Kooky thinking about the depression

Here is an astonishing statistic: U.S. manufacturing is currently operating at only 65.6% of capacity. That is, fully one-third of American manufacturing is idle. Not since the Great Depression (the other one in the 1930s) has such a huge chunk of American manufacturing--once the engine of wealth creation for the entire world--stood unused with no prospect of recovery. Considering that manufacturing was once fully 25% of this country's economy but now comprises not more than 9%, the sad tale of the decay of America's industrial base leaves a person almost breathless. This decline is unprecedented in human economic history.

Incredibly given these facts, people are still forecasting a "recovery" in the fall; indeed, Mr.Obama has staked his entire administration on this recovery. But how is recovery supposed to happen? With what will anybody recover? Exactly what will be recovered? How can an industrial economy "recover" despite one-third of it being idle? What could "recovery" mean under these circumstances? These preposterous forecasts are exactly like those absurd predictions of "top psychics" that get published in "The National Enquirer" and other such rags.

The truth is that America's industrial base is severely wounded. World markets are shrinking fast; the American domestic market continues to decline. The world is awash in idle industrial capacity. I'm willing to bet a dollar that the idle capacity of China alone exceeds total American industrial capacity. What sensible person thinks that high-cost America will recover sooner than low-cost China? If you were a capitalist investor, where would you be putting your money?

And if American industry remains hobbled, where's recovery going to come from? Want a peek at our real future? Just keep up with current events in California. California this year is America next year.


Read the article here