POPPY COCK ALL OVER THE PLACE!

One of the things you have read a million times is that the US is no longer a manufacturing economy. Numerous writers and politicians lament that all the good jobs are going over seas and the US is becoming a service economy. Nothing could be further from the truth!

The numbers show that the United States of America is about to set another all time record in the level of manufacturing as a percentage of our total GNP. We are a manufacturing machine like none other any where in the world. We hear cries that all the jobs are going to China but the numbers show that China has lost more jobs in the past 10 years than there are jobs in America. Germany, France, Great Britain, Italy and I believe all the other developed nations have lower percentage manufacturing output than the good old US of A.

The "negative Nellie’s" want to avoid talking about the tremendous good news which includes very high productivity. Instead they "blame the loss of manufacturing jobs" on China and India. These folks must wish that it still took 60% of our population to raise food. China and India are going through the same process the US went through years ago. We can now raise all the food we need while employing only 3% of our population as farmers. We raise more food today than ever before in our history. These folks should be rejoicing that India is growing its GNP at about 6.9% and China is growing at about 9.5%. These poor countries need dramatic growth. I am thankful. I am thankful that poverty is being reduced and I am thankful that huge productivity growth in these countries allow me to buy goods cheaper now than 30 years ago.

I understand that the news folks must focus on the controversial to build their audience. However, you do not need to be duped. You can think for yourself. When the "negative Nellie’s" whine about inflation, you can look at the government numbers which slow moderate inflation and you can look at the cost of the things you buy. In most cases, you will find that the things you buy have gone down relative to the increase in your wages. I just looked down at my shoes that cost $22. The same pair would have cost $52 twenty years ago. I see the copier than I purchased 14 years ago for $850; a much faster and improved one is available today for maybe $150. Yes, some things cost more, but the aggregate numbers show an unprecedenteded 10 years of wages growing faster than prices (yearly numbers not counting every little blip along the way).

The "negative Nellie’s" continue to harp on Greenspan for raising interest rates while the numbers keep proving Greenspan right. The recent strength in the labor market has dropped the unemployment rate to 4.9%. If our economy continues to grow above trend, then why should the fed throw more fuel on the fire? It is not too hot now but capacity utilization, employment, oil and other resources are showing signs that more fuel is not needed.

Investors are currently focused on the oil supply disruption. There are screams that rising oil prices combined with rising interest rates might cause a recession. Because of the storm, Greenspan may agree to hold rates steady for a few months. However, the rising fuel prices are part of the data that show the need for higher short rates. Whenever some folks are crying over a recession that is not likely and other folks are crying over inflation that is not there, it means we are in a good spot.

I hope you have responded to the pain and suffering of the needy with a sacrificial donation. However, investors need to understand that the disruption is temporary. Indeed the high cost of energy is going to speed the adoption of new technology. BUY THE BULL!