The Unwritten Plan
Friday, October 22nd, 2004
By Michael Lombardi, MBA for Profit Confidential
There’s a number I’d like you to keep in mind. That number is 77 and it’s important for a reason.
Take all the factories in America that make something… anything for that matter. Put them all together and you’ll find that, as a group, they are working at only 77% of their capacity.
We can look at it another way too-one quarter of all the space and equipment in a typical American manufacturing facility sits idle without any use. Our factories are working at only three- quarters of their capacity.
Why are our factories far from working at full capacity? A simple one-word answer: China. Much of what American consumers buy, much of what the one hundred million people who visit Wal-Mart each week buy, are goods made in China. It’s simply cheaper to have goods imported from China than to have those same goods made here because Chinese labor is so inexpensive.
But it’s not just goods anymore that are made and imported into the U.S. Many large American companies have set-up their call centers and other “service” operations in cheap-labor countries. American companies, in their never-ending pursuit of profits, are ultimately responsible to their shareholders. So if they can get cheaper labor elsewhere, outside America, well that’s exactly what they’ll do.
However, times are slowly changing. Manufacturers around the globe, and many foreign central banks, are getting close to crying bloody murder. And that’s because the U.S. dollar has literally been in a freefall against other world currencies.
The ultimate, unwritten, not talked about plan: Devalue the American dollar so low that Americans will find it cheaper to buy American again than import… Increase the capacity of our factories at the cost of decreasing the capacity of foreign manufacturing plants… Bring our dollar so low foreigners cannot afford to sell their American stocks and real estate because they would take too much of a currency hit… Yes, make our real estate and stocks even cheaper and more attractive to foreign investors because foreign money will go so much further in the U.S.
I truly believe this is what is going on right now with the American dollar. It’s not good for Americans who want to travel abroad, but it is good for the American tourism industry because foreigners can now travel in the U.S. at bargain basement prices (because of the U.S. dollar is valued so low).
The decline in the dollar has been gradual to date. And that’s a great thing. If we can continue on this “plan,” we can truly engineer a turnaround. And really, I think it’s the only good plan we have going right now.
Next Post: Biggest profits from dollar collapse yours for the takingPrevious Post: Why It All Happened 16 Years Ago for the Better
Tags: china, U.S. dollar, Wal Mart
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on TwitterTweet
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