March 30, 2011 Market/Economic Report (video)

China's "Unfair" Trade Policy

Last week I told a tale of two cousins, an Alabamian scientist and a Floridian engineer whose invention could get you from Fresno to Albuquerque on a mere gallon of gas. I imagine very few, if any, of you tech-enlightened patriots would hassle with the prospect that such innovation would eliminate a few destined-to-be-obsolete American jobs - anymore than you'd have us return to the days of the stagecoach... You understand that technology has improved our lives in myriad ways while producing more and better jobs in the process... You understand that innovation breeds efficiency, greater margins and higher incomes...

But would you be so readily understanding if my scientist had resided in say Taipei as opposed to Tuscaloosa? You'd of course prefer the credit for the energy revolution, not to mention all the jobs, go to the USA - ala the tech-revolution - right? Like the iPad I'm typing on... You know, that notebook designed in America and manufactured in China...

Thank goodness we taxpayers (although we didn't vote on it) saved General Motors... A real American company providing real American jobs in plants like the one in Shreveport, Louisianna... You know, the one shut down last Sunday due to supply problems with parts coming from Japan...

Okay, so you get the importance of international trade, and I suspect you'd have no problem with it if it were "fair"... Which we know it's not. But if a country like China wants to treat its people so unfairly by restricting the import of foreign goods, while providing us the goods we desire at the most affordable prices, so be it... If they want to go to the extreme and subsidize their exports to make them cheaper for us (leaving us with discretionary monies to spend, invest and create jobs in the industries where America reigns supreme), if they want to send all that foreign aid our way, who are we to argue with it?

Now if you must get excited about something, get excited about the fact that our government is slated to spend $1+ trillion more than it'll take in this year... China's not the problem my friends, we are...

Have a nice week!
Marty

China's "Unfair" Trade Policy

Last week I told a tale of two cousins, an Alabamian scientist and a Floridian engineer whose invention could get you from Fresno to Albuquerque on a mere gallon of gas. I imagine very few, if any, of you tech-enlightened patriots would hassle with the prospect that such innovation would eliminate a few destined-to-be-obsolete American jobs - anymore than you'd have us return to the days of the stagecoach... You understand that technology has improved our lives in myriad ways while producing more and better jobs in the process... You understand that innovation breeds efficiency, greater margins and higher incomes...

But would you be so readily understanding if my scientist had resided in say Taipei as opposed to Tuscaloosa? You'd of course prefer the credit for the energy revolution, not to mention all the jobs, go to the USA - ala the tech-revolution - right? Like the iPad I'm typing on... You know, that notebook designed in America and manufactured in China...

Thank goodness we taxpayers (although we didn't vote on it) saved General Motors... A real American company providing real American jobs in plants like the one in Shreveport, Louisianna... You know, the one shut down last Sunday due to supply problems with parts coming from Japan...

Okay, so you get the importance of international trade, and I suspect you'd have no problem with it if it were "fair"... Which we know it's not. But if a country like China wants to treat its people so unfairly by restricting the import of foreign goods, while providing us the goods we desire at the most affordable prices, so be it... If they want to go to the extreme and subsidize their exports to make them cheaper for us (leaving us with discretionary monies to spend, invest and create jobs in the industries where America reigns supreme), if they want to send all that foreign aid our way, who are we to argue with it?

Now if you must get excited about something, get excited about the fact that our government is slated to spend $1+ trillion more than it'll take in this year... China's not the problem my friends, we are...

Have a nice week!
Marty

March 23, 2011 Market/Economic Report (video)

A Thousand Miles Per Gallon

In today’s world, mainstream economic theory comes wrapped, at virtually every juncture, in politically exploited packages… The hired henchmen on the left preach the virtues of bigger government, while those to the right stake their claim (feebly) to less government and greater personal freedom…

Leaving us at the mercy of a few very bright, academically-gifted appointees who’ve proven to be most adept at test-taking and, alas, mess-making…

The fact is, macro economics, upon legitimate inspection, is not nearly as complicated as many would have us believe. And that’s what I aim to illustrate here in the months/years to come… I will, in concise language, clear up many of your misconceptions. That is if you’ll allow me…

I should warn you ahead of time that, as with past narratives, you may not appreciate every illustration… All I ask is that you keep an open mind and, as you cringe, consider whether or not your resistance stems from fear over how a given concept might impact your personal situation and/or conflict with your political ideology…

A (hypothetical) Thousand Miles Per Gallon
A scientist in Tuscaloosa, in collaboration with his engineer cousin in Tallahassee, designs the most fuel efficient gas engine known to man – it gets 1,000 miles per gallon… They sell the technology to GM for $billions, Ford and Chrysler invent their own versions (then successfully defend the patent-infringement suits) and over the next decade, economic life, as we know it, improves dramatically…

Gas prices plummet, consumer discretionary income soars (creating huge growth [and jobs] in other industries), tax-revenue sky-rockets, the government balances its budget, yada yada yada…

Now hang on a second… what about the oil industry? What about the worker who’ll lose his job as demand and, consequently, profits plummet? What’s he supposed to do? Oh that’s right… and what about all those stagecoach operators? What are they supposed to do?

I.e., keep in mind that while innovation virtually always disrupts a certain labor pool, innovation, without exception, created that pool to begin with…

Bottom line, society at large always (always) benefits when we find more efficient, less expensive modes of producing the goods we desire…

Natural Disasters

As advisor to many of you I often find myself at odds with my desire to calm your nerves in the midst of uncertainty and the reality that any given event could provide the catalyst for the next bear market (as opposed to your garden-variety 10% correction

March 16, 2011 Market/Economic Report (video)

The Risk of Retirement

Before we get to this week

March 9, 2011 Market/Economic Commentary (video)

Random (slightly cynical) Thoughts

March 2, 2011 Market/Economic Report (video)