Category Archives: World War II

Introducing The Sichuan Tengzhong Hummer H1

This week’s bankruptcy filing by General Motors, and indeed the current critical condition of the entire U.S. economy can be traced directly to the wholesale loss of decent paying American manufacturing jobs, primarily to China.  Retailers like Walmart, whose stores are stocked predominantly with cheap Chinese-made goods are thriving, because financially desperate American families can’t afford to shop anywhere else (Walmart employs almost 1.5 million workers in the United States, and will be adding 22,000 more U.S. workers to its payroll in 2009; while this may sound like good news, it is anything but.)  It is a vicious cycle of cheap imports, resulting in job losses and low wages for those still lucky enough to find work, that creates an even greater demand for cheap imports that are destroying the American economy even more.  Probably the only thing that is limiting imports from China right now is the lack of available space on cargo ships.  The U.S. government does not seem to be the least bit inclined to limit imports, despite the damage they are doing to our country.

Now, it appears that General Motor’s Hummer division is being sold to China’s Sichuan Tengzhong Heavy Industrial Machinery Company.  We feel that dismantling what was one of the largest and oldest American corporations, and selling a portion of it to China is nothing short of treason.  It’s also ludicrous.  Friends, what you are witnessing is an acceleration of the destruction of the U.S. economy.

On a purely practical level, it won’t work.  The type of American buyers who are attracted to a vehicle like a Hummer won’t want a Chinese vehicle.  And as the U.S. economy continues to disintegrate because of exactly this sort of exportation of American brands and jobs, few if any Americans will be able to afford to buy a Hummer, or any vehicle, for that matter.

From a national security standpoint, selling yet another major American manufacturing company to China places America in grave danger. And remember… Hummer is basically a military vehicle, even if it has morphed into a family vehicle for soccer moms on American highways. We’ve said it before on this blog, and we’ll say it again…  Anytime it desires, China will be able to bring America to its knees without firing a single shot.  If China cuts off the supply lines that America has become dependent on, the United States will starve to death.   And we won’t be able to defend ourselves either, because unlike during World War II, America’s manufacturing capacity has all but disappeared.  If you think that melamine-laced pet food, lead-tainted toys, or toxic sheetrock from China are a problem, you ain’t seen nothing yet.

How bad are things getting for U.S. manufacturers?  We went to the Home Depot recently to buy a few sheets of sandpaper, and everything they had was made in China.  It appears that America can’t even manufacture sandpaper any more.

So stop worrying about North Korea or Iran or al-Qaeda or the Taliban.  What you should really be worrying about are those shiny new Sichuan Tengzhong Hummers that will soon be rolling down America’s highways.

We wonder if they sell portraits of Chairman Mao at Walmart.  There’s a bare wall in our living room where we could hang it.

– Routing By Rumor

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Bloomberg Hits The Nail On The Head Regarding Economic Stimulus Plan

NYC mayor Michael R. Bloomberg

NYC mayor Michael R. Bloomberg

There was a piece on the radio this morning which discussed New York City Mayor Michael Bloomberg‘s comments about any future economic stimulus plans. Unfortunately, our searches for his comments have come up empty, but we’re guessing that he made these remarks yesterday. If we’ve misquoted Mr. Bloomberg, our apologies. We are going on our recollection of what we heard on the radio this morning.

Mr. Bloomberg (his middle name is “Rubens” – how many of you knew that?) said that the first round of economic stimulus checks the government mailed out amounted to a program that allowed Americans to go buy Chinese-made widescreen TVs at Circuit City. We couldn’t agree more. In fact, if you’ve followed RoutingByRumor, you know that we have said that the first round of economic stimulus checks amounted to little more than a subsidy for Middle East Oil producing countries, big oil and China, Inc. (You can rest assured that no matter how low the price of oil goes, no matter how much demand drops, that ExxonMobil will continue to post record profits in the quarters and years ahead.)

Franklin Delano Roosevelt

Franklin Delano Roosevelt

Mr. Bloomberg said that any future economic stimulus program should fund infrastructure projects, which would be similar to what the United States undertook to help lift the country out of The Great Depression. President Franklin Delano Roosevelt‘s Works Progress Administration (WPA) created almost eight million jobs between 1935 and 1943. Just as importantly, this New Deal agency built highways, bridges, schools and other public works projects across America that still serve our nation today. New York City has more than it’s share of crumbling infrastructure, and like other American cities, would benefit greatly from a modern-day WPA.

Mr. Bloomberg has been critical of the Federal government’s economic stimulus plan in the past. In fact, he’s been against it all along. Last February, he said the then-proposed first round of economic stimulus checks were “like giving a drink to an alcoholic”.

Athough not in relation to the current debate on future economic stimulus spending, Mr. Bloomberg appeared before lawmakers on Capitol Hill this past June, in his capacity as co-chair of Building America’s Future.   He gave this testimony about the need to invest in infrastructure projects.

At a time when there’s more layoffs in the news every day, and the scope of those job cuts are getting wider and wider (today’s news brought word of Citibank planning 10,000 job cuts worldwide), we desperately need a government program that will give American families more than fleeting relief. We need a program that will keep the economic stimulus money the government spends here at home, instead of it being an indirect subsidy for China, which doesn’t benefit American families one bit. Walmart is doing very well, thanks to American families desperate to stretch their income. There is no need to provide Americans with stimulus checks they can take to Walmart, to buy more Chinese made goods. We’ve read that something on the order of 80% of the goods on the shelves at Walmart are made in China.

There’s slim chance that outgoing President George W. Bush will try to implement a program that will put Americans to work while also rebuilding America’s infrastructure. Our hope is that President-elect Barack Obama will seize the opportunity to lift America out of hard times by proposing a program styled on Roosevelt’s WPA. If Washington is going to spend billions of more dollars in an attempt to prevent an economic collapse, doesn’t it make sense to spend it on projects that will benefit America for generations to come, while keeping our money here at home ?

– Routing By Rumor

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“The Iraq War Has Been Won” – A Grammar Lesson In Past, Present and Future Tense

Senator McCain speaking in Columbus, Ohio on Thursday

credit: Associated Press / CNN.com

It has been widely reported that Senator John McCain, while campaigning in Columbus, Ohio this week, announced that “By January 2013, America has welcomed home most of the servicemen and women who have sacrificed terribly so that America might be secure in her freedom. The Iraq War has been won.” Talk about irrational exhuberance.

It’s the most curious statement we’ve seen yet about the war in Iraq. We can’t figure out if it is future tense, past tense, both or neither? Is it wishful thinking, a sign that dementia is setting in, or a slightly premature victory speech from the apparent next President of the United States? And if this is victory, what does defeat look like?

Before John Sidney McCain III makes any long term prognostications, he would be well advised to take a look at what George Bush was saying five years ago, in May of 2003. Mr. Bush spoke under a banner proclaiming “Mission Accomplished” on the deck of the nuclear powered aircraft carrier USS Abraham Lincoln (read CNN article). He spoke of having accomplished victory in Iraq. Not only was that claim untrue then, it’s even further from the truth today, five years, a Presidential term, and 4,000 dead Americans later. And George Bush was speaking in the present tense, which one would think gives him an advantage over the Senator from Arizona. If Mr. Bush could be so wrong, why should anyone put much stock in Senator McCain’s predictions about Iraq?

Perhaps what the Senator was really saying was “just give me four years to clean up this mess”. The fact of the matter is that January, 2013 will likely mark the end of McCain’s tenure, Iraq or no Iraq. If you’re reading this blog in 2013, please leave a comment, telling us whether the prediction President McCain made about Iraq back in 2008 was accurate.

Don’t get me wrong… I’ve felt that John McCain is the only viable candidate at this juncture. Unlike the other major candidates, he is the only true American hero, and the only candidate with what we believe is the prerequisite experience required by the office. But after hearing him hallucinate out loud in Columbus, we are starting to have our doubts.

A sidenote: In doing research about Senator McCain for this article, we stumbled across his page on Dickipedia. That’s right, Dickipedia, not Wikipedia. Absolutely hilarious stuff. Very, very funny. ROFL funny. (Not to be confused with ROFLCAT). Now I know why the World Wide Web was invented. We just hope Dickipedia never creates a RoutingByRumor page.

Q: How do you know when you’ve won a war?

A: It will look something like this…

Japan signs formal surrender aboard the USS Missouri in Tokyo Bay, September 2, 1945

This is what winning a war looks like. It has all the trappings of a victory (see more here). Unlike what has happened in Iraq, you have an event that clearly signals to the world that it’s over, and who the winner is. No such luck with Iraq. Indeed, we’re no longer fighting a government over there. Who’s going to sit down at the table to sign a formal declaration of surrender?

More than 4,000 of our troops have died so far, and you can be certain that thousands more will die before we find a way to extricate ourselves from Iraq (see “Faces of the Fallen” at The Washington Post). In the words of The Clash, who asked the question “Should I stay or should I go?“, they concluded that “If I go there will be trouble, and if I stay it will be double“. Ditto for America’s military involvement in Iraq.

Now, to be fair to Senator McCain, what do you expect him to say? Should he promise to pull out of Iraq the day he becomes President? Should he commit to staying indefinitely? There’s no clear exit strategy for Iraq, and we’re not sure that one is possible. It’s a politician’s worst nightmare.

It is debatable whether we’ve accomplished much of anything over there, and Iraq is much more unstable today than before we invaded. We think that Iraq under Saddam Hussein was preferable to what exists over there now, and there are probably many Iraqis that would agree. Does anyone really believe that we will ever be able to claim victory in Iraq?

Most importantly, is America more secure today than it was before we invaded Iraq?

– Routing By Rumor

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The Coming Gasoline Crisis… Get Ready For Gas Lines And Rationing !

credit: Florida Sun-Sentinel / americanphotojournalist.com

photographer: Melissa Lyttle

The first gas crisis in the United States in recent (post WW II) times was during the winter of 1972-73. The second gas shortage was during the summer of 1979. It was during that crisis that gas prices broke (at least in the Northeast U.S.) $1.00 a gallon for the first time. Those were the good old days. Fast forward to 2008, when, for many parts of the United States, gasoline is now topping $4.00 a gallon, and rising daily.

Despite the fact that we are almost 30 years down the road since the last energy crisis, we are still almost totally dependent on petroleum-based fuel. Electric, natural gas, solar, hydrogen and to a lesser extent ethanol, have failed to make a significant dent in our demand for petroleum-derived gasoline and diesel fuel.

There are still virtually no all-electric, natural gas or hydrogen vehicles on the road, with a fairly insignificant number of these alternative-fuel vehicles in some fleets, such as utility company, transit authority and delivery company vehicles. Have you ever seen an electric, hydrogen or natural gas refueling station ? Even today, for all practical purposes, gasoline and diesel are the only fuel options available. What percentage of the privately owned passenger vehicles in the U.S. are all-electric or gas-electric hybrids ?

Despite more energy-efficient homes and appliances, we continue to set energy consumption records. Electric utilities generally set new winter and summer peak output records each year. It seems that no matter how efficient our homes or cars become, no matter how hard we try to conserve energy, we will never see lower demand for energy. All we can hope to achieve is to slow the increase in energy consumption.

While the increase in total energy consumption varies by geographic region and market sector, consumption generally increases between 1 and 3% annually (see US Department of Energy report).

Now couple our ever-increasing appetite for energy with the fact that developing nations, most notably China, are significantly increasing their energy use. It portends continuing increases in the price of energy from all sources, not just oil. It also means tighter supplies and future energy shortages (see this April, 2008 AP article in the NY Times about tight oil inventories). With the summer approaching, shrinking gasoline supplies (despite higher prices), and increasing seasonal demand, it’s a recipe for trouble. They are even attributing a decrease in U.S. oil supplies to fog in the port of Huston. What’s next… blaming it on which way the wind is blowing ?

Recent world events related to shortages of food staples such as rice, wheat and corn are already being felt in the United States. While there does not appear to be a true shortage yet, the prices of all these commodity items has risen sharply in recent months. And yes, much of this increase can be tied to the price of oil.

We are seeing more and more instability, in terms of price and availability of food items. In just the past few weeks, rationing (or more accurately, purchase limits) have begun to pop up at retailers around the United States, on rice and flour. While panic buying is likely to blame to a great extent, a tight supply is no doubt at the root of these actions, as well as the sharply higher prices.

credit: freeenterpriser.com

Gasoline is subject to exactly the same market behaviors as food. To some extent, it is even more vulnerable. You can’t plant more oil seeds next Spring in anticipation of higher demand. The crude oil supply is more or less constant, at least for now. It’s a non-renewable resource, so once it’s gone, it’s gone forever.

It would not take much to touch off panic buying of gasoline. A steep short-term increase in the price of crude, a new political crisis in the Middle-East, a weather-related emergency, or some unforeseen event that influences energy markets, are all capable of creating a crisis overnight.

We think that the recent run-up in gasoline prices has significantly increased the likelihood that we will see another gas crisis in the near future. This is regardless of whether there is a true shortage, or if it’s just panic buying that takes hold. Don’t be surprised to see gasoline rationing being put in place as soon as this occurs, whether it is imposed by the retailers, or by the government. Don’t be surprised to see long lines at the pumps, a la 1972.

– Routing By Rumor

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Oh Great… Just When I Feel Like Having Arroz Con Pollo, They Announce Rice Rationing !

J. Howard Miller's World War II poster

J. Howard Miller’s (see obituary) World War II era poster

Global warming, mad cow disease, Iraq, disappearing honey bees, $4.00/gallon gasoline, the real estate slump, food riots around the world, a recession here in the U.S. (despite what Washington may be telling you), and now rice rationing ?

Check your calendar. Is it 2008, or 1942 ?

I’ve lost my appetite. Forget the rice. I’m going to buy some Soylent Green. Speaking of Soylent Green, maybe we can have Charlton Heston investigate this rice shortage. Oops, too late.

…And you do need a balanced diet, so get some Soylent Red and Soylent Yellow, too.

You have to wonder why Costco and Wal-Mart (Sam’s Club) would choose to ration rice purchases, rather than let market forces control demand and price. Rationing tends to induce panic buying. This is a bad omen, coming at a time when corn is in short supply because of the demand created by ethanol production.

What’s next ? Sending military advisors to Vietnam, to help the rice paddy farmers ? We’ll call it a “police action”. Maybe they can dust off “Rosie The Riveter” and have her star in a new campaign to eat potatoes, and the government can start issuing rice coupons.

I can see it now… McDonald’s running TV commercials advertising their “Freedom Fries”. Bags of “Patriot Chips” on store shelves. People throwing popcorn at weddings. Boycotts of Chinese restaurants that serve rice. Food manufacturers promoting rice-free products. The price of potatoes quadrupling overnight. Runaway wheat prices. Supermarkets using armored cars to deliver rice to their stores. “Rice lines” at the supermarkets, and “rice riots” in the streets. Soccer moms fighting in the cereal aisle over the last box of Rice Chex. Rice-free Fridays. “Black market” rice. Even/Odd day rice rationing. Flour rationing. Bootlegged rice. $5.00 or $10.00 loaves of bread (which isn’t such a huge jump, since many premium breads now sell for close to $4.00 a loaf). And don’t forget the inevitable Congressional hearings into the rice shortage, with farmers and wholesalers invoking the fifth amendment. Northerners might even discover what Southerners already enjoy, grits. The USO starts an anti-rice campaign, encouraging Americans to send potatoes to servicemen instead, with the catchy phrase… “Send a sack to our boys in Iraq” (inspired by “Send a salami to your boy in the Army” (youtube) …featuring Jerry Lewis at Katz’s Delicatessen, NYC, from “At War With The Army“.) Also see this blogger’s raving about Katz’s Delicatessen, a New York City landmark. (While we’re on the subject of movies and Katz’s Delicatessen, here’s the classic scene from “When Harry Met Sally”, starring Meg Ryan and Billy Crystal. It was also filmed in Katz’s Delicatessen.)

You’re walking down the street, and some guy steps out of a dark alleyway. Pssst… hey bud, youz wants to buy a bag of Basmati, real cheap?

$4.00/gallon gasoline will pale in comparison.

– RoutingByRumor

photo courtesy of Kobako / Wikimedia

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The Great Bernanke Pulls A Rabbit Out Of His Hat

What might have come to be known as Black Tuesday 2008 (yesterday) was averted at the last minute, when Ben Bernanke and Company delivered a 3/4% cut to the overnight bank rate. Tuesday’s rate cut was the largest one-day rate cut ever by the U.S. Federal Reserve Bank.

As any great magician will tell you, timing is everything. The Federal Reserve waited until just before the markets opened Tuesday to announce the latest rate cut. Here at Routing By Rumor, we were way too conservative in our predictions for yesterday. We forecast the Dow dropping 200 points within the first hour of trading. In fact, the Dow dropped 464 points within minutes of opening. We predicted a loss of over 700 points on the day, which did not happen, thanks to the intervention by the Federal Reserve yesterday morning. The Dow lost just over 1% on the day, closing down 128 points. Not a good day, but much better than everybody was expecting, for a trading day that resembled nothing as much as a wild roller coaster ride. We have little doubt that had it not been for the Fed’s action yesterday morning, there would have been a bloodbath on the floor of the New York Stock Exchange yesterday, just as there was on world markets earlier in the day. Instead, there was controlled bleeding, and a market that was touch-and-go all day.
That was a pretty big rabbit that Mr. Bernanke pulled out of his hat. He will only be able to pull that trick off a couple of more times before he is fresh out of rabbits. Then what? Mr. Bernanke’s rabbit arsenal reminds us of the bluff the United States pulled off in World War II. The dropping of atomic bombs on Hiroshima and Nagasaki prompted the surrender of Japan a few days later. Things might have turned out much differently, had the Japanese known that we used the only two atomic bombs we had. We were fresh out.

This is economic policy driven by crisis, rather than by plan. The Fed is putting out fires, rather than addressing the reasons why the U.S. economy is faltering. But the policies that are responsible for America’s economic problems are not controlled by Mr. Bernanke and his friends. There is little more he can do than loosen and tighten the tourniquet now and then.

Hear that giant sucking sound? We do. Ross Perot did, way back in the 1990’s when he was warning us about NAFTA. That’s the sound of jobs leaving the United States. I’ve written about the problem in this blog recently. As long as we are importing most of the goods we consume in America, our economy will continue to disintegrate right before our eyes, no magician necessary. Quick fixes and slight-of-hand will only work for so long.

So what’s ahead? Look for another wild ride when the markets open later this morning. The stock market futures are pointing to a 250 point drop on the Dow and a 35 point drop on the S&P this morning, Wednesday, 1/23/2008. Don’t look for any more rabbits, at least not for a while, despite hints by the Fed that another rate cut might come at their scheduled meeting next week. We view that as an attempt to maximize the mileage they get out of Tuesday’s rate cut. And even if we’re wrong about another rate cut, don’t expect another whopper. If there are any more rabbits in Mr. Bernanke’s hat, they’re likely to be a lot of smaller rabbits, rather than another 2 or 3 bunker busters.

….And the bad news keeps rolling in. Iraq, layoffs, foreclosures, energy prices, bankruptcies, inflation, unemployment, just to name a few. As the Bernanke effect starts to wear off, we believe the markets will trend lower in the days and months ahead. Expect to see a lot of volatility in the markets, similar to what occured yesterday.

– RoutingByRumor

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