21 Signs That The Once Great U.S. Economy Is Being Gutted

21 Signs That The Once Great U.S. Economy Is Being Gutted, Neutered, Defanged, Declawed And Deindustrialized - The Economic Collapse - February 13, 2011

Once upon a time, the United States was the greatest industrial powerhouse that the world has ever seen. Our immense economic machinery was the envy of the rest of the globe and it provided the foundation for the largest and most vibrant middle class in the history of the world. But now the once great U.S. economic machine is being dismantled piece by piece. The U.S. economy is being gutted, neutered, defanged, declawed and deindustrialized and very few of our leaders even seem to care. It was the United States that once showed the rest of the world how to mass produce televisions and automobiles and airplanes and computers, but now our industrial base is being ripped to shreds. Tens of thousands of our factories and millions of our jobs have been shipped overseas. Many of our proudest manufacturing cities have been transformed into "post-industrial" hellholes that nobody wants to live in anymore.

Meanwhile, wave after wave of shiny new factories is going up in nations such as China, India and Brazil. This is great for those countries, but for the millions of American workers that desperately needed the jobs that have been sent overseas it is not so great.

This is the legacy of globalism. Multinational corporations now have the choice whether to hire U.S. workers or to hire workers in countries where it is legal to pay slave labor wages. The "great sucking sound" that Ross Perot warned us about so long ago is actually happening, and it has left tens of millions of Americans without good jobs.

So what is to become of a nation that consumes more than it ever has and yet continues to produce less and less?

Well, the greatest debt binge in the history of the world has enabled us to maintain (and even increase) our standard of living for several decades, but all of that debt is starting to really catch up with us.

The American people seem to be very confused about what is happening to us because most of them thought that the party was going to last forever. In fact, most of them still seem convinced that our brightest economic days are still ahead.

After all, every time we have had a "recession" in the past things have always turned around and we have gone on to even greater things, right?

Well, what most Americans simply fail to understand is that we are like a car that is having its insides ripped right out. Our industrial base is being gutted right in front of our eyes.

Most Americans don't think much about our "trade deficit", but it is absolutely central to what is happening to our economy. Every year, we buy far, far more from the rest of the world than they buy from us.

In 2010, the U.S. trade deficit was just a whisker under $500 billion. This is money that we could have all spent inside the United States that would have supported thousands of American factories and millions of American jobs.

Instead, we sent all of those hundreds of billions of dollars overseas in exchange for a big pile of stuff that we greedily consumed. Most of that stuff we probably didn't need anyway.

Since we spent almost $500 billion more with the rest of the world than they spent with us, at the end of the year the rest of the world was $500 billion wealthier and the American people were collectively $500 billion poorer.

That means that the collective "economic pie" that we are all dividing up is now $500 billion smaller.

Are you starting to understand why times suddenly seem so "hard" in the United States?

Meanwhile, jobs and businesses continue to fly out of the United States at a blinding pace.

This is a national crisis.

We simply cannot expect to continue to have a "great economy" if we allow our economy to be deindustrialized.

A nation that consumes far more than it produces is not going to be wealthy for long.

The following are 21 signs that the once great U.S. economy is being gutted, neutered, defanged, declawed and deindustrialized....

#1 The U.S. trade deficit with the rest of the world rose to 497.8 billion dollars in 2010. That represented a 32.8% increase from 2009.

#2 The U.S. trade deficit with China rose to an all-time record of 273.1 billion dollars in 2010. This is the largest trade deficit that one nation has had with another nation in the history of the world.

#3 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

#4 In the years since 1975, the United States had run a total trade deficit of 7.5 trillion dollars with the rest of the world.

#5 The United States spends more than 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#6 In 1959, manufacturing represented 28 percent of all U.S. economic output. In 2008, it represented only 11.5 percent and it continues to fall.

#7 The number of net jobs gained by the U.S. economy during this past decade was smaller than during any other decade since World War 2.

#8 The Bureau of Labor Statistics originally predicted that the U.S. economy would create approximately 22 million jobs during the decade of the 2000s, but it turns out that the U.S. economy only produced about 7 million jobs during that time period.

#9 Japan now manufactures about 5 million more automobiles than the United States does.

#10 China has now become the world's largest exporter of high technology products.

#11 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

#12 The United States now has 10 percent fewer "middle class jobs" than it did just ten years ago.

#13 According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30 percent to 10.1 million. During that exact same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.

#14 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.

#15 Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China's share had soared to 20 percent.

#16 The number of Americans that have become so discouraged that they have given up searching for work completely now stands at an all-time high.

#17 Half of all American workers now earn $505 or less per week.

#18 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#19 Since 2001, over 42,000 U.S. factories have closed down for good.

#20 In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States? Zero.

#21 Ten years ago, the "employment rate" in the United States was about 64%. Since then it has been constantly declining and now the "employment rate" in the United States is only about 58%. So where did all of those jobs go?

The world is changing.

We are bleeding national wealth at a pace that is almost unimaginable.

We are literally being drained dry.

Did you know that China now has the world's fastest train and the world's largest high-speed rail network?

They were able to afford those things with all of the money that we have been sending them.

How do you think all of those oil barons in the Middle East became so wealthy and could build such opulent palaces?

They got rich off of all the money that we have been sending them.

Meanwhile, once great U.S. cities such as Detroit, Michigan now look like war zones.

Back in 1985, the U.S. trade deficit with China was about 6 million dollars for the entire year.

As mentioned above, the U.S. trade deficit with China for 2010 was over 273 billion dollars.

What a difference 25 years can make, eh?

What do you find when you go into a Wal-Mart, a Target or a dollar store today?

You find row after row after row of stuff made in China and in other far away countries.

It can be more than a bit difficult to find things that are actually made inside the United States anymore. In fact, there are quite a few industries that have completely and totally left the United States. For certain product categories it is now literally impossible to buy something made in America.

So what are we going to do with our tens of millions of blue collar workers?

Should we just tell them that their jobs are not ever coming back so they better learn phrases such as "Welcome to Wal-Mart" and "Would you like fries with that"?

For quite a few years, the gigantic debt bubble that we were living in kind of insulated us from feeling the effects of the deindustrialization of America.

But now the pain is starting to kick in.

It has now become soul-crushingly difficult to find a job in America today.

According to Gallup, the U.S. unemployment rate is currently 10.1% and when you throw in "underemployed" workers that figure rises to 19.6%.

Competition for jobs has become incredibly fierce and it is going to stay that way.

The great U.S. economic machine is being ripped apart and dismantled right in full view of us all.

This is not a "conservative" issue or a "liberal" issue. This is an American issue.

The United States is rapidly being turned into a "post-industrial" wasteland.

It is time to wake up America.

Melding the Corporatocracy with a Kleptocracy

Below are two presentations that get to the bottom of the issues that we face here in America. The First is a presentation from Dr. Paul Craig Roberts that defines the waste and dysfunction of the American Economic system as it stands today entitled Klepocrats at Work. The second is a video interview of Catherine Austin Fitts by Max Keiser on his TV program On the Edge.

What is it going to take for people to wake up to what are the actual underlying systemic, problematic issues in our economy and what will it take for people to take action? We have seen upheaval in the Middle East related to their cost of living and governments that are autocratic protecting the interests of the ruling class at the expense of the people. We have been buffered to a great degree from the cost of living issues, because of the American Dollar's role as the World Reserve Currency.

Fundamental Economics have not played a role in the value of our money since the Dollar was taken off of the Gold Standard in 1971 (Nixon Shock - The ending of the Bretton Woods agreement). The Dollar became a "Legal Tender" currency, which many define as being backed by the full faith and credit of the United States Government. Thus today the notes are backed only by the government's ability to levy taxes to pay its debts. In another sense, because the notes are legal tender, they are "backed" by all the goods and services in the U.S. economy and have value because the public may exchange them for valued goods and services in the U.S. economy.

This led to the Petrodollar and the role of the dollar as the World Reserve currency (Petrodollar), because of agreements made between the United States Government and Oil Exporting Nations (mainly The Organization of the Petroleum Exporting Countries - OPEC). American Dollars have been used for the basis of exchange for oil. This was originally instituted, because we were the leading importer of oil from Oil Exporting nations. Instead of pegging our currency to Gold (prior to 1971), it would now be pegged to oil (shortly thereafter ever since). This peg supposedly led to stability in oil prices, as well as stability in the value of our dollar.

What we have seen is that the Dollar has been hijacked as a result of this system. Instead of Petrodollars bringing stability, they have brought instability. We are engaged in worldwide conflicts that propagandists try to insinuate are a result of ideological principles, when the baseline hostilities could easily be defanged by a reduction in the exchange of American dollars to buy foreign imports, mainly centered on Oil. Would the issues we face in the Middle East and North Africa be as perilous today if we were not tangled in this Oil Web?

What Catherine Austin Fitts details in the Video below is that, "What happens to the Dollar will be the result of our Military. The central banks print money and the Military makes sure everybody takes it, while trading back natural resources cheap." That is what we have seen. That is where the "Full Faith and Credit" is enforced.

This Federal Credit mechanism keeps the liquidity going through force. This system has been breaking down, because it must constantly grow and it cannot grow to infinity. Over the years this system has allowed America to become an Empire, but as the fundamental system based around our dominant currency continues to break down and as this breakdown accelerates it becomes more impossible to sustain and eventually it will completely collapse as people wake up and realize that this system is dysfunctional and they choose not to participate in the American Dollar system any longer. Because as Gerald Celente states, "It is not worth the paper it is not printed on."

The Fiat Dollar was functional in the beginning because it was backed by our wealth as a nation. It was backed by the assets we had built up as a nation since our inception and because of our status created as a result of the role we played in solving the disputes of World War I and II. Now, instead of playing a role in solving disputes, we are playing a major role in the inception and continuation of hostilities both overtly in some instances and covertly through wars of proxy. Now we have shrunk our Industrial capacity and strained our creative abilities to the extent that we are contributing to our own implosion and eventual demise.

It is time that we get back to our core principles as a nation. It is time that we restore our roots as a Republic. It is time to revalidate the Constitution and the principles of our founders. The founders of this nation were men who were willing to put their lives on the line. They would have been executed if they had failed in their mission. The "leaders" of today are men of clay, who want to maintain the status quo and continue to enjoy the fruits of an unmanageable and crumbling system that is harming the people of this nation. What they don't understand is that when it crumbles they will be holding a whole lot of nothing.

Kleptocrats at Work - Paul Craig Roberts - Infowars.com - February 8, 2011

Kleptocracy is as old as government. Exotic car broker Michael Sheehan discovered an amazing case nine years ago when he was invited to purchase rare Ferraris and McLaren F1s from a Brunei collection. He writes about it in the current issue of Sports Car Market.

Brunei is a family-owned oil sultanate of 400,000 people located on the island of Borneo in southeast Asia. A brother of the sultan was finance minister until 1997, when the Asian financial crisis hit Brunei. The Arthur Andersen accounting firm was called in to audit the books. The accountants found that between 1983 and 1998 $40 billion had disappeared and that the finance minister himself had personally spent $14.8 billion.

The finance minister had a collection of 2,500 exotic cars, 500 properties, five yachts, and nine world-class aircraft. He had managed to spend $900,000,000 in the London jeweler Asprey, apparently guaranteeing the old age retirements of a number of attractive women who consort with kleptocrats.

The finance minister was allowed to keep 500 of the cars, but he had to turn in the rest of his loot – to no avail as we shall see.

Sheehan went to Brunei to view the cars. From his general description of the collection, I estimate that the finance minister had paid six figures for the least expensive car in the collection. Many cost much more. McLaren F1s cost $1,000,000 new. They are more valuable now. In October 2008 one sold at a London auction for $4,100,000. Many of the cars were custom built. Some of the high-speed Ferraris “were coated in radar-absorbent matte-black coatings and fitted with infrared cameras for night driving.” Easily more than one billion dollars of Brunei’s oil revenues had found their way into the finance minister’s car collection.

Sheehan reports that the cars were stored in about 12 buildings “surrounded by a high wall topped with razor wire and with a bomb-proof front gate” and patrolled by “armed Gurkhas with very serious German shepherds.” The security was for naught, because “the air conditioning was off, but the tropical sun was not.” Years of heat and humidity had destroyed the cars. The storage facilities had become a car tomb.

Sheehan concluded that most of the cars were in such a state of ruin that only a few of the cars had sufficiently high inherent values to support commercially viable restorations. The best use of the rest, Sheehan decided, would be to turn them into an artificial ocean reef.

The careless waste is shocking and even more so to car buffs who consider many of the ruined cars to be artistic masterpieces. This is the kind of opulent waste that we associate with family-owned countries. But before we Americans start feeling superior, consider that the U.S. government puts the Brunei finance minister to shame.

On Jan. 29, 2002, the CBS Evening News reported that the Pentagon had lost track of $2.3 trillion, yes, $2,300 billion. Defense Secretary Rumsfeld admitted, “According to some estimates we cannot track $2.3 trillion in transactions.” “We know it is gone,” said Jim Minnery of the Defense Finance and Accounting Service, “but we don’t know what they spent it on.”

Reported thefts from Iraq and Afghanistan reconstruction aid rival Brunei’s missing billions. Pallets of cash stacked high have been flown out of Afghanistan in plain view. The stories of corruption and missing funds are so numerous that they are no longer reported.

The U.S. Congress, at President Obama’s request, recently passed the largest military spending bill of all time in behalf of the share prices of the military/security complex, while many of the 50 states teeter on bankruptcy and default on pensions and municipal bonds and slash education, medical, and other services. For “our” government in Washington, it is a no-brainer that the profits of the military-security complex take every precedence over every need of the American people.

If the Brunei finance minister’s billion-dollar car collection becomes an artificial reef, it will foster marine life. In contrast, Dick Cheney seriously damaged, perhaps for many years to come, the Gulf of Mexico, because Cheney believed a few extra bucks for the oil companies were more important than safety standards. The missing safety standards have cost British Petroleum $20 billion in clean up and restitution costs.

U.S. taxpayers are paying the Orwellian Department of Homeland Security $56,336,000,000 this year to porno-scan and grope them and otherwise invade their privacy, while millions of Americans are foreclosed out of their homes.

How are the priorities of the U.S. government superior to those of the Brunei finance minister? When it comes to waste and corruption, lies and deception, the U.S. government has no equal.

Dr. Paul Craig Roberts is the father of Reaganomics and the former head of policy at the Department of Treasury. He is a columnist and was previously the editor of the Wall Street Journal. His latest book, “How the Economy Was Lost: The War of the Worlds,” details why America is disintegrating.

Catherine Austin Fitts interview with Max Keiser - Revolutions and Economy

Hickory 2015 - Realities, Challenges, Opportunities!!!

The following thesis that I am putting forth comes from a question posed by the Chairman of the Future Economy Council of Catawba County, Terry Bledsoe. Terry asked, "One of the purposes of this group was to identify weak signals here in the county, the region, and beyond that may have an impact on us or offer us an opportunity. What weak signals are you seeing?"

"Weak Signals" are advanced indicators of changes in trends and systems that are currently forming and will continue to gel until reaching tangible status in the future. The study and acknowledgment of these signals can be used for enabling anticipatory action.

The following is a critical thinking exercise and I wish that more people in this community would think along this manner. We need more of our citizens to think about the realities, challenges, and responsibilities that we face in this community over the next few years. What do you see forming and how would you address these issues?

Here is my View of some of the Weak Signal issues that we face over the next 3 to 5 Years:

An Established pattern of Energy Dependence

Let's think back to the Arab Oil Embargo of 1973. when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC (consisting of the Arab members of OPEC, plus Egypt, Syria and Tunisia) proclaimed an oil embargo "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war; it lasted until March 1974.

During that period of time, we saw a near tripling of the price of crude from 1973 to 1975 - (http://www.inflationdata.com/inflation/inflation_rate/historical_oil_prices_table.asp)

(Year - Nominal - Inflation adjusted):
1972 - $3.60 - $20.78
1973 - $4.75 - $23.13
1974 - $9.35 - $41.27
1975 - $12.21 - $49.42
1976 - $13.10 - $50.19
1977 - $14.40 - $51.76
1978 - $14.95 - $49.99
1979 - $25.10 - $74.67
1980 - $37.42 - $99.11
1981 - $35.75 - $85.82

If one looks at a pattern of oil prices, then one would see stability during the 1950s and 1960s with oil hovering in a low inflation adjusted range around $20/barrel from 1948 to early 1973, then the inflation adjusted price doubles over the next two years and quadruples-plus over the seven year time period (to 1980-81).

From 1986 to 2002, with the exception of the Gulf war in 1990-91, we fell back to $20 to $30/barrel inflation adjusted Crude Oil. Then in 2003 oil began to rise again. Oil prices have essentially doubled from 2003 to 2011, with the brief spike to $146 in 2008. So if we carry this correlation out, then we could see a doubling of the current price over the next few years (from double to quadruple from 2003). This means that we would be dealing with a price per barrel in the $130 to $150 range, with possible blips to the upside in the $200 area.

Look at our vulnerabilities related to the importation of Crude Oil. In 1972 we were importing 2.2 million barrels of Oil per day and now we are importing over 9 million barrels per day. The latest Statistics show that we are consuming around 19 million barrels of oil per day total, which is only a 10% increase over what we were using in 1973 (17.3 million barrels/day) - U.S. Energy Information Administration.

Oil Imports per day:


Oil Consumed per day:


I do believe that the above proves that the U.S. has become highly efficient in its usage of Petroleum. We are only utilizing 10% more oil as compared to 28 years ago and our population has increased by nearly 50% from nearly 212 million in 1973 to 312 million in 2011, but we have definitely left ourselves more and more vulnerable by not producing more energy domestically.

It surely does seem that the pattern of inflationary energy costs are repeating themselves. If we overlay this correlation it means that oil trading today at $87 will cause gasoline at its current price ($3) to expand 1.5x and could blip to 2.5x that price. This means that over the next 3 to 5 year period we would have to deal with gas prices in the $4.50 to $7.50 range.

Now, if we carry this out and understand that Oil is an essential ingredient in everything we consume, then you can foresee what the mid-term future holds for the world and our area.

Translating this Reality to Tomorrow

First, I believe that the instability created by inflation is going to lead to hostilities and uprisings throughout the world as people become more and more anxious. The Federal Reserve creating a bubble throughout the speculative markets with the influx of dollars through the megabanks is contributing to much of the upward pressures we are seeing in all commodities as I have shown in various articles since this blog began 2 1/2 years ago. These inflationary processes have consequences. This is not Collegiate theory. Rising prices are something that will have a huge impact on the affordability and quality of our lives.

In our own area, we see a problem with the permanent unemployment structure and an aging population. The median household income for Catawba County was $40,536 as of the 2000 census. The American Community Survey shows that median household income, as of 2009, is $41,116. This means that over a nine-year period the county only saw a growth in income for households of 1.43%. Over that same time, the Consumer Price Index in the United States grew by 23%. This means that to keep up with the cost of living, the year 2000 household income of $40,536 should be $49,950.38. That $8,834 less in income means less money for people to live on, having to become more thrifty to make ends meet, and less to spend on, in, and for local businesses. This therefore has implications on the community from the top to the bottom of the socio-economic strata.

We were once one of the wealthiest areas in the State and now we are one of the poorest. That means that we are going to have to deal with this issue over the next 3 to 5 years, because it is going to be in our face.

When one couples this income/employment issue with the aging population problem and what I have explained with the cost of living (fuel issue and inflation), it paints a bleak picture, but from this black hole is where our opportunities will arise and that is the reason we need to be honest about these issues, so that we can understand them, and take advantage of them. If you walk out onto I-40 with blinders on and ear plugs in does not mean that by not acknowledging the traffic that you're not going to get run over!

Economic Development Goals for the next 3 to 5 years (2015)

We spoke of some of this last year in our State of Hickory Address for 2010. As far as economic development, I think that we need to follow Steve Ivester's advice and create our own Regional Economic Development entity. This can be created by the State Legislature; combining some of Advantage West and the Charlotte Regional Partnership areas and placing Hickory as the hub of said region. Charlotte has issues, because of the scramble left from the consolidation of the banking industry towards Wall Street and New York interests.

Things aren't going to change around here through a political process. It's about the mindset. Look at how Charlotte and Duke Power are focused on new energy. They're retaining their financial capacity and facilitating micro-lending to help entrepreneurs. They have expanded their culinary scene substantially over the years. Restaurant and Hospitality is a real industry that is thriving throughout the Charlotte area. Charlotte has a new biomass center and they have recently opened a Superfund cleanup site. UNC-Charlotte has laid biotech plans that are interconnected with the biotech center in Kannapolis. Concord's retail center and race track are attached to Charlotte at the hip.

Charlotte has sown seeds that will continue to blossom in the upcoming years and Hickory has too. We're moving towards having more eldercare facilities, doctors, medical industry, cheap housing, fast food, cheap groceries, cheap retail, and cheap labor. The sad thing is that when Charlotte talks about being a hub of economic growth, it stops right at Catawba County. If you don't believe me, ask people that have seen Charlotte's transportation plans looking to future growth.

Hickory and Catawba County need to look out for our own interests. Changing the status quo does not necessarily equate to instability, but maintaining the status quo at all costs will cause us to fall further and further behind and we can already see that we have economic instability and it can get worse, a lot worse.

So I think we need to reestablish our roots of independence. I am not saying that we need to become an island. We still need to network and make connections. What I am saying is that the reason why the original inhabitants came here to start with was to make a new life for themselves. They wanted to get away from the eastern North Carolina established interests and the Germans came here to get away from Old Europe and it's monarchical and noble classes and their entrenched interests. We need to make provisions to be able to sustain this community on its own, if all hell breaks loose, while looking to existing challenges and the opportunities that will develop around those challenges.

Looking at the challenges we face related to Fuel and commodity prices, I think that we must get into the energy game. I honestly don't think we can do this by piggy backing on Charlotte. The Eco-Complex is a wonderful thing and to it I say bravo. We need to expand that concept to other areas of the region with the eco-complex being the hub.

I think that we need to expand the farmer's markets and have them be regional and introduce one huge farmer's market site to go along with smaller satellite sites and make it easier for people to have access and participate in these marketplaces. I think that Urban and suburban gardening, community and victory gardens are going to become an essential part of our lives. This food is fresher and healthier in many ways than what we find in the grocery stores. How do we facilitate, expedite, and build a foundation off of this type of natural development and structure that will develop from necessity? I think that should be a near future discussion that we can all take advantage of and spread the word about and ingrain in our local culture.

Conclusions and Solutions headed towards 2015

I think that the rising fuel prices are going to have a lot of implications. The above are results of that, but just think about filling your tank up and it costing $60 to $100 for a mid-size car or $150 to $250 for an SUV. This will change your lifestyle!

This will mean that you have to create alternatives to deal with the sprawl that we have in the area. This is the reason why it will be necessary to have gardens. This means that a lot of our local restaurants are going to go out of business and others will have to rethink their business model in order to survive, because their profit margins are already slim. Throw in the fact that their customers won't have as much money and won't be able to get there as frequently and prices are set to go up a lot due to the energy costs that play a role in their wholesale costs as well as the services they deliver and you see what I am getting at.

I really do appreciate the initiative that Danny Hearn and Garrett Hinshaw have taken in getting these innovation project contests off the ground. I think that we will see fruit born from this and it will feed off of itself. It is my hope that this will lead to the creation of a permanent facility and structure that will allow creators and innovators to explore unknown opportunities that can bear fruit. My idea is that this Center would allow access to knowledge centers, in which these people can do research in an attached or detached manner -- whatever the circumstances call for. By doing this, the person would have an area in which to be alone when they need to concentrate and have other Human energy resources of inspiration near them when they need that kind of motivation or help.

I would like to see one of these old manufacturing buildings around here utilized for that. I think that is what Donald Duncan is getting around to with the Conover Station Concept. We need more of that. How do we make that happen? How do we convince some of the people who own these buildings to allow this to happen? How do we show them that this can bear fruit and pay dividends for the community and they can get the credit for this and participate in it? What do they have to lose? I mean the building is going to eventually fall down anyway, if it isn't maintained, and let's be frank, most of these buildings aren't being maintained.

Maybe I am a little out there, but I don't only think that the identification and acknowledgment of weak signals is important. I think it is more important to take action, managing, massaging, and being flexible in dealing with these weak signals and the opportunities that they present.

Why Small Business Isn't Hiring and Won't Be Hiring

Why Small Business Isn't Hiring and Won't Be Hiring - (of two minds.com - Charles Hugh Smith - February 8, 2011)

Pundits and politicos promote a magical myth: a coming small business hiring boom. That fantasy is completely disconnected from the harsh realities of private enterprise.

Regardless of their ideological persuasion, pundits and politicos reliably repeat the mantra that "small business is the engine of jobs growth." The mantra is followed by the pundit-politico's belief that a "small business jobs boom is right around the corner."

I have news for the pundits and politicos: ain't gonna happen. Why? The answer cannot be found in the manipulated and massaged Bureau of Labor Statistics numbers (have any real jobs been created, net of jobs lost, in the past year? Who knows?) or in the punditry's Cargo-Cult-like belief in a mythical "small business jobs machine" that they have never experienced and know nothing about.

While a handful of the new crop of politicos are entrepreneurs, most Washington denizens are attorneys, the offspring of wealthy or politically connected families or people who have lived off the government at some level their entire lives. Most have never had a customer or client or had to borrow off a credit card to make payroll. (I have; any pundits who can honestly raise their hands for that one?)

Pundits come in two flavors: the academics, happily making mud pies in the moat surrounding their secure Ivory Tower, and the loud-mouths who have screeched louder and longer than the other media-monkeys. All know less than zero about actual small business.

To understand why small business isn't hiring and won't be hiring, you need to understand the psychology of this era and the systemic pressures on all small businesses which don't live off Federal government contracts. In a very powerful sense, those businesses which live from one government contract to the next are not private businesses at all: they are merely proxies or extensions of the government. Their non-governmental work is either trivial or non-existent.

So when some government set-aside program sanctions $40 million or whatever for "small business," it's no different than opening another government office: the only difference is the employees are not Civil Service. The competition is not between private-sector and government, it's only between rival government contractors.

What pundits and politicos don't get is small business knows the "recovery" is totally bogus. Why hire somebody who you'll have to lay off a few months from now? Laying people off is emotionally painful--you dread it, tire of it, are wearied by it. This is a real human being who is losing their job, not some ginned-up statistic hyped by some think-tank-pundit pulling down $15K a month for dishing whatever flavor of propaganda he/she is paid to churn out.

The Washington establishment--the Fed, the Treasury, Congress, the Obama Administration-- seem to believe they've successfully pulled the propaganda wool over Americans' eyes, and that the yokels actually believe "things are getting better and better every day and in every way."

Only the yokels without clients, customers and payrolls can believe the propaganda.

Meanwhile, back in the real world, small business income is down 5%. Small Business: Still Waiting for Recovery.

According to data from the Bureau of Economic Analysis. Proprietors' income-- the profits of unincorporated businesses such as partnerships or individuals who work for themselves--is down nearly 5 percent from two years ago, while corporate profits have jumped 21 percent in that period.

About 19.9 million partnerships and sole proprietorships with no employees existed in 2008, the latest year for which U.S. Census Bureau data are available. That number fell almost 2 percent from the previous year.

In a private-sector workforce of about 106 million, that's about 19% of all people with a job. Recall that the BLS counts you as employed if you work one hour a week or if you're "self-employed," even if you aren't making a dime.

Only in the Fantasyland of propaganda does nobody notice that self-employed people who are seeing revenues and profits fall do not need to hire someone: they're sinking all on their own.

Only in the Fantasyland of propaganda does nobody seem to notice that for every celebrity-chef restaurant opening to gushing hype in Manahattan, West L.A. or San Francisco, two other restaurants quietly closed.

Small business understands uncertainty is now permanent. That's why 26% of all new private-sector hires are temporary--and if we subtract the bogus phantom jobs created by the BLS "birth-death model," then the number is probably more like a third or even half.

Small business understands that the "recovery" is merely a Federal towel stuffed in the gaping hole in the rowboat's leaky planks, and that it's literally insane to hire workers when your revenues could evaporate next month.

Small business re-discovered it could do more with less. Once businesses trimmed payrolls to survive, they discovered they could make more money for themselves and do so with fewer people. Why add to staff when all that means is transferring your own paycheck to someone else?

Small businesses are closing, not opening. Rents have barely dipped, local government taxes and junk fees have skyrocketed, and the complexities and costs of the new healthcare bill have all added systemic pressures on every small business: it's either adapt quickly and successfully or perish, and many are choosing to close down and quit working so hard for so little payoff.

When leases expire, the doors close, and no one leaps in to pay boomtime-level rents, and heavy business licence and permit fees. The only people insane enough to hire anyone are three guys working in a living room somewhere, trying to hire a few Javascript programmers to finish their app so they can cash out by selling the "company" to some larger enterprise.

The programmers are independent contractors who have to take care of their own healthcare and taxes, or they're young and single so the healthcare insurance costs are modest--if they even bother with buying insurance.

Nobody's hiring for the long-term for the simple reason that there is no long-term: we're either selling the company as soon as we can, or we're waiting for the next dip in revenues to close down before we lose everything.

Local government has grown accustomed to small business being uncomplaining tax-donkeys, silently paying every junk fee and every additional tax the government levies. Only a funny thing happened on the way to local government's plan to fill the shortfalls in its own revenues by taxing small businesses even more: they're closing down.

The reason is simple: why work for free? This is incomprehensible to both local governments, who expect all those "filthy-rich small-business Capitalists" to pay higher taxes and fees, and the safely remote-from-the-real-world pundits and politicos.

These members of the academia-think-tank-media-politico Cargo Cult have a magical belief in a mythical "small business" which is anxious to get out there and create new jobs because "to get rich is glorious," as if "getting rich" is even an option for 90% of real small businesses.

In the real world, small businesses aren't getting rich, they're going broke and closing down to save whatever remains of their sanity and assets. You want high-tech and "clean energy" jobs? Well, how about MySpace laying off half its 1,000-person staff? How about Evergreen Solar closing its Devens, MA plant, laying off 800 workers and moving production to China? Did the pundits honestly think that globalization was over?

Memo to pundits and politicos: you worship at the altar of Capitalist profits driving small business--get real. People will do whatever they have to in order not to go broke.

That's why the three guys or gals aren't renting an office--who needs the overhead? They also don't have health insurance: who can afford $1,000 a month for crappy, confusing "care" young people rarely even need? Better to pay cash.

And they aren't hiring "employees": they're paying their friends with equity shares, or cash, and paying their own taxes is up to each free-lancer.

That is the new model of American entrepreneurship: no office, no overhead, no employees, no health insurance, no business travel. That's the only way any new enterprise can survive.

Everyone who buys into the myth and pays absurdly high rents, junk fees and healthcare insurance will be ground down and bled dry. The only exception are those well-connected enough to run a pipe into the limitless lake of Federal money. Yes, 40% of the lake is borrowed from our kids, but no matter--the "recovery" is real, and this stone with a crudely painted radio dial is in fact a working radio. It's magic. You just have to believe.

Small business can't afford to believe in myths and fantasies. They are dealing with the harsh reality of adapt or die.

Does anyone notice that food prices are rising?

Sysco profit falls as “extreme” meat, dairy inflation raises costs - (Drover's Cattle Network - 2/7/2011) -
Meat, seafood and dairy costs rose 11 percent to 12 percent during the quarter ended Jan. 1, Sysco executives said during a conference call today with analysts following the release of quarterly results. Those categories account for about a third of Sysco’s sales... Meat prices are expected to continue rising this year as soaring feed costs discourage herd expansion. That’s raising concern over consumers’ willingness to pay for steaks, chops and other pricier foods with unemployment still high... Sysco is North America’s largest food distributor to restaurants and has about 400,000 customers, including schools, hotels and prisons.

U.S. faces $70 billion inflation hit - CNNMoney.com - February 7, 2011
If the recent run-up in energy and agricultural commodities persists, U.S. consumers will have to shell out $20 billion more for energy and $50 billion more for food this year, Capital Economics estimates... And with all that, the bite from food inflation has yet to arrive. Capital Economics forecasts that the price shock will take nine months to show up at the grocery store. It says the food component of the consumer price index will rise at a 7% annual clip later this year, as rises in the costs of sugar, corn and other agricultural commodities work their way through the system.

Food inflation and QE2: the correlation is undeniable - The International Business Times - 2/3/2011 -
Experts can argue all they want about the causality relationship between food inflation and the Federal Reserve’s second round of quantitative easing (QE2). What cannot be denied, however, is the correlation. Indeed, ever since QE2 was clearly signaled by the Fed, the price of food commodities surged.