trade deficit widened to $57.8 billion.  That’s an annual rate of just under $700 billion, or $2,300 per year for every man, woman and child (over $10,000 for every family of four) in this country!  That’s how much poorer you are as a result of our misguided free trade policy.

Contrary to economists’ forecasts, the falling dollar is having no effect on reducing this deficit.  But this is exactly what anyone who understands the theory presented in “Five Short Blasts” would predict.  Exchange rates have almost nothing to do with the trade deficit.  It is the gross disparity in population densities between the U.S. and trading “partners” like Japan, Germany, China and others that is driving the deficit. 

We need a tariff structure indexed to population density NOW!

Pete

Fed Disappoints Wall Street with Small Rate Cut

The stock market plunged yesterday when the Fed announced that it was cutting interest rates by only 0.25%.  Wall street wanted a bigger cut.  In addition, the Fed gave no indication that it was inclined to drop interest rates further, adding to the stock market’s disappointment.

I wasn’t surprised.  The Fed is caught between a rock and a hard place.  It wants to lower rates to head off a recession but needs to keep rates high in order to attract foreign investment needed to off-set our staggering trade deficit. 

Don’t be surprised if the Fed disappoints next month too. 

Pete