When you read the title of this article, the obvious question is this:
Who is “we”?
Well, when I say we, I pretty much mean all of us, collectively. I mean, I am not personally on the edge of financial failure, and I hope that you are not either. However, “we” might be. I am talking about we collectively, governments.
In the past few months, we have seen Greece at the brink of bankruptcy. Spain is there now too. I saw something on a TV news program yesterday, I think it was on CNN, that in Spain they are cutting the salaries of Government workers. Cutting the salaries! In my childhood, even in my adult years, this was unthinkable, that government workers would face salary cuts. Not only the mentioned European countries are on the brink of financial collapse, but the European Union itself is said to be on the brink. There is talk that the Euro as a monetary unit may not last the year. I personally think that the Euro will last longer than that, but I can’t say it’s here for the long haul.
Americans should not feel smug. The finances of the USA are in such disarray that frankly, it was the USA who started the instability of this entire house of cards. I saw an article yesterday that told how the State of Illinois is not going to be paying it’s bills now. California is in similar straits. Other States are not trailing far behind, and the United States itself is only being saved by the short term solution of the printing press.
Most people would say that the worst of times for the United States was the Great Depression in the 1930’s and 40’s, of course which kicked off by the Stock Market collapse in 1929. Funny thing is that according to CNBC, a financial TV network in the USA, the US Stock Market is mirroring it’s actions just before the Great Depression. Are we on the brink of collapse? It sure seems so. Today, the newspaper Telegraph in the UK reported With the US trapped in depression, this really is starting to feel like 1932. That’s pretty darn bleak, my friends. But, is The Telegraph correct, is the USA facing a second depression?
Oh, let’s not forget this one… the Financial Times reported that Investors are now worried that some US States are going to be defaulting on their debts. Oh, wait, that just hearkens back to the article I mentioned about Illinois not paying it’s debts. Oh well.
Earlier today, my friend Dave sent me a link to an article in Businessweek Magazine, written by former Intel CEO, Andy Grove. I have followed Andy Grove for a long time, and he is no doubt a wise man. I used to work in the Silicon Wafer industry and Intel was our #1 customer, so I always kept an eye on what Andy Grove had to say. In his Businessweek article, Grove talks about outsourcing of work to Asia, and why that is (obviously) taking away jobs from Americans. He talks about how Silicon Valley is no longer inventing, scaling and manufacturing. Now, they are sometimes inventing, but when they invent, they just send the rest of the work overseas. In fact, Mr. Grove goes on to say, in different words, that the United States has already either forgotten, or has begun to forget how to even do many of these manufacturing tasks itself. He cites the manufacturing of batteries, an essential technology for the coming wave of electric vehicles in the United States, and how the US farmed out battery production several generations ago. By sending that work offshore, the US basically has missed out on the loop of how batteries are even made now, and certainly has few, if any of the necessary contacts in the industry to even be able to ramp up for such production. Grove comes to the point that because of the outsourcing of almost every element of manufacturing, the USA is almost unable to produce jobs for it’s people now. Read the article. As I told Dave after reading the article, I found the article both interesting and also depressing.
Why do I find that article interesting as well as depressing? It seems that the USA in in a Catch 22 situation right now. If I were the owner of a big business myself, I would certainly be using outsourcing as a means to maximize my profits. Any good businessman would do it, or should I say is doing it. However, the catch is that after reading Grove’s article, one cannot deny that he makes a good point, and that the more Patriotic thing to do would be to create jobs for Americans. But, the next catch is that American salaries are too high, and if you manufacture in the USA, you cannot bring a competitive product to market at a price is on par with the competition. Next, the American people themselves go to WalMart and purchase the product that gives them the best value, which virtually eliminates American made products. So, what’s a businessman to do?
So, a lot of signs are pointing to economic collapse, or at least more years of extremely hard times, and plenty more belt tightening. How can we avoid it. What are the right steps to take. What seems “right” leads to more problems. What we have been doing has lead to serious problems too. So, which way should we turn?
Don’t ask me… I have no answers.