Stand Back, or Jump?

Until the US can reduce its trade imbalance with the rest of the world there can be no real recovery. We consume too much and produce too little. If your business can make things that people in other countries want to buy, or if you make things efficiently enough to compete with the flood of cheap imports, then you might want to expand. Otherwise you may be throwing your money away.

It will be very hard for the US economy to rebound because of our relatively high cost of living and disdain for education. An engineer in India or China can use the same CAD programs as an American engineer, and can design car parts (or whatever) at an annual salary that would not even cover the American's health insurance premium.

Many people still expect that 'economic recovery' will mean a return to the levels of wealth we experienced during the last twenty years or so. This won't happen, because much of that wealth was an illusion - a series of asset bubbles. The US came out of WWII with a stunning economic advantage: our industrial base was growing at a dizzying pace, and unlike the rest of the industrial world (Europe and Japan) it had not been reduced to rubble and scrap metal. We rode that wave for the next few decades. Remember when 'Made in Japan' was a joke? Remember how we made fun of the Volkswagen?

But in time the Europeans and Japanese rebuilt their industrial bases, and new members joined the club. And then in the 70's all those brown skinned people who used to let us have all their oil in exchange for a few beads and trinkets discoverd that they had real power, and quickly learned how to use it. For the last few decades we have failed to adjust to the changing world economic order. Instead of concentrating on educating our people, retooling our industry, and reducing our dependance on imported energy, we convinced ourselves we could become rich just by living in our homes, and by borrowing money from the bank and then betting ("investing") it in the Wall Street casino. We neglected our real prosperity, and instead encouraged our brightest young minds to 'make money' by playing with money.

This 'strategy' will not work anymore. There is really very little actual money left to play with. So yes, if you think that you can sell more of what you make (taking into account the clear disadvantage of operating in what is still an absurdly high priced economy) then go for it, and the best of luck to you.

(I apologise if this seems over-simplified and harsh, because it is. But being one of those folks who still make things that people here and in other countries want to buy, I really need to get back to work.)