two very critical economic (and related) trends
For those of you who have read some of my economic postings (as opposed to religious or political), you know that I am a follower of John Mauldin's weekly newsletter. He also publishes a weekly letter called "Outside of the Box" which is not his writings, but a contribution of one of his many world-wide economic/finanical friends, every week. They are both free. I actually like Outside the Box better than his Thoughts from the Frontline better, but just because his Thoughts from the Frontline can be a little repetitive. If you are going to read any economic analysis, these two should be at the top of your list. But I digress with my introduction.
This weeks Outside the Box article should be a must read http://www.investorsinsight.com/blog...es-happen.aspx .
I have posted before on two possible economic trends, and have met with MUCH sckeptism, but this letter addresses them both and relates them.
1) Return of manufacturing to the US, due to increased automation and decrease need for cheap labor. This is going to happen (it has already happened more and more). What people do not realize is the net loss of manufacturing jobs in the US the last three decades is not due to out-sourcing; it is due to obselescence. However, it as the article points out, it may be accelerated due to less expensive and more flexible robotics entering the manufacturing area. So it makes sense for manufactures to build plants close to customers and (this is the new relation I have not posted before) to the cheapest energy source.
2) Potential for US becoming energy independent. Now, first of all, a definition of energy independence is required: it means that a country is not a net importer of energy. It does not mean we won't import any oil, just that the oil will be more than offset by other energy we export (e.g. compressed natural gas or Alaskan oil).
For the first time in decades we have a real shot a becoming independent. And it is extremely critical that we do, more so than ever before.
note: here is my political thoughts:
First of all, we are running HUGE governement deficits. This cannot be sustained, yet it is VERY difficult to solve in the short term. The money has to come from somewhere. Now: it turns out that it is not just the government deficit that matters, but the overall account deficit: which is the sum of the government deficit and the trade deficit. Probably half of our trade deficit is due to energy imports. If we can significantly reduce our trade deficit, it buys us critital time on the government deficit. We don't want to be a Greece or Portugal and have both a large government deficit and large trade deficit and no hope for improvement on either one.
Fortunately, and we have no idea how fortunate we are, all of this new potential for US oil and gas development (gas shale, oil shale, and deep water wells) is coming at a very, very good time for us. It is critical we exploit it now.
And then there is the side effect of this helping manufacturing return to the US (see above referenced article) as manufactures are interested in building automated plants where energy is the cheapest (apparently Germany has really missed the boat on this trend). This will help the trade deficit even more.
So I think achieving energy independence is the most critical economic issue of this campaign. The Obama administration does not recognize this at all (gas shale has been a big deal for several years, and this year was the first time he has mentioned it as critical to our future). He does not even seem to see the economic implication of how a lower trade deficit can indirectly fund his large government programs for a while, ie he could be using this to help his big government idealogical agenda, but he is just not smart enough to realize it.
Well, you may not agree with my political analysis, but for your own knowlege, you should read the very non-political article I posted above.
Good day
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