Symptoms - Part Two

I am working feverishly on a piece about "The Crime of '73," but it isn't finished yet. That's 1873, not 1973. So We must continue examining the frightening symptoms we now see, and what they can result in, probably in the not too distant future.

Picture a 42 year old man, who has worked faithfully at Delta or some other airline for 15 years or even more. He makes $42,000 a year and is getting laid off. He has mortgage payments to make, probably car and credit card payments as well, and probably a couple of kids to support. Multiply that by many thousands.

Picture an auto worker, who has 25 years seniority working for Ford. He is getting laid off with a few week's pay for his trouble. He's pushing 50, and has the same expenses as the airline guy. His pension plan is under-funded by hundreds of millions. Multiply that by 30,000, or a lot more if GM is included.

Picture a truck driver who hauls anything to do with construction, be it lumber, nails, roofing, cement, or plumbing. Picture the builders of new homes, such as carpenters, plumbers, electricians, roofers, carpet layers, and painters. The new housing construction is about over, and while it is still a couple of percentage points above negative, it is slowing radically. Anyone connected with housing is soon to be laid off. This means that millions will be laid off, counting the manufacturers of building materials, wholesalers, retailers, handlers, truckers, installers, etc. These laid off workers have mortgage payments, kids to support, car or truck payments, etc, and it looks really bad…to me.

I am well aware that most who read my columns have no debts, and if not retired, at least have a lot of economic sense, and aren't in the jams that millions will be in, and hundreds of thousands now are. These symptoms are to warn you of what's ahead. The above aren't nearly all, of course.

White collar jobs are virtually unavailable, since tens of thousands have been shipped overseas. Literally, if you want a credit card balance, bank info, travel arrangements, etc, someone in the Philippines, or India will surely answer. What has gone wrong with America? Easy. Corporations are no longer "American Corporations," but world wide ones, and I cannot explain why. When a corporation goes world wide, it hires and manufactures world wide, leaving their original home base withering on the vine. Corporations are contributing to the death of the American economy.

Why can't gals or guys get jobs in back offices, answering phones, keeping books, taking orders or the like? Because the jobs are now in Bombay or Manila. I know, it is not "Bombay" any longer, but it is to me. These Indians and Pilipinos make less than an American would make, but the phone bills are huge, and even if they still are cheaper, so what? Why can't a corporation which makes most or all of its profits here, hire here? Why doesn't a credit card outfit, with virtually 100% of its customers in America, hire American? It makes my blood boil. Why can't Ford make parts for Ford in America? Why can't Ford make cars as dependable and reliable as Toyota? Are we so stupid as not to be able to make good things? The first Hondas to arrive in America were miserable two cylinder things that were laughing stocks, and this was but 40 years ago. What has happened to America?

So when the ARMS come due and payments increase, the bankruptcies will also. With $3.00 gas, and higher mortgage payments, Joe Sixpack gets in trouble. He owes more on his home than it is worth, when real estate goes down, and he uses his credit card to stay afloat. Bankruptcy is very difficult now that the new laws have been passed, so that may not even be a way out. Think about it. 320 MILLION gallons of gasoline are consumed every day in America, thanks to so called "freeways" and people having to drive to work. (When the cities were intact, one could go to work on a trolley car in minutes).

320 million times $2 increase in gas price is $640 million each day that it is necessary to cough up, for Joe Sixpack just to get to work. And his job may be soon over or exported.

America is so far over-extended with various wars and subsidizing everything in the world, that the dollar is being printed with wild abandon, and this won't stop soon. Thousands of containers come into America's ports every day and leave empty, to pick up more stuff made abroad to sell here. Philly and other former manufacturing cities are full of abandoned or burned factories, which no longer make what we consume, and manned by Americans who made what we consume. "PHILCO" stood for The Philadelphia Corporation, which made TV's and radios for generations. The factory is empty. Philly also made Disston saws and Stetson hats, Botany 500 Suits, just to name a couple, but no more. Why not? Because of corporations not giving a damn about their homeland, and discovering that the stuff can be made overseas, shipped here, and a larger profit made. "To hell with laid off workers, we want high dividends."

Even the armed forces are having uniforms made overseas, and I have heard that American flags are also being made overseas. What has happened to America? Pity the poor American worker, whose jobs have been "outsourced" as is the common phrase. Thousands of Mexicans pour into America each day, and take jobs that Americans would take. Those who say Americans wouldn't do the work which illegals do, are dead wrong. Any one will do anything necessary to stay alive and feed their families. Those who say Americans won't pick oranges, so illegals must do it are lying.

Pat Buchanan has a new book out titled "State of Emergency." I am half way through it and will finish it this weekend, and than start on Tom Tancredo's book, "In Mortal Danger." I am certain my feelings towards illegals won't change, but be intensified. Tom would make an excellent Presidential choice for the Republicans.

A client of mine who lives in deep Georgia, last week bought a wonderful set of valve and valve seat grinding apparatus for $300…a real steal. Sold by an engineer who lost his job to "outsourcing." He's selling is valuables, just to stay alive. What happens to him and his family when the stuff he has valued so much and for so long, is gone? How sad.

I consider myself blessed. Either that or extremely lucky. I hope that you dear reader consider yourself the same. We, as a whole, have done the smart thing, and that is store our surplus assets in tangibles, be they machinery, homes, antiques or gold and silver.

I am 72 years old, and in my entire life, I have never had a savings account. I have always wanted "things" rather than paper money, even when paper money still bought 20 times what it buys now. It wasn't that I didn't trust paper money, but I always loved machinery, cars, electric trains, books, records, cameras, antiques, and of course homes, more than paper money. I have always loved things I can touch, use, admire, and look at, rather than having a passbook which says I have so many dollars tucked away. I'd rather spend the bucks traveling or buying, than storing them in some bank. It's just me, so don't ask me for advice about "how much should be in gold or silver," because I have it all in them, except old Mercedes, antiques, etc. I want no dollars, other than a couple of grand to pay the bills. Remember though, I am not retired, so I have a cash flow from my brokerage. I can't imagine retiring. I'd get bored.

Just beware that hard times are coming upon us, and other than hyper inflation, I can see no way out. Hyper inflation will bring home the foolishness of saving in dollars or 'whole life' policies pretty quickly, but it will be too late. Protect yourself.

August 24, 2006

Don Stott has been a precious metals dealer since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com