Nostradamus was a punk! Have we reached bottom?

You forget about the downward cycle we have been on ever sice we let the US manufacturing base die. You only believe you are going to be OK because you live in the world of bullsh*t stocks. The world of fake paper wealth and accounting scandal. Where a fortune can be made trading a worthless piece of paper rather than producing a real product you can feel with your hands and sell to someone to better thier life.

The only way for most massive corporations to remain profitable is to produce product for less and less while selling the product at ever higher margins. To pad the books to drive stock price rather than true earnings.

We are at the point now that no product can be produced in America for a cost that will allow an american manufacturer to stay in business. The margins required by the mass retailer force any remaining manufacturers to look overseas in order to eek out a profit.

Could the Big 3 actually have stayed in business this long had it not been for NAFTA allwoing for Mexican production?

Our economy is 100% unsustainable at this point. There is no argument against that point. If you think there is than you have no understanding of the true economy.

I will give you a concrete example which is followed by nearly every other consumer product company in existence. The only area that hasn't been affected is food. However a quick look at the supermarket shows that this trend is entering this area as well. Around 10% of the frozen prepackaged meal area is actually produced in foreign countries.

I have designed and produced product for multiple corporations. Each one required chinese labor to meet the price expectations of the mass retailer. We could produce the product for $5.35 in the US. The mass retailer required a price of $19.95 and 60% gross margin. This meant that the wholesale price needed to be set at $7.98.

Our gross profit $2.63, gross profit to the retailer $11.97. Do you see a problem there Sheldon? This major imbalance has affected our entire economy more than you will ever know.

Out of the $2.63 our company would have to pay wages, taxes, sales commisions, and shipping. At the end of the day we could not produce the product in the US and stay in the black. I guarantee that the people employed by manufacturing in the US do far more for the economy than anyone working in the mass retailer.

In order to stay in business we must purchase outsourced products. I think Walmart can live with a 40% gross profit margin but they refuse to. They force a margin on suppliers that forces them out of business. The American economy could not function if massive price inflation hit every sector due to an American first manufacturing push.

The only solution we have is to let the mega corporations fail and let small business come back. The problem is that we have destroyed the manufacturing base in the USA. We have also created two generations of workers who are unqualified to produce product.

That is why it is the end of the world as we know it. Not because of Nostradamus but because of the big box retailer and the wholesale slaughter of the middle class factory worker.

Iridium,

As always, thanks for taking the time to comment. You raise a few points worth pondering.

I think that different things are produced in different places.

The Japanese have no natural resources and buy most raw materials outside of their country, yet they have had one of the leading economies for decades.

The smaller countries of the world that have thriving economies have no labor or internal market for growth so they go outside their countries. These include Finland, Sweden, Norway, Israel, Korea, Singapore, and numerous others.

The United States produces higher education, invention, technology, health care and ideas worth something to other nations.

Some countries like Mexico or China have primarily labor to offer and not much else so they sell what they can.

Some countries have more fertile soil and better climate for growing crops than others so it is natural that Brazil and Argentina and even California produce more than they consume for places like Greenland, and Russia, and others that cannot.

I think as you suggest my viewpoint comes from my investment side but it is also influenced by my profession as an architect and travels around the world as well. You have candidly admitted that your views are carved from your business and work experience that is perhaps limited focusing your concerns to the issues you take exception to.

i am not very political or anything but this article sounds like a tool of false reassurance. am i to believe that the "world" isnt coming to an end. that a bloodline of 13 families is deciding whats going on in the lives of the planet. that all this merging for greater purpose isnt to flock us in like sheep. we are ppl not sheep. i am to open minded to believe what this world has come to. the prove we are in great turmoil is waved blindly in our face. what do we do?

Sheldon,

Don't forget the Zip Code of the Beast. Clearly he lives in Topeka Kansas with the zip code 66618. Afterall, 3 sixes are 18.

Their nuclear bunkers will be repossessed after all those naked puts come 2013.

"I predict we will hit bottom when people decide they no longer want to on average sell stocks. The proceeding epoch thereafter will be a great boom for the worlds economy where many stock indexes will double in value or more. But the road ahead will not be straight." Nostracoldreadus

Forget all of your expensive software and erudite prognosticators, commodities are the true barometer. If oil can stay above $45/barrel for thirty days we're in recovery mode. If it cannot or begins to fall again then look out below. Anyway, love you people who love them triple-short ETFs particularly SKF. I'll say it, you're stupid if you hold these trades for more than five minutes.

Even if the world were to end tomorrow, would you rather have died in anger at "the man" or in peace with yourself, your kids, your mailman, your lawyer, your president, your religion (or at peace with your choice to opt out of religion), with your neighbor's religion, and all of humankind?

It is a dog eat dog world. "But in the end nothing really matters"-- or does it? Would you rather die in the middle of this sentence "I am proud to be an American, BUT..." or "Hi, honey, I just called to let you know I lost my job too but at least..."

Pause and count your blessings and stop griping.