The New(ish) economy: Dirty Jobs Trump the Ivory Tower

We are all witness in this new golden age of journalism and media, the likes we have never seen before. With a video camera and an internet connection, people are etching out their own place in the world to tell truths and raise suspicion in ways we haven't seen since the days of Thomas Paine.

As more media comes online, media that isn't solely driven by profit but instead driven by passion & truth it's competing on level playing field and in some cases replacing traditional media outlets. Where no longer your platform is your advantage. And it's not just newspapers in jeopardy anymore. All traditional and mainstream media quivers with the notion they're being tuned OUT, not IN. But to be a credible witness you must pass the jury of truth.

We are that jury of truth. Words, ironically enough do matter. Thank you, leftists! And if we sit back and take everyone at face value without preconceived notions of platform and statue whose words are true and whose are incoherent nonsense may surprise you.

Today I present to you, the jury of truth, three witnesses. And the case I present to you is Jobs and the skills gap. Skills "gap," you say? This happens to be a dirty little secret for anyone that works in construction or simply travels the country enough to see there are jobs to be had; we just don't have the quality of trained people to fill them. As a small business owner myself, for me this is the biggest struggle I have growing my business. Anecdotal of course but make no mistake, across the country the skills gap is very real.

Paul Krugman, a liberal economist doesn't believe there is a skills gap. He once opined that the skill gap was in fact “a prime example of a zombie idea — an idea that should have been killed by evidence, but refuses to die”. Yes, the same Paul Krugman who blamed the weakest recovery in American history (apologist for Mr. Obama no doubt) because the government was forced to curb deficit spending. In Krugman's world, deficit spending = job creation. Without pointing out the obvious short-sidedness of this in any long term measurables, even at the zenith of optimism, in the short term… it’s a dead cat bounce at best.

“TO FIGHT THIS RECESSION THE FED NEEDS MORE THAN A SNAPBACK; IT NEEDS SOARING HOUSEHOLD SPENDING TO OFFSET MORIBUND BUSINESS INVESTMENT”

This is a man after all who believes and writes op-ed after op-ed on how the FED can cure all that ails the natural economic cycle. The FED. Not natural interest rates but the artificial rates orchestrated by the FED. Be that it may, a crooked petrol dollar fiat scheme until the bitter end, it's still of this world and a 100% human creation. Therefore you cannot escape its entropy. Inflation in this monetary system is like gravity in spacetime. You cannot travel faster than the speed of light to outrun gravity and you cannot escape the compound interest paradox regardless of how many Harvard degrees you accumulate on your wall. Paul Krugman is not a credible witness.

Donald Trump complains about jobs leaving overseas. SEIU, one of the largest unions still left and incidentally enough the largest government union in the nation announced last week it's cutting its budget by 30% because of.... President-elect Trump.

“BECAUSE THE FAR RIGHT WILL CONTROL ALL THREE BRANCHES OF THE FEDERAL GOVERNMENT, WE WILL FACE SERIOUS THREATS TO THE ABILITY OF WORKING PEOPLE TO JOIN TOGETHER IN UNIONS,” PRESIDENT MARY KAY HENRY WROTE IN AN INTERNAL MEMO OBTAINED BY BLOOMBERG BUSINESSWEEK.

First of all, "far right"? Trump? Trump is hardly far right but I digress. That is actually a win for Trump. Nothing to add to that. But my eyes could simply skim over this quote from President Mary Kay Henry...

“FOCUS OUR RESOURCES AND ENERGY ON THE FIGHTS THAT POSITION US TO RETAKE POWER IN 2018, 2020 AND BEYOND.”

Organized labor fighting for power in elections. Where have we seen this movie before? Circa 1933?

To his credit, Trump was the only candidate to continuously rail against NAFTA and TPP. While it’s true, the middle class has been chipped away at over the last four decades with trade being a part of that decline; it’s not the biggest culprit. That decline was in effect long before the offshoring of jobs started taking a footing. The best way to sum up the decline of the middle class and the loss of jobs overseas is simply this: It's complicated. So much so that it’s layered with layers of many competing mitigating factors. To blame it on free trade above all else is irresponsible and just plain not true.

We have seen entire sectors hollowed out while others boom. Sure, many Americans do feel left out and left behind in Middle America. And that, probably above all is what made Mr. Trump the 45th president. But that doesn’t make those people or he correct if they’re thinking to end free trade or raising tariffs will simply be the magic wand to make America great again. It might bring back some jobs but it will destroy just as much or more of existing jobs with existing families relying on them. Surely, It will make goods and services costs rise and that is no recipe to grow an economy.

Recently, Deborah Lockridge wrote a piece on free trade and quoted FedEx Chairman and CEO Fred Smith. Smith speaking to the audience at the National Council on Competitiveness Forum in mid-December warned Trump by saying this:

“WE HAVE THE BEST EXAMPLE OF PROTECTIONISM FROM OUR OWN HISTORY. THE DEVASTATING SMOOT-HAWLEY ACT OF 1930 RAISED TARIFFS ON MORE THAN 20,000 ITEMS. THIS CONTRIBUTED TO A 66% DECLINE IN WORLD TRADE FROM 1929 TO 1934. THIS MISGUIDED ACT OF CONGRESS IGNITED THE GREAT DEPRESSION.”

Does this mean raising tariffs is a bad idea? Not necessarily but raising prices on goods and services will cancel its gains out by raising prices. Government wins, consumers lose.

Bringing back blue collar jobs (manufacturing) is a noble cause and one that should be positive but how that is accomplished will be messy. In a matter of a decade, we saw manufacturing slip from 20% of GDP to 5%. But how many jobs can be saved from automation? It's not like we are living a Jetsons lifestyle just yet but automation is at some point will be the next scapegoat for the declining middle class as its only a matter of time where technology is improved and even more jobs will die off. However, while bringing back jobs that were let go offshore won't save the middle class it certainly couldn't be any worse than the previous administration's stance on offshoring jobs...

"SERVICES LIKE ENGINEERING, RESEARCH, AND DEVELOPMENT, FINANCE AND SOFTWARE PRODUCTION– WHICH TYPICALLY PAY HIGH WAGES – CAN NOW BE MORE EASILY TRADED ACROSS COUNTRIES. AS A RESULT, THE UNITED STATES IS POISED TO EXPAND ITS TRADE SURPLUS IN SERVICES, WHICH HAS ALREADY GROWN SUBSTANTIALLY, NEARLY TRIPLING IN SIZE SINCE 2003, TO $146 BILLION IN 2010."

So if unpacking the jobs that left will be hard what about the jobs we have here now that are going unfilled? Contrary to popular belief and the stigma that goes along with it, a college degree isn't the only pathway to a respectable and sustainable living.

Take transportation for example. This is is one sector that has been a major winner with free trade. Trucking alone has had shortages of drivers for at least a decade.

Bill Graves, former president and chief executive of the American Trucking Associations wrote about this issue last summer.

"WHEN I FIRST CAME TO THE AMERICAN TRUCKING ASSOCIATIONS IN 2003, AMONG OUR INDUSTRY’S TOP CONCERNS WERE DIESEL COSTS, THE DRIVER SHORTAGE, INSURANCE COSTS AND SECURITY.

IN THE NEARLY 14 YEARS SINCE MANY THINGS HAVE CHANGED. I THINK IF YOU SPOKE TO TRUCKING INDUSTRY EXECUTIVES TODAY, THE COST OF FUEL AND INSURANCE OR HOW BEST TO SECURE THE SUPPLY CHAIN WOULDN’T BE AT THE TOP OF THEIR PRIORITY LIST, BUT THEY’D HAVE A LOT TO SAY ABOUT THE DRIVER SHORTAGE."

Driving a truck, that doesn't seem that prominent does it? But that's just it. That's the problem with perception and conditioning. We've been conditioned to scoff at these types of jobs while they go unfilled while another college graduate goes underemployed or simply unemployed.

2015 mean annual earnings of truck drivers: $43,410
2015 average earnings for college graduates is: $45,400
2015 those who’ve only completed high school: $25,900

We don't have a jobs problem here. We have a fortitude problem. So Trump, like many or most of his diatribes is tapping into a problem or sees the writing on the wall, except it's written in hieroglyphics and he only speaks in sign language. Thus, Trump isn't FIRED but he must do a better job of addressing the wage gap that already exists.

Now, may I please present to you juror #3. Mike Rowe. Yes, that Mike Rowe of the Dirty Jobs variety. He's doing his best to promote ending the skills gap with actually incentivising skilled work through his charity ProfoundlyDisconnected.

There is now a 5.6 million skills gap from everything to plumbers to masons to heavy equipment operators and everywhere else in between. This is not just some random number from Mike Rowe either. He is quoting the Department of Labor. And training for these new careers won't add to the 1 trillion (and growing) dollar boondoggle that is the student debt bubble that ominously awaits an eruption like a fiat Mt St Helens.

So yes we do have a problem with the hollowing of the middle class. People left behind from the factory that disappeared are a reality but the problem isn’t just going to be cured by a company reopening its doors via tariffs, repatriating or from idle threats. Does that mean trading jobs for tax breaks should not still be pursued? Of course not. The corporate tax rate stifles business especially small business but in the meantime, let's take the easiest route possible. It's just a matter of perception and priorities. Mike Rowe gets it. He's traveled the country and understands quite well the reality versus perception that has sacked this nation's "can do" spirit.

If we define success and working nirvana by a four-year degree with a mountain of debt attached to it (thank you subsidies) then that gap only widens. But if we reverse this pussification and get real about OUR economy we will achieve the closest we've been to full employment as we've ever been.

The chequeing scheme, where micro meets macro

This is about as a rounded and admittedly loose connection as one can make but a connection nonetheless. Let me get straight to the back story.

My lady friend of 18 years & counting refuses to use a debit card. She despises credit. She also prefers to not use cash either. She's still the mindset of 20 years ago when everything revolves around cheques. Now, in her defense there is a practical reason behind it. She feels if you really want to buy something that added step of writing it out reduces impulse buying and judging by her sterling accounting of our finances; I offer no debate.

A few weeks ago she unexpectedly ran out of cheques. Unfortunately this coincided with the long Martin Luther King Day weekend thus the banks were closed. So with no ability to access her money, she had two choices: use credit or dont buy what she needed until the next day. As we were just one day from our annual winter getaway to Florida... I enter with option three: me picking up the tab. And being the loving spouse I am, I chose to use my cheques. One part out of respect for her and partly because I just haven't written one in so long. At the same time, I felt it would make it an interesting exercise to practice my cursive. 

So a few transactions and a few chicken scratches later, we were on our way. When we got back home is when it got interesting. It seems due to inactivity and I moving my direct deposit out of that bank, my account was closed. Unbeknownst to me, I had written three cheques without having an account at all. I quickly made contact with the vendors and paid in cash the amount + fees. This suddenly made me remember why I stopped using cheques over a decade ago: overdrafts.

Now at this point It was behind us. One week later came the letters from collection agencies demanding the funds to cover said cheques. So, I called to explain to them the situation. A manager on duty of the collection service then hit me with this...

"Sir, if you dont have proof you made good on these cheques we require a payment to take care of that. We except two forms of payment. Western Union and Cheque by phone."

Cheque by phone, I asked? I told her I wrote a bad cheque, why would they accept another cheque? She then begins to tell me it happens all the time. That people knowingly write bad cheques and then make payments to the collection agencies with more bad cheques. If this process seems completely irrational and made up; its only the same exact thing that our government does (and gets away with) regarding the dollar.

Now I did say it was a loose connection and you made it this far so bare with me.

We effectively print dollars with no tangible backing whatsoever, just "confidence" that the dollar will not crash and that in turn will not lead to a run on the bank. Remember, due to the modern practice of fractional reserve banking, bank's tend to only keep a small fraction in liquid reserves. Thus any major fluctuation of withdrawals in a one day period can make things very interesting for a bank.

Now with that said, after the banks make these monopoly based dollars, they just sit back and operate the biggest shakedown modern civilization has ever seen.

By way of OPEC taking only US dollars for its oil (thank you President Nixon and King Faisal), it forces oil buying nations (read the entire world) to naturally obtain US dollars so they can obtain the OPEC oil (which holds about 2/3 of the worlds oil supply). OPEC then takes those US dollars and reinvests them into US banks further strengthening our place as the preferred empire of the world over.

So, like a guy armed with a closed chequing account and a fistful of cheques, you too can play the game of tangible assets/commodities for nothing too. Buy the goods and services with cheques that, like our dollar, are essentially worthless paper backed by nothing; THEN use the same cheques to pay off the creditors! You come out with goods and everyone else is stuck holding worthless paper. Then rinse & repeat.

The difference between the guy running that scheme with a closed chequing account is eventually the jig will be up. Unless you’re real slippery and willing to constantly move and change your name quite often; it will all come to an end. But what about the US petrol-dollar scheme? How long before that hustle is over? When you think about it, from the US point of view, it’s paramount that the US remains the reserve currency for oil. For if not, we can expect a lot of dollars coming back home and when I say a lot, I am talking the SHIT-TON of quantities.

If that happens our standard of living (even at a declining rate) will all but disappear. This will create instant hyperinflation and eventually a sell-off so large that the immigration issues on the borders wont be commonly known from Mexican people trying to get as they are today but instead it will be American citizens trying to get out.

Its pretty obvious the lengths our leaders will go to keep this asset bubble propped up. So, what happens if you don't agree with this petrodollar recycling scheme? What if you are in favor of, say a more "open competition" regarding how to pay for oil? As I stated last year in this piece; it usually doesn’t end well for you.

Now with Iraq and Afghanistan wrapping up, all the sabers are waving towards Iran and they are running out of time. Friday, President Obama put them on notice Friday saying:

"Right now, we think it would take over a year or so for Iran to actually develop a nuclear weapon"

Then eloquently added:  "but obviously we don’t want to cut it too close.”

The President then went on to call a nuclear Iran "a red line". You have less than a year Iran. Less then a year before you continue or end your nuclear program. But remember, the nuclear program is a guise. The real threat remains the precedent you are making with disrespect for the dollar. So, close your oil bourse and fall back in line or else.

Now picture that guy again with the cheques and the false chequing account. Hes cashing cheques and receiving goods and when you want to collect or end the scheme he shows up at your place of business with an army and guns and tells you if you dont change your ad's or paint your store Tropicana yellow hes gonna shoot the place up and remove you. You like your job dont you? Your kids eat waffles dont they? You need money to buy waffles. The American hegemony alive and well; Tony Soprano don’t have nothin’ on us. 

Iran, a nuclear threat? Or... Dollar threat?

(Graphic courtesy of Soahead.com)

Is Iran a threat? Are they a threat to the US? Are they are threat to her allies? Is Iran a threat to the region? The answer to these questions are all, yes, they are. However, they are a threat for different reasons to each entity. Israel has long had problems with Iran. It’s well documented and that will never cease; at least not in our lifetimes.

The Middle East region is very complicated and convoluted. With the Arab Spring now working its way into other totalitarian regimes, established dictators and theocracy’s, the region remains sensitive to any waves. Iran is the most powerful state left in the Middle East. They are predominately Shi’a Muslim’s (85%) while the rest of the region is overwhelmingly Sunni Muslim (90%). If we remember the problems with the US invasion and subsequent occupation of Iraq, it was complications of various religious sects and the sectarian violence that ensued because of those divisions, was what caused the greatest problems.

Religion was also in part the basis for Iraq’s invasion of Iran in 1980 that lasted eight bloody years resulting in over 1 Million deaths. This was the same war that the US backed Saddam’s Sunni invasion supplying both weapons and intelligence to Iraq in proxy war against the Shi’a Iranians. It was during and after the Iraq invasion that Iran became more isolated the ever before and when you include they speak a different language (Persian) and have another belief system from their neighbors; it only compounded the isolation.

Recently, there was the wikileaks cable that quoted Saudi Ambassador to the US, Adel al-Jubeir recalling King Abdullah of Saudi Arabia urging the US to attack Iran’s nuclear program. To quote “cut the head off the snake (Iran)”. Last month, Saudi Oil Minister, Ali al-Naimi, said that the Kingdom will be able to make -up for any shortfall if Iran remains in a defensive posture; further indicating their approval for regime change. 

"It is because of our ongoing investment that Saudi Arabia is able to respond to shortages around the world - take issues with Libyan production last year for example. 'And it's because of our investment that any future shortages will be handled."

In fact, most Arab nations do not receive the Iranians well and do not want them to go nuclear. The Arab League has isolated Syria (Iran’s only ally) as it has halted both diplomatic and economic ties with the nation. If that wasnt enough of a statement they will lend political and material support to the Syrian opposition. It appears Syria will come to some type of regime change similar to what happened in Egypt and Libya. The Arab spring is said to be based on freedom of individuals and elections are a part of that; if and when the revolution takes power, it will not replace the leadership of Assad with a pro Iranian government.

What is happening is Iran is walking the proverbial plank. They have no allies. Everyone around them either wants their leadership removed or they simply don’t care either way. Both bordering nations of Iran have been vaporized by the United States. Its only logical that another member of the “Axis of evil” stuck smack dab in the middle of US occupations is next.

They know it and they also know they only have a few cards to play. First, they must go nuclear BEFORE an attack, being that a nuclear nation has yet to be attacked by the United States. Will this deter them from being attacked by the West? Nobody can say for sure, but it will at least give them pause and possibly buy the Iranians more time. Secondly, and the Ace of Spades, is that they will divorce themselves from the dollar.

With the drumbeat of war ratcheting up from the US to heights not seen since 2002, Iran, like its neighbor Iraq once did, is poised to play chicken with the US and its European allies engaging the US in economic war. The first strike was launched by the US in new sanctions signed by President Obama back in December and there was a response by Tehran with a threat to close the Strait of Hormuz. 

Now, we have Belgium-based SWIFT - who is a lifeline to international trade, as they oversee an average of 18 million payment messages per day between banks in 210 countries prepared to cut off Iran, virtually forcing international trade with Iran to a standstill. This is a remarkable revelation and a clear indication of the clout the US still carries as the reserve currency of international trade. Never, has SWIFT removed a nation since its inception in 1973.

"Kicking Iran out of SWIFT is both unprecedented and another dangerous step toward turning a financial war into a military conflict," said Reza Marashi, National Iranian American Council's research director.

Not only does this hurt all Iranians, but more importantly it hurts Iran’s military as well. Without fuel you cannot mobilize your military and logistics become impossible. Logistical failure has been the downfall of some of them most important conflicts of the last 300 years and with Iran being economically cut off it would inevitable. While Iran maybe the 3^rd largest supplier of crude in the world, it’s also relying on 40% of its petroleum and diesel consumption to come way of imports due to both refinery dysfunction /inefficiencies and just flat out a shortage of new refineries. That however is being addressed and eventually Iran will not be so dependable on importing gasoline but yet still vulnerable if those refineries were knocked offline.  

At one point, Iran was planning on getting out of the dollar as early as 2002 (if not long before) and then Iraq (who tried getting out of the dollar in 2000 after a decade of sanctions) got blitzed and Tehran went eerily silent. Then a few years later and coincidentally enough with the US bogged down in two stagnate/unpopular wars... Tehran began chatting aloud about dumping the dollar again. It was The Iranian Oil Bourse, created in 2008, that set the stage for this showdown that will officially end the petrol-dollar relationship with Iranian crude oil beginning on March 20, 2012. That is just a little over a month to go.

Now that we are facing our own debt problems, drawing down from Iraq and Afghanistan and have a President who may be perceived as weak, the Iranians threw down the gauntlet. What are we to do? All this adds up to one thing and that is why we are seeing a strong military presence in the Middle East, coupled with tough talk from talking heads here in the states. I see a major push to invoke war with the Iranians.

I've always felt and said that nuclear weapons and terrorism have always been more of a perceived threat then an actual threat concerning the Middle East. 9-11 was the exception and it wasn't state sponsored either. Are nuclear weapons that much of a threat to warrant all this attention? I have my reservations. Iran has plenty of nations around them that don't particularly care for them and are nuked up as well, and those that don’t posses nuclear capability's, I assume would be more then happy to have nukes from the US/West planted on their soil as a deterrent.

Iran maybe a nutty regime but mutual destruction is a deterrent to even the crazies, no matter how much “cooze” Allah can (sic) promise. It’s simply a self contained regional situation in spite of what the saber wavers might otherwise say, even if they did get nukes. The idea of supporting terrorist and getting nukes however is easier for people to grasp then how the Petrodollar recycling machine works and its more inline with the average person’s moral views: good vs evil is easier to understand vs then say what it really is and that is the Machiavellian battle of high vs low mach, or some might say survival of the fittest.

Hell, the majority of the country does not even believe in natural selection!? Can you really blame our government for running with the: 'scary dudes in turbans, armed with rocket launchers and hiding in caves reading Korans under camp fires - alongside a gaggle of virgins, who also want to nuke you…because they hate you, because you are free' story?  

That's where this web gets tangled. See, as Americans we like our standard of living. Is it inflated? Is it driven purely by consumption and debt? Is it made possible by a rigged game that allows us to trade pieces of paper for all types of goods and commodities that the rest of the world has to break their backs for? The answer to those questions is also - yes.  

If it was just about nuclear weapons we would have eliminated North Korea's capability's long ago. If it was about terrorism, we would have went after our own allies like Saudi Arabia or never would have clandestinely funded so many right-wing gorilla operations in Latin and South America the last 50 years. 

Anyone that threatened to flip the monopoly board over and not participate (and publicly denounce the petrodollar) in the petrodollar scheme and trade with other currencies, has already been or will be (Hugo Chavez) neutralized. From Libya - Iraq - former IMF chair Dominique Strauss-Kahn and now Iran. 

“The dispute over Iran’s nuclear programme is nothing more than a convenient excuse for the US to use threats to protect the 'reserve currency’ status of the dollar” from the Tehran Times - which calls itself the voice of the Islamic Revolution

With the Petrodollar recycling process being the single - most vital element to the United States hegemony, it is imperative and absolutely essential that nations (see OPEC) continue to exchange their oil for US dollars. Or, the world as we know it here in the States will be much different... and not for the better. You can rest assured, that we will be putting a boot up the Ayatollahs ass and carpet bombing the Caucasus before our leaders (see corporations) allow us to fall into that state.