Productivity, Supply, Demand, Price, Labor, Inflation, Deflation, Expanding Commerce
Exploring economic changes over recent decades & anticipated inflation, deflation, supply, demand, availability of products & services. Globalization is bringing new opportunities to changing markets for existing and additional products and services, while eliminating others.
If you think the decline in the DJIA from the October, 2007 all-time high was severe, consider the following quantitative history of human psychology.
The DJIA’s all-time high reached in October, 2007, faded throughout 2008 to the low reached in March, 2009. September 3, 1929: The DJIA reached 381.17, the closing peak for the bull market of the 1920’s. October 28, 1929: The DJIA lost 38.33 points to close at 260.64, losing 12.8% of it value. October 29, 1929: The DJIA lost 30.57 points to close at 230.07 losing 11.7%. Over the two days October 28 and 29, the total DJIA loss was 24.5%. October 30, 1929: The DJIA rose 28.40 points to close at 258.47. That was 12.34%, the second largest percentage gain of the DJIA. October 6, 1931: The DJIA rose 12.86 points to close at 99.34, largest percentage gain of the DJIA, 14.87%. July 8, 1932: The DJIA fell .59 to close at 41.22. The decline from September 3, 1929 to July 8, 1932 totaled 339.95 points, 89.19%.
It was not until 1954 that the DJIA returned to the all-time high it had reached on September 3, 1929. Beware of false valuations that have been created through arrogant and ignorant market participants groping for bottoms.
Pumpkin Stuff Shortage — Yet We All Survived
The Nestle company manufacturers most of the canned pumpkin product sold in America. It markets these products under the brand name Libby. Nestle’s Libby announced that there may not be an adequate supply of canned pumpkin product for the 2009 holiday season. Libby stated that its production of canned pumpkin products may be sold out before the end of the holiday season. This is one of the first shortages in food products to hit the United States since World War II. It will not be an anomaly. Americans should expect more shortages because manufacturers are conserving resources — that is, cutting back on production. Americans should expect additional shortages in many product lines and in various other manufactured and processed goods. Manufacturers will continue to scale back production, consumers will continue to buy less, and the downward economic spiral will proceed. This sort of downward spiral in production is a result of increased taxation on businesses during today’s recessionary that forces businesses to reduce labor costs which results in people losing jobs which results in people having lowered or no income which results in consumers’ growing inability to buy products and services which results in businesses laying off additional workers who produce products and services that consumers are not buying. Amidst the coming shortages, people will long for the gasoline lines of 1973.
Many businessmen have experienced cash shortfalls and operating difficulties. Those men worthy of managing businesses find creative ways to maneuver their company out of financial and operating difficulties. Even owners of service businesses can successfully maneuver, avoid bankruptcy, and grow their company into prosperity. Major corporations can do it with ease… especially major corporations that have tangible products to sell, but that are not selling for exogenous reasons. General Motors celebrated its 100th anniversary in September, 2008. Men starting with William C. Durant, GM’s founder, overcame bigger problems than those facing GM today. Other men following Durant led GM through serious difficulties and emerged successfully, having kept GM the world’s largest vehicle manufacturer and ensuring profitability. General Motors is simply suffering from the same problems all car companies, including Japanese and German, are working through. The global economy is in a downturn that started because a meaningful portion of Americans are refusing to meet their credit obligations. Consequences are stifling many industries in most industrialized nations. It is time for adjustments and efficiencies to be implemented. General Motors should never have even considered borrowing money from the US government. General Motors should not have run for the cover of bankruptcy. General Motors should have found some solid, worthy men — old fashioned car guys — to take over and run the company like men. General Motors has thousands of vehicles aging on dealer lots. It could have sold a substantial portion of those using creative methods including major discounts, special leasing arrangements, free service deals, & more. Sell cars and collect cash! But GM management was arrogant. It saw no need to implement serious actions commensurate with serious crisis. Instead, weak managers naively & uncaringly accepted what they considered “free money” — that is, money with no strings attached… or strings that did not concern them. As a result all Americans have learned the consequences of accepting money from socialists who could not operate a business if their lives depended upon it. General Motors’ life truly did depend upon its unworthy, inept management. This unworthy, inept management was entrusted with the responsibility of managing General Motors, but instead permitted its take over. Through Americans’ uncaring and arrogant lack of concern, the US is experiencing a socialist takeover. The evil and loss of American economic potency will be charged to each American — even those lazy, unworthy Americans who are fooled into believing they will benefit from the redistribution being engineered by their dear leader. Consider the opportunity GM’s ousted CEO Rick Wagoner lost. If GM had had a genuine and worthy leader, he would have made a deal with all salaried employees to work smarter four days each week and take the fifth off or work for the future good of the company at no salary on the fifth day. He would have ended the decades-long war between management and labor by joining with union leadership and the rank & file to arrange some reasonable give-backs for the common good. A worthy leader could have prevented losing control of GM to a socialist government now near fully taken over by Obama who is supported by the out-of-control Pelosi-Reed Congressional cabal. A worthy leader would have united management and labor in “The Just Cause Of Saving America” and the symbol of American manufacturing greatness, GM, against quasi-nationalization and loss of control over the cars it will produce. But GM, Ford, and Chrysler’s so-called leadership sat before Congressional grandstanders. These are the same grandstanders who are unable to run the government — recall that that is their responsibility. In an uninvolved manner the so-called management of GM, Chrysler, and Ford childishly played foil for the buffoons’ lecturing during Congressional hearings. Wagoner could have stood up, been a man, and told Congress that, “We will get ourselves out of this mess that we allowed to happen and failed to plan for”. He could have been the model for all other industries and Americans who will need to stop the socialization of the USA dead in its tracks — someday. But instead the three stooges sat and played the game while waiting for what they knew was the inevitable bailout… sellout. They took what they naively and without regard for America, its workers, or its liberty, considered free money. Now we all know that there is no such thing as free money. UAW President Ron Gettlefinger also should have demonstrated some leadership initiative and made a deal with GM’s top management and board. Instead he continued his dealings with the Democrat Party, despite the fact that it has mutated into socialism and disregards the US Constitution and all that made America great. We have deteriorated into a nation that deserves the government we are getting. Will there be a point at which we stand up for the America we too-easily inherited but are rapidly losing? America cannot afford more weak, inept, under-qualified people to run for president on the Republican or Democrat tickets. Nor can America afford this type in charge of major industrial enterprises. Obama will simply run them over as he did Rick Wagoner, GM, and its workers. Obama operates by his own rules only. He is determined to restructure America into the dream of his father — a Lenin-style Communist state. Obama has failed to learn that that form of government fails to provide well for any people other than those who devise and run it. Or, perhaps he has learned that lesson. After all, he does live well, has power, and is a multimillionaire.