After laying off 31,000 the last three years. Shutting down eight million feet of manufacturing space. Revenues down a billion or so... outlook is good for a much trimmed company?
The damage was done during the boom, when EZ mal-credit was spread far and wide and thick and companies like CAT could make money selling heavy equipment to the extraction industries to dig up minerals like copper, nickel, tin, oil, etc to sell to companies that make materials for manufacturers, which in turn sell to wholesalers who sell to retailers like Home Depot that provide what the end-users need to fix up their MacMansions.
A big bubble is blown, the banks privatize the profits and leave the losses on the pensions who invest their ersatz funds into false-economy companies, a list ginned up by government fiat.
So that thin layer of actual USA productivity, made up of companies actually producing things people need and want, like Caterpillar Tractors, just got thinner. But the claims on that asset base just got bigger, with another 10,000 people, expert at making heavy machinery, are looking for work in a much smaller heavy machinery industry. And it will get worse: they will be offered student retraining loans so java coders can learn to become roofers and roofers can learn to be java coders and they all come out to no demand but $25,000 in unbankruptable student loan debt.
Now what should be happening is with 8 million feet of useless warehosue/manufacturing space coming on the market, the price of such space should be dropping fast. but no, with ZIRP the policy of the land, land banking, sitting on empty space is better than taking a loss. You can borrow more money at no cost with a building valued on the books at $500,000,000, than you woould get if you sold the building for a million, what it is worth.
Labor rates should fall, real estate prices fall, and energy would be falling right now, except for government interference, ever making the day of reckoning for bigger and badder than if we had bit the bullet earlier.
But the powers that be could care less what happens. They win no matter what, The people in charge of the Soviet block before it imploded are the people in charge now. So it will be in the USA.
And there is always war. Gas prices have not dropped with the lack of demand because China is stockpiling "strategic reserves", as in preparing for war.
Who knows what is going to happen, but one thing is sure - the asset base cannot meet the claims on that base. By what margin? Will people have to settle for 90 cents on the dollar? 50, 20? I think it is more a matter of some get 90 and some get 10, depend on how hard you fight or game the system.
Better to step away completely from that mess, create your own business and economy. Adopt patterns and practices we had even only 40 years ago, and live in a real economy, surrounded by an economic Stalingrad.
Is he point of craft whickey, a family sized business quality, or local. Yes, source matters in whiskey, as it does in sourdough bread, terroir the wine makers call it. But the cost of shipping liquid, even at real market rates, and meeting local demand, can be done by a local family competitively now that the bankers have blown the EZ Mal-credit economy.
Start your business, count all else lost.
Feel free to forward this by email to three of your friends.
The damage was done during the boom, when EZ mal-credit was spread far and wide and thick and companies like CAT could make money selling heavy equipment to the extraction industries to dig up minerals like copper, nickel, tin, oil, etc to sell to companies that make materials for manufacturers, which in turn sell to wholesalers who sell to retailers like Home Depot that provide what the end-users need to fix up their MacMansions.
A big bubble is blown, the banks privatize the profits and leave the losses on the pensions who invest their ersatz funds into false-economy companies, a list ginned up by government fiat.
So that thin layer of actual USA productivity, made up of companies actually producing things people need and want, like Caterpillar Tractors, just got thinner. But the claims on that asset base just got bigger, with another 10,000 people, expert at making heavy machinery, are looking for work in a much smaller heavy machinery industry. And it will get worse: they will be offered student retraining loans so java coders can learn to become roofers and roofers can learn to be java coders and they all come out to no demand but $25,000 in unbankruptable student loan debt.
Now what should be happening is with 8 million feet of useless warehosue/manufacturing space coming on the market, the price of such space should be dropping fast. but no, with ZIRP the policy of the land, land banking, sitting on empty space is better than taking a loss. You can borrow more money at no cost with a building valued on the books at $500,000,000, than you woould get if you sold the building for a million, what it is worth.
Labor rates should fall, real estate prices fall, and energy would be falling right now, except for government interference, ever making the day of reckoning for bigger and badder than if we had bit the bullet earlier.
But the powers that be could care less what happens. They win no matter what, The people in charge of the Soviet block before it imploded are the people in charge now. So it will be in the USA.
And there is always war. Gas prices have not dropped with the lack of demand because China is stockpiling "strategic reserves", as in preparing for war.
Who knows what is going to happen, but one thing is sure - the asset base cannot meet the claims on that base. By what margin? Will people have to settle for 90 cents on the dollar? 50, 20? I think it is more a matter of some get 90 and some get 10, depend on how hard you fight or game the system.
Better to step away completely from that mess, create your own business and economy. Adopt patterns and practices we had even only 40 years ago, and live in a real economy, surrounded by an economic Stalingrad.
Is he point of craft whickey, a family sized business quality, or local. Yes, source matters in whiskey, as it does in sourdough bread, terroir the wine makers call it. But the cost of shipping liquid, even at real market rates, and meeting local demand, can be done by a local family competitively now that the bankers have blown the EZ Mal-credit economy.
Start your business, count all else lost.
Feel free to forward this by email to three of your friends.
1 comments:
China still land of opportunity: the Caterpillar story:
http://www.ecns.cn/business/2015/09-26/182740.shtml
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