Econ Outlook Part 3

Folks,

After I sent part 2, the news announced 8 Chinese laborers were kidnapped in
Iraq and threatened with death if China did not forbid Chinese from working in
Iraq. I was hoping to predict they would be released, but I'm too late to
predict, since they have been released.

In May of 1999, USA bombed the Chinese Embassy in Belgrade, taking out its
intelligence offices and killing several people. USA claimed it was a mistake,
but the Chinese believe it was intentional since the Chinese were retransmitting
the allies' communications to our enemies, making our bombing of the enemy
ineffectual.

In the chaos of of Iraq, there are also plenty of criminal opportunists
kidnapping for cash. There are many entrepreneurs trying to cash in on the money
flowing around. I suspect some witless start-up terrorist group grabbed the
Chinese hoping to get money or cooperation and found out it was not healthy to
do so. This is not the first time eight Chinese were kidnapped and released.

It is certainly easier to make war than to make business, and these wars are
only interesting in the measure they change the business patterns. Indeed, if
there is any hesitancy in launching a war, it is usually consideration of the
impact on business as to whether to go ahead or not.

So let's start our own businesses, and do our part in making peace. For my part
I look forward to the day I sit down in a Kabul restaurant and hear a tall
fellow in a turban say, "hello, my name is Osama and welcome to my
restaurant..."

Now back to Dr. Richebacher;

Blinded by the dogma of compelling mutual benefits; policymakers, economists,
investors and the American public flatly refuse to see this disastrous causal
connection. The alternative explanation is that America's extremely poor job
performance has its main cause in the highly desirable high rate of productivity
growth.

It is a convenient, but foolish explanation, reminding us of the early days of
industrialization, when people destroyed machinery for fear of unemployment. For
us, productivity growth that destroys millions of jobs is definitely suspect as
a mirage. Historically, strong productivity growth has always coincided with
strong capital investment involving, in turn, strong employment growth in the
capital goods industries.

That is presently, of course, precisely the missing link in the U.S. economic
recovery. (As an aside, in a healthy economy with adequate savings, cutting
labor costs generally takes place through investment, not through firing.)

***

Dr. Richebacher has this right, and note his litany of policymakers,
investors...etc... he too paints a bleak picture. Having seen situations
similar before, he advises elsewhere how to preserve one's wealth. Ahem... what
about we who wish to gain wealth to preserve? What about we who if not filthy
rich, would at least like to get slightly soiled with lucre?

Well, as employees we'll always be subject to the results of the whims of the
policymakers, investors, etc. for good or bad, and according to the most
reliable oracles, what is shaping up is bad.

The way out is harder than sitting tight... and it involves deciding what you
love to do and do that. Become expert on ski sweaters, their design and
construction. The worldtrade patterns in wool... the buying process and
retailing thereof. Become expert on the end-users of ski sweaters. Get to $1.5
million a year in sales, with $120,000 net profit for yourself... it is as easy
as I make it sound.. what slows some of us up is wasting time with the
unnecessary and the insufficient.

What also happens is you get sharp and clear in your thinking. You adjust your
activities to preserve your lifestyle no matter what the policymakers do to vex
your happiness. In a word, you get free. Free to do as you wish, free from
those who would decide you do their will.

I agree with the scary assessments of Gross and Grant and Richebacher and Buffet
and Soros, none of whom will suffer no matter what happens. They've all got
money and houses stashed all over the world. On the other hand, in spite of it
all, with my own business, I can get anything I want or need as well. So far so
good, anyway. In spite of the dire assessments, I don't see anything that says
the next 30 years won't be a lot better than even the last 30.

John

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