The New American Paradigm

Urban sprawl is dead, and we should all be grateful for it. America is entering a new paradigm, which I have been writing about for over the past year. The nation has been feeling the contortions of a painful repositioning brought about by the country’s most greedy and self-centered individuals sucking off of the citizens that earned much less per year than they did. I have written before that they were the designers of the world’s biggest Ponzi scheme. They were instrumental in the monstrous frenzy that orchestrated the creation of what we know today as urban sprawl.

They issued huge "creative", although destructive mortgages to families and individuals, as well as speculators, to sell those large homes with big footprints. Often linked by highways, the residents of those homes spent hours in their cars, stuck in long rush hour delays as they crept along, inch by inch, toward their offices or places of work. To and fro was their routine, day in and day out. Out the tailpipes spewed fossil fuel pollutants.

With many of these homeowners losing extraordinary value in their homes, some over 50%, they are fearing the reset of their original Teaser mortgage rates, which might have been at 3%, now rising to 8-9-12%, or more. The incomes of many of these families were already stretched before the reset schedule, and now, with wages stagnant, and jobs being one step away from separation, as well as plummeting property values, millions are ready to walk away and find somewhere else to live leaving those who are and have been paying their mortgages left alone on the cul-de-sac to watch their own property values plummet. This is painful to watch, nonetheless.

We have begun to realize that the homeownership scam has been just what it was. It has been a scam, part of the Ponzi scheme, which began 30 years ago, to force middle income workers to live above their means, and borrow off of their investments to participate in the con-sumerism culture preaching that more stuff is better.

Those top-tier financial conartists working in the FIRE sector of our GDP, finance-insurance-real estate, were the ones who so loved to sell people highly priced homes that they would never pay off delaying the chance to live mortgage-free, for possibly many years, following that final payment, off-setting the inflated costs which were paid so dutifully. With interest payments over a 30-year mortgage schedule, their homes often cost them twice as much above what the actual agreement price was. In order to recoup that inflated outlay over 30 years, they would need to have the opportunity to live in that house mortgage-free. But, today for many that dream has turned into a nightmare. The urban sprawled communities will begin to disappear as more and more families walk away from their mortgages. There will actually be turned into ghost-town suburbs surrounding some of our cities.

A reason that might tip homeowners into walking away from their mortgages could occur when they hear the sales pitch they will likely be given in hopes of swaying their emotions attaching them to place and neighborhood when their bankers come a callin’ with new mortgage agreement papers for them to sign. Once they are done reading the stack, they will likely figure out that they will basically end up as just a renter when it is all said and done. As I wrote in my last posting, the pitch will likely be that the homeowner’s home value will be lowered to reflect current market prices. But when it is time to resell the home, the homeowner will have to agree to hand over any profit made from the sale that exceeds beyond the newly adjusted mortgage price.

For example, if the home was originally sold for $500,000 and was adjusted to the current value of $250,000, any amount over $250,000 when sold might have to be handed over to da' Man. This would mean that the family, for all essential purposes, will be renting the home even though they had been paying a mortgage, with interest, as well as putting up that initial down payment, and financially adding to the improvement and maintenance of the property. I am not saying that this is unfair, since taxpayers would be offering mortgage assistance, if the homeowner does wish to remain in their home. All I am saying is that some might say, "So, what's the point of staying?" We maybe looking at 50% of homeowners walking away from upsidedown mortgages.

So, is there one good reason to stay and make the deal with the devil who brought down the economy, in my belief, on purpose!? These very vampires who made huge amounts of money gambling on these mortgages derivatives should now be responsible for the destruction they created throughout this economy. In my opinion, there is no good reason to stay with the home. I don't believe that the Obama administration will be forcing the bankstas, and financial kleptocrats to give up their gains and profits to support the very homeowners they exploited as they carved up those mortgages into toxic derivatives. It may be in one’s best interest to just walk away from it all and move closer to the job, reducing one’s overall monthly expenses, save some money and just rent. No more mortgage insurance. No more mortgage interest rate. No more ball and chain commitment to a possibly dying Exburban community.

When you begin to examine the Bush Ownership Society philosophy, which did not start with him, yet had existed for decades, you realize that it was meant to lock people into a place even if it sacrificed professional and personal mobility. For many of those decades, selling one’s home was not a problem, since home prices were stable, if not escalating. But, once Little Boy Bush came around the neighborhood, that all changed and prices went sky high, and the Ownership Society housing bubble got bigger and bigger until it finally exploded turning the economy into balls of fire.

This was the only way the financial predatory vampires could get the price asset values of homes and property back down to fire sale values; but now, they will be left with foreclosed, and abandoned homes. Some might say, "It serves them right!" These vampires did not really think through their crash plan very well.

The upside to all of this is that as the nation begins to remake itself, and the new paradigm begins to take shape, families who walk away from their overvalued homes can relocate to where the new urban revivals will be taking shape. Cities such as Pittsburgh, Baltimore, Columbus, Seattle, and Norfolk, to just name a few, will rise from the rubble if they can fast forward a new domestic and exportable industrial revolution, which will manufacture light rail, solar, wind, and water energy generation systems, high speed telecommunications infrastructure parts and systems, electric vehicles and parts, sustainable food production, and non-Terminator seed harvesting systems, sustainable building materials and pre-fabricated residential and commercial structures and systems.

Just think, what if shopping malls, homes and offices were designed in such a way that once they became obsolete, or needed to be moved easily, they could be dismantled, without waste, and relocated and reassembled for use again.

If a big box store, after a few years, realized that they made a bad choice and built the structure where it no longer made a profit, could then be taken apart, and moved to a new location without waste. What if the home you were living in needed to be moved to a new location, much like a mobile home, stacked on a truck and driven somewhere else, then restacked and assembled. All that would remain on the old lot would be a slab and a flat piece of landscaped ground, which could be sold to someone else. Such a concept could be done with, for example, used shipping containers, and there will be plenty available, that could be remade into stackable dwellings.

By designing structures in such a way, a mobile society could set down roots, without necessarily renting, and then, when necessary, relocate the homes to new sites where they could be stacked back up on newly purchased or leased lots. No one would be horse tied to fixed locations, especially when property values appear to be declining.

The nation’s future will no longer look like it had for the last 60 or so years. It will be forever changed. A new paradigm. The mega-financialized Ponzi sector will be put back into their boxes and managed properly. Once again, labor MUST take back its rightful place in the economy, which should be, at least, on even par with all other sectors. No one sector should dominate the economy. Without labor, and “laborers” earning good wages, while able to spend and save money, there is no economy. Without finance, there would be no investment to bring about new ideas. But, the laws need to be changed to eliminate monopolies created by big pharma, energy producers, and other multi-national conglomerates stifling creativity, research and development, and more. New laws need to passed that reduce the burden put on manufacturing that weights them down with outrageous health care costs, insurance costs, rental costs, and borrowing costs.

It is clear that a new paradigm will be forcing Change, one way or another. The world is in crisis created by the ‘Consumer Society of Americans’ so willing to buy the cheap stuff made in foreign countries. We have been responsible for the lifting-up of emerging economies and their standard-of-living. There is nothing wrong with that, but now, our debt has reached dangerous levels, 45 million Americans are without health care, millions are ready to retire, if possible, and jobs are disappearing. Obama’s Change will need to find sources of capital, since domestic revenues have significantly declined. Other richer nations are finding they don’t have enough to spare. He must not waste a penny of it. It appears he already has. He needs to wake up to the future and the new paradigm rolling in. It is time to make it relevant. It must be a bottom up paradigm with workers rebuilding cities and surrounding areas, revitalizing our agriculture with domestic local farmers supplying their regions using efficient machines and technologies, expanding light rail and transit systems, with Green energy grids, and manufacturing that would be immediately used domestically and desired by those in America, as well as other parts of the world.

President Obama must decide which side of the paradigm line drawn in the sand he chooses to stand on: a bottom up paradigm, or the top down paradigm.

Thanks for reading, jerry

Handmade Manufacturing

As the nation, and the world, experiences the worst economic crisis since the Great Depression, manufacturing in the United States has slipped away to places outside the country. Manufacturing only makes up 17% of our GDP (19.8% in 2007) (Gross Domestic Product), while the service and financial sectors had moved ahead to a rank of nearly 40% before it imploded. In 1948, manufacturing GDP was 46%, while the service sector GDP only made up 21% of GDP. Later, manufacturing fell to 36%, in 1960, while the service sector GDP grew to 25%. The trends continued, and in 1970, manufacturing GDP slipped to 34% as the service sector GDP gained more strength making up 26% of GDP. In 1982, they both converged. By 2000, manufacturing GDP fell to 28%, while services went up to 40%. The service sector economy has been made up of franchising, news media, hospitality-entertainment, legal, healthcare, hospital care, real estate, garbage/waste hauling, and consulting, as well as business solutions and services, financial, and personal services. Wikipedia.com listed those as “intangible goods”, plus included public utilities as a “tertiary sector”.

One can understand how the service sector grew as a support to, but later, separated from the nation’s manufacturing industry. As we learned, this split from being symbiotic to each other was not sustainable. The model of a dominating service sector disconnected from a strong and viable domestic manufacturing sector cannot work.

Factories, which once brought a hum to communities from Maine to California, have been relocated to East Asia, and elsewhere, along with the jobs. Since 1948, domestic manufacturing began to steadily fall as a leading economic engine of our gross domestic product--measure for our national income and output for our economy.

Small towns and cities, along with their bigger brothers and sisters, such as parts of the greater Chicago area, Cleveland and Pittsburgh, have seen their economies decline as steel, furniture, clothing, and shoes are now made by foreign nationals, and sold back to Americans, while the profits are sent back to the home country, or country of origin. We seem to have been drunk on buying cheap stuff, and in large quantities, as we blindly watched our trade surplus of 30 years transformed into a deficit. We participated in the largest consumer spending frenzy, which has made up 72% of our economy, or GDP. Today, our trade deficit has reached $900 billion. That means the United States buys $900 billion more than it exports. China’s economy relies on 40% of their exports to fuel their economy, and much of it heads over to the United States to be sold in discount and other retail stores.

We have devolved, over 30 years, into the world’s biggest exporter of raw materials and the world’s biggest importer of finished goods, and world’s fattest debtor nation. Before then, we were just the opposite exporting finished goods all over the industrialized world, and ranked as the number one creditor nation. Today, we are now a more global economy, but many say it is without balance. Our economy is finding itself broken and broke. We have become a service economy that is hard to export. Try exporting a double cheeseburger with fries and a soft drink!! Or, try exporting in-home health services, or window cleaning, or roofing services.

A service economy tends to be domestic in nature and less of an exporting commodity. Manufacturing has been, and will continue to be the most valuable exportable product this nation has available to them. To export financial services will no longer be trusted by many around the world after specialized financial products ended up burning down right before the investor’s eyes. Many people have called it the World’s Biggest Ponzi Scheme, and that is hard to be argued against.

What can be trusted, though, is a handmade item that can be used over and over and has reliability built into it. You can call it a hard good, even though it will likely have a limited lifespan of varying degrees. When you buy a coat, or shoes, or stove, or frying pan, you know it will be there today, tomorrow and next year. We need to get back to that. We are getting closer to it now, than several years ago. Unfortunately or fortunately, depending how one sees it, our economy has declined so much over the last 12 months, our exports have become more affordable to foreigners.

Handmade manufacturing employs people with a variety of tradable skills, ranging from highly skilled to lower skilled; yet, nevertheless, all have a place in the world of manufacturing.

Yet still situated behind apartments, condominium buildings and retail stores, still lies manufacturing. American manufacturing has kept that remaining 17% of GDP still alive. Unfortunately, it continues to fall. Consumer demand for most hard goods, such as cars, home building supplies, clothing, electronics, and more has dramatically collapsed. The consumer feels squeezed and at-risk of further economic vulnerability.

Manufacturing is what this nation needs to rebuild its economy again. This way of making things that can be exported keeps local economies alive. Workers spend their skilled labor incomes in their communities, and buy local services stimulating the economy. Taxes are generated and paid by both the company’s owner, as well as all the employees. This fuels our GDP and helps reduce of trade deficit.

Often what stifles a small or medium sized manufacturer from expanding, or paying higher wages, or investing in research and development are the costs affiliated with the paying of rent, insurance, and debt loads, such as lines of credit, and commercial paper payments. This has showered the fire, insurance, real estate (F-I-RE) and financial sectors with lots of cash to alter the face of our economy, and many say for the negative.

By placing these heavily expensive pressures on domestic manufacturing, many owners have been forced to leave the country or fold up completed over the last 30 years. A company having difficulty getting customers to pay on time then has trouble operating, and making payments to suppliers.

Many economists have stated that domestic manufacturing is burdened with the payment loads put on them by the FIRE and financial sectors. Such expenses inhibit their growth potentials.

In order for domestic manufacturing to begin its resurgence, these heavily burdensome economic pressures must be modified and reformed if manufacturing is to grow again, and begin to hire the good ole’ American worker.

Factories are the long-term life preservers of our sinking ship. A stimulus package might be helpful in the short run by hiring out-of-work construction laborers and skilled machine operators to fix bridges, roads, tunnels, and schools, among other projects, yet more is needed to build a sustainable society and nation.

The United States must invest in sustainable energy resources, which should be manufactured by skilled American laborers. The technologies are out there today to build small, localized renewable energy power plants to provide electricity to those users within that localized community.

For example, there are magnetic levitation wind generators, which require minimal wind to spin and create electricity. Communities could take empty, abandoned, or condemned properties and build such power plants all over this nation. But, we need a strong president and administration to initiate and champion such ingenuity and reforms, while pushing back against the powerful forces that are afraid of losing their economic stranglehold upon the consumer.

America needs to realize that without handmade manufactured products that domestic workers can afford to buy with their wages, and export to other countries, there will not be an America. Our nation will diminish in strength and respect throughout the world, as well as the value of the dollar and its investment products. If credit will ever return, those at the top end of the income ladder must accept that without lower and middle income workers earning a good wage allowing them to save, spend and borrow, once again, there will be no America. As long as consumers are afraid to spend due to disappearing jobs, stagnant wage growth, and shaken by their neighbors, friends and relatives losing their homes and retirement investments, there will be no borrowing, or willingness to take on more debt. The financial sector might as well give it up.

With 12 consecutive months of declining manufacturing output, and the lowest percentage of GDP in 50 years, the Obama administration needs to realize that giving the too-big-to-fail financial banks is not the answer to our economic crisis. A significant portion must go to rejuvenating the handmade manufacturing sector so workers can gain employment, pay off their debts, save, and pay taxes so as to reduce our deficits and help pay for our overall national economic recovery. The sooner Congress realizes these facts, the quicker we will see a recovery.