Personally I think we are a year or two too late. We as a country have sown the wind, and we may reap the whirlwind. Paulson is doing what he can to keep that from happening, but the financial system has a lot of momentum.
This country's economy I read somewhere is about seven trillion dollars. Well, we hung about a trillion dollars worth of bad paper on the Central Banks of most of the developed countries last year, and we saw the financial balloon deflating from last summer thru this spring. That trashed the value of the dollar. It did not help that last fall and spring China began hoarding oil to burn in its power plants when they ceased burning coal, so as to allow their air to clear so they did not lose face for the Olympics. The oil producers and dealers squeezed whoever wanted that extra oil on the price of the oil they HAD to have, and that ran up the price of oil further, and lowered the value of the dollar even more. That was temporary. Now it's out in the open that it was China buying up the oil, and the oil-price-balloon collapsed, and the cost of oil is coming back down.
We have the fallout from that, namely that the Country has less money. See, the official economy may be seven trillion, but I think there's ANOTHER seven trillion that is created by all of us extending credit to each other.
No more. Not like it used to be. I think we lost another trillion of internally-generated credit.
I have my manufacturing business
www.smithandcompany.org, as many of you know, and in the last few months my chemical suppliers have reduced my lines of credit by half, and are now holding me to net 30 firm, where before they were liberal and if I paid in 60 days that was fine. Some banks have lowered my [paid-current-never-late] credit-card limits by half. My customers who financed their boat-repairs and house-repairs with home-equity lines now no longer have those, and less is getting done. Some businesses place large orders with me, and I require prepayment, and it now takes them a month or two to prepay the order, even though their own production department is screaming for delivery.
My large chemical raw-material manufacturers have become slow in supplying product to my distributors, and now I am seeing back-ordered raw materials like never before. My distributors have less working capital and are keeping less material in inventory, and I have to order single-drum shipments sent to me by motor freight because the distributors do not want to do as frequent stock-transfers as they have less inventory to spread around, thus my costs go up even more than they already have due to the spiraling cost of energy.
We all have less money to go around, and yet it is money-supply that supports the exchange of goods and services. What's the solution?
The DEFINITION of Money is " an intermediate-value unit that represents the production and exchange of goods and services".
It's not "that which one borrows". That stuff just got burned up.
So, if we haven't got enough money, that means we haven't got enough "production-and-exchange-of-goods-and-services".
The solution is thus for every one of us that can produce something exchangeable to get busy and do it. That's how we're gonna get out of this mess. Roll up our sleeves and get busy.
Here's what I've been doing in the last nine months: Besides hustling new business and custom-manufacturing of new products for industrial customers that need what I can produce, and looking for private-label opportunities, I have found ways to promote a product I invented last Summer, a new water-base environmentally-friendly wood treatment that helps wood to resist deterioration, and over the winter I invented and filed patents on a new, MUCH more efficient process for making fuel oil from renewable resources, and have recently established the Green Fuel Oil llc to commercialize the technology.
I've been working an 80-hour week, too. No time for goofing off.
If we all get busy producing whatever each of us is good at, we can straighten this country out.
Steve Smith
