-- Posted Wednesday, 12 November 2003 | Digg This Article
I recently had to take a trip to upstate New York for a business meeting along with my brother and an associate. The last time I was there was over twenty years ago.
As dictated by the airlines our Monday through Wednesday meetings necessitated us to begin Saturday so we could stay over a Saturday night between flights. (Anyone who travels much knows the airlines try to gouge the business travelers and discount to vacationers by charging more if you do not stay over on a Saturday night.) This gave us a couple of days to sight see over the week end. In upstate New York the biggest attraction is Niagara Falls. Since my wife and I honeymooned at Disney world we missed out on the usual Niagara Falls trip. The falls were quite spectacular and I enjoyed them but as usual it is not the destination but the journey that interested me more.
The trip started out with the usual airport Gestapo hassle. I am not sure how they do it but I am sure they have some sort of mind reading devise next to the x-ray machine. They always seem to pick me for the detailed search off to the side while going through security. Next time I will try to think something nice about the TSA for a change and see if they let me breeze through like the rest. (My wife is getting scared to fly these days. She is a pilot and has no fear of the plane – it is the TSA that scare her.) We now drive up to 500 miles before we fly. We used to fly everywhere but have stopped flying on shorter trips due to the hassle of airline travel these days. We are even looking for a good late model small 19’ airstream trailer to extend our no fly radius to 750 miles. Don’t even get me started about the security guy at Leonardo DiVince airport in Rome that was pointing a loaded machine gun at me and everybody else in the lobby with his finger on the trigger. I was starting to give him a good lesson on gun safety that every 5 year old boy in the South got from his parents when Puddy pulled me away and told me we were late for our flight. (I guess she is the reason I do not know what the inside of a jail in Rome looks like. I still think his Daddy was negligent in his raising and should have taught him better gun manners.)
Upon arrival in upstate New York we rented a car and drove into Canada. The Canadian border patrol seemed more concerned about the length of our stay and how fast we would return to the US than if we were transporting contraband. After reviewing our passports and asking where we were going, where we were staying, why we were going and when we were leaving (they asked that one twice) they tried to trick us by casually asking if we were transporting guns or drugs. (I’ll bet they catch a bunch of smugglers that way.)
The drive through upstate New York to Canada was a little depressing. We passed several closed factories. Some were old but many looked fairly new. We did not notice any construction whatsoever except for government projects. It appeared that the only one who could afford to build anything in the US was the government. Niagara Falls on the US side was particularly glum looking especially while driving through the business district. There were several closed buildings. We did not notice one nice hotel on the US side. Upon crossing over into Canada the difference was striking. There were high rise hotels and building going up in several areas of the town. Good Cuban cigars seemed to be for sale on every corner along with other tobacco products. After a brief discussion we decided not to support Castro and his evil government and resisted the urge to smoke a good Cuban cigar even though we were beyond the reach of the US State Department. (That is our official story just in case anyone from the US State Department is reading this.) I suppose the sin tax on cigarettes is much lower in Canada. The US border patrol agent who allowed us to pass back into the US seemed more concerned about US citizens going to Canada to purchase non-taxed tobacco products than to smuggle other dangerous articles back into the country. (He only asked about tobacco, didn’t even mention plutonium.)
After driving around Canada for a little while we were remarking on the stark contrast between these two border towns. It was about then that we noticed the casino. Not that I am against gambling (Excuse me – gambling is illegal in my home state but we have dozens of riverboats that engage in “gaming” - which is an altogether different activity according to the lawyers.) I have personally engaged in a little “gaming” in Las Vegas over the course of my life but I just don’t get it. I suppose it is my “engineer training” and all those math classes we have to take. Statistically it just does not make sense to gamble. I would just as soon throw the money out the window – it is faster and the results are the same. My home town has several casinos and I rarely go. When one particular casino first opened in my home town I went in and bet $50 on red at the roulette wheel. It hit, I collected and I walked out. I have never returned to that casino and I believe I am the only person in my town who can truthfully say that he has beaten that casino. Besides, even though there may not be a casino in every town across the US, you can always find a stockbrokerage agency. I just feel it is overdone. I would be twice as excited about a new lawnmower factory that employed 100 than a new casino that employed 1000. For now the new casino seems to be working for Niagara Falls in Canada. But I feel the prosperity will only last as long as a steady supply of suckers is allowed to come over from the US to gamble there.
Upon returning to the US I read the small local newspaper during my stay in upstate New York and learned that the big news was the closing of a large HVAC manufacturing company in the area. This closure was costing that entire area of the state 1,200 manufacturing jobs. When you multiply that by 7 there will probably be over 8,000 more jobs that are lost in related service industries and related jobs throughout the region as a result of that one plant closure. The next day in an effort to put a happy face on the unemployment picture in the area it was announced that Lockheed was hiring almost 500 aerospace engineers. My radar went on full alert since I have a son graduating in aerospace engineering this May and his entire class is considering graduate school since their job prospects are so bleak right now. Upon reading the fine print you learned that those 490 jobs would be phased in over 5 years and many of them depended on obtaining Government contracts that were not yet in place.
While at the manufacturing plant we were visiting I asked the production engineer how many US made machine tools were at use in their rather large plant. He responded that probably just under half of the still in use machine tools were domestic. I then asked him how many of the new machine tools that they have purchased over the last few years were US made machine tools. He just looked down and said none. I told him that most of the new machine tools looked like they were made in Japan. He said in the last decade that was true but in the last couple of years the Koreans were under cutting the Japanese and they were buying Korean machine tools. I looked around in this factory and wondered if it would be here at all in 20 years for me to visit a third time.
I have visited manufacturing plants throughout the world during my life. My first factory tour was with my father when I was five years old and I still remember the train trip to Iowa. I remember the mighty machine tools in the plants that made the products. Machines with names like “LeBlond”, “Lodge and Shipley”, “Cincinnati”, and “Bridgeport” were everywhere on the factory floor. Now I can not even pronounce the names on the machine tools. Our machine tool industry is now gone. We are not only losing our factories but we have lost our ability to build new factories.
I have always contended that our wealth as a nation was dependant on our ability to create goods and services. The information society never made much sense to me. Information is simply another tool to create the goods and services more efficiently. It is tragic when we lose our ability to create goods but even more so when we lose our ability to build the machine tools necessary to run our factories.
From a defense standpoint, what happens when we are unable to build our own weapons systems such as ships, planes and high technology items? Does it make sense to buy our weapons from overseas suppliers with a questionable supply of parts and support? What new problems are created whenever we buy a weapons system from a country that is friendly to a 3rd country that may be hostile to us?
Currently we are just ignoring the situation and saying that it does not matter where anything is made. We even enjoy the lower costs of our imported consumer goods. Eventually there is a sad end to this situation that results in a higher standard of living for the rest of the world and a lower standard of living for the US. I do not think the entire country will finally wake up until the dollar devaluates hard and loses its status as the world reserve currency.
The government statistics tell us that this past 3rd quarter was wonderful. Look around your community and others when you travel. Talk to people about their economic situations. Even though the “rate” of unemployment claims is down the aggregate number is still growing. The total number of unemployed is going up in spite of the fact that after 6 months of unemployment you are dropped from the list of “officially unemployed”. I suppose you are now officially “chronically unemployed” and listed elsewhere. Notice if anything you buy is going up in price. (Sit down when your insurance renewal comes in this year.) The government statisticians say that inflation is low but look around and judge for yourself if inflation is at work. There is no way that M-3 money growth can occur like it has for the past 12 months without inflation rearing its ugly head somewhere (real estate and this little bear market rally perhaps?). I fear things are possibly getting worse in spite of the government statistics being published. Many even feel that the current administration is cooking the books in order to make us feel better. (Or at least vote “correctly” in the coming election next fall.) While I am a registered republican I feel nothing but disgust and distrust for my current party. The only consolation is it is slightly better than the worthy opposition. Both, however, are for larger government and larger government control of the economy which will only make things worse in the end.
Remember that inflation (coming soon to an economy near you) is just another tax by your government. Protect your remaining assets. Pay off debt. Live below your means. Save all you can. Just remember not so save in a depreciating, unlawful, deceitful medium such as federal reserve notes. Trust in 5,000 years of history. Save in gold and silver bullion. Your government will probably not appreciate it but your family will.
Larry LaBorde
Larry and his wife Puddy both live in the South with their two almost grown children and Haley the wonder dog. Larry manages the family drilling company and also sells gold and silver through Silver Trading Company at www.silvertrading.net. Please send your thoughts or comments to Llaborde@cdswater.com
Please note that I am no means a financial advisor and all investments should only be made after performing your own due diligence.
-- Posted Wednesday, 12 November 2003 | Digg This Article
