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A U.S. Collapse? Don't Make Me Laugh

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Wherever I turn these days, it seems I'm repeatedly met with the same dire drumbeat. It goes something like this: The U.S. has seen its best days and is now in a state of decline.

Some folks echoing this sentiment focus on the rise of emerging markets like China and India. Others talk of the U.S. being mired in a terrible depression. Some even go as far as to compare the U.S. to the Roman Empire right before its epic fall.

I'm not sure the best way to express my view on this in a family friendly way, so I'll just say that it's all absolute poppycock. Sorry for such harsh language.

Branded successful
One interesting gauge of American business comes from the annual "Best Global Brands" list that brand expert Interbrand compiles. Nine of the top 10 global brands hail from the U.S. Here's a look at a few:





Brand Value

1 Coca-Cola (NYSE: KO  ) United States Beverages $70.4 billion
2 IBM (NYSE: IBM  ) United States Business Services $64.7 billion
4 Google (Nasdaq: GOOG  ) United States Internet Services $43.6 billion
5 General Electric (NYSE: GE  ) United States Diversified $42.8 billion
6 McDonald's (NYSE: MCD  ) United States Restaurants $33.6 billion
7 Intel (Nasdaq: INTC  ) United States Electronics $32.0 billion

Source: Interbrand.

If the U.S. is in an interminable decline, somebody forgot to tell that to the consumers around the world religiously drinking Coke, eating McDonald's hamburgers, and using Intel-driven computers.

Of course, the presence of brands like Coke and General Electric -- which seem to have been around since time immemorial -- doesn't necessarily help our case much. They could be shrugged off as simply aging pillars that are waiting to crumble (even if they're not).

What's more interesting is that on a list that includes venerable brands that are more than a century old, like Coca-Cola, Mercedes Benz, and Budweiser, we see the brands of U.S. companies that are far younger. Cisco and Dell (numbers 14 and 41) are just 26 years old. and Yahoo (numbers 36 and 66) are still in their midteens. And of course the No. 4 brand in the entire world, Google, is a mere 12 years old.

Maybe just as impressive are the older brands that have significantly reinvented themselves. While IBM still carries the same brand that it has for decades upon decades, the services-and-software-focused company of today is very different from the mainframe giant of the past. And today's Apple (Nasdaq: AAPL  ) brand, which has been jolted by iPhones, iPads, and iPods, bears little resemblance to the company that sold the Apple IIe I had in the early '80s.

Not all of these brands will have positive momentum in the years ahead. Dell, for instance, has had a bumpy ride of late. But looking across many of these other dominant and growing American brands the idea that the U.S. is in a state of collapse begins to seem fairly silly.

Hold the confetti
This isn't to say that everything is perfect for the U.S. Smart, talented entrepreneurs from places like China and India could create businesses that will provide tough competition for American companies. Our current sticky unemployment problem could cause problems for the domestic side of U.S. businesses. And, at least in my opinion, our competitiveness will only be hurt by the extent to which our best and brightest are attracted to get-rich-quick schemes in the financial world.

In other words, there's no room for us to fall asleep at the wheel.

But much of the direst rhetoric is coming from folks that have something to sell you -- whether that's gold coins, bomb shelters, financial advisory services, or a political ideology. If Peter Schiff gave up on the idea that the dollar -- and the U.S. as a whole -- could be headed for a complete collapse, his opportunities for shameless self-promotion would plummet. And is it likely that an upstart political movement would grab many ears if it wasn't telling a goosebump-inducing story about how the U.S. is headed for utter calamity?

Tempting for a reason
A cognitive bias called the "recency effect" explains why people are more tempted than ever to buy into scary predictions of a U.S. collapse. This bias causes us to put more weight on the most recent events and information and put less weight on what happened further in the past. That means that today many are squarely focused on the gut-wrenching turmoil of the past few years and massively discounting a long history of innovation and growth.

But just as the Internet boom didn't really mean that supercharged growth would take us to untold heights, it's highly unlikely that the recent challenges mean that we're going to end up anywhere near what the doomsayers are jabbering about.

Think I'm off my rocker? Head down to the comments section and let me know why.

Bearish talk has many investors hating the stock market. But perhaps that's a good thing.

Google, Intel, and Coca-Cola are Motley Fool Inside Value picks. Google is a Motley Fool Rule Breakers recommendation. Apple and are Motley Fool Stock Advisor picks. Coca-Cola is a Motley Fool Income Investor selection. The Fool has written calls (bull call spread) on Cisco Systems. Motley Fool Options has recommended buying calls on Intel. The Fool owns shares of Apple, Coca-Cola, Google, Intel, and International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer owns shares of Intel, Coca-Cola, and McDonald's, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you no Wookiees were harmed in the making of this article.

Read/Post Comments (58) | Recommend This Article (55)

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  • Report this Comment On October 26, 2010, at 11:03 AM, goody5boo wrote:

    Deficit is almost 1.5 trillion. That is enough for 15 million jobs paying 100K each. We have borrowed these jobs. It is not sustainable. America is in denial. Credit was inflated for many decades. FED made credit easy, we borrowed. This inflated the money supply, prices and salaries. Now borrowing has stopped. Pay back time. When everybody stops together, it creates deflation because the money to pay outstanding debt does not exist. Kondratieff Winter has started and is not over yet.

  • Report this Comment On October 26, 2010, at 11:25 AM, menefer wrote:

    These American companies are all actually international companies that are shrinking in the US while growing overseas. What is good for Wall Street is not the same as good for Main St. Our country has been in decline since this shift started in the 1970's. Only now is there some hope in the likes of Ford who is winning back American buyers and growing in the US. Buy American or watch the decline continue!

  • Report this Comment On October 26, 2010, at 11:34 AM, MichaelinPV wrote:

    I admit it, I'm a glass half full guy, but come on... As long as people keep making people, people are going to need 'stuff.' And there are always plenty of smart, opportunistic people who will make the stuff we need, and want, and covet. Will it always all be 'made in America?' Who knows? But it will be made somewhere and I intend to be on the look-out for those companies no matter where they are who make what people need. BTW, I'm up 16% YTD.

  • Report this Comment On October 26, 2010, at 12:35 PM, CPACAPitalist wrote:

    I recently read an article on Yahoo! Finance by Robert Kyosaki (aka Rich Dad Poor Dad guy) which basically said that the US was in decline and would be going the way of previous empires. His point was that once the majority can vote to entitle themselves then the system is doomed, which I agree with to a degree. But I am more of the mind that while the US may not be the far ahead super-power that is has been for the last century, it will remain a relevant and influential country for many years to come.

    SImply put, I think that the US is losing ground in the global standing, but that does not mean it is falling apart and will soon be destroyed. So we are spreading some jobs and wealth around the world - so what? Our high standard of living may need to be adjusted slightly, that is probably a good thing. I am not scared that there is a growing middle class in other developing countries, i'm happy that those people are starting to get some decent ammenities! We might not all get a McMansion, three cars, cable tv, an xbox, fast food, and two week vacations - but neither does most of the world.

    "All I ask of you, especially young people ... is one thing: Please don't be cynical. I hate cynicism -- it's my least favorite quality and it doesn't lead anywhere. Nobody in life gets exactly what they thought they were going to get. But if you work really hard and you're kind, amazing things will happen. I'm telling you, amazing things will happen."

  • Report this Comment On October 26, 2010, at 12:59 PM, gfbjohn wrote:

    We have trouble because the prevailing economic system puts the cart (supply) in front of the horse (demand). This is a really good model when things are good, but the model is unstable because when the cart heads to the ditch the feedback mechanism stops the horse (unemployment means were-wage-earners now have no money so as consumers they are not able to continue to buy so businesses stop producing and lay off/off shore jobs instead of hiring).

    We need a way to get the unvested demand of the un- and under-employed factored into training, hiring and production. We should be aligning our efforts to produce more high value goods and services with newest, best technology run by a well trained and retrained workforce. Demand, technology, infrastructure - these are becoming more volatily variable as the speed of change accelerates.

    The invisible hand requires knowledge and mobility, even more so now than in Adam Smith's time, and business decisions, worker actions and consumer choices need to function in concert rather than in as if they are in separate vacuum-sealed environments. BTW I'm up 36% YTD

  • Report this Comment On October 26, 2010, at 2:35 PM, BillyTG wrote:

    Matt, I'm not selling anything and I believe the US is in an indefinite imperial decline.

    I've been blogging about it all month, so I won't state all the details---about ubiquitous and unprosecuted corporate and political fraud at levels never before seen, housing consolidation among the poor and unemployed, net job losses every week and a 22.5% unemployed/underemployed rate (I wouldn't call this a "sticky problem" when the Great Depression peak rate was 25%), the most manipulated stock market we've had in our lifetimes, declining wages, cheaper workers available overseas, and looming global agricultural and water problems---but I will throw a couple thoughts your way.

    Maybe you'll modify your thinking that the US is not business as usual, and everything will not return to normal again. Maybe you'll see that some trends really do show a decline, and revise your "I'll just say that it's all absolute poppycock" statement.

    FIRST, Peak oil. We are there. Our entire economy is based on carbon fuels. Everything you eat, wear, talk on, type on, drive, or do involves oil to transport and most likely to produce. The US, about 5% of the world's population, consumes 25% of oil produced. Most of our oil is imported. Most of the "easy," cheaply produced oil has been had. The demand for oil is growing like crazy. We have militarized control of the last gigantic oil region left. Others will want it. Prices will skyrocket, and wars will be fought. They already have and are. Pinch supply a little harder and the economy as we know it slows greatly or even halts. There is no replacement energy on the horizon.

    SECOND, every company you mention is a multinational. I agree that they are great companies. They will survive and most likely thrive no matter what happens domestically. Do you not believe it possible for the US to be in a decline while transnational companies record record earnings? Believe it---that is what is happening! Your statements on the economy, however, seem to focus on corporate earnings and not AMERICAN PEOPLE. This is a big difference that many on MF can't see for some reason. US global corporations can no longer be seen as representing the US economy in my opinion, as they have an increasingly diverging correlation. These companies are American In Name Only (AINO---I just invented that! haha). Recent headlines show how Google paid ~2.4% taxes because they funnel money through Ireland then through the Netherlands and finally to the US. Americans are prohibited by law from doing such a thing.

    Our economy is unsustainable on many levels and your focus, like many, is on individual stock picking. It completely neglects the foundational drivers, like the energy needed to make it all happen and like the demographics behind the labor.

    Thank you for mentioning a psychology, the recency effect. Confirmation bias is something similar and I know I'm vulnerable to them both, but I keep them in mind to criticize my own thoughts (which is better than not knowing we have such vulnerabilities!). I don't know a psychology term for it, but I bet there is one that describes an everything-will-be-okay-and-never-change attitude (which is actually quite healthy, even if not realistic).

  • Report this Comment On October 26, 2010, at 2:47 PM, BillyTG wrote:
  • Report this Comment On October 26, 2010, at 3:45 PM, commoncents33 wrote:

    1) All of the recent estimates for the future obligations of the Federal government are in the greater-than-100 trillion range. It seems to me that this is an IMPOSSIBLE financial burden to meet. I have yet to see anyone give a credible scenario of how those obligations could be met. Do you have a credible scenario? If not, how do you envision the inevitable default playing out? I see no alternative besides a horrific combination of crushing taxes, scary levels of inflation (Fed already printing money for our entire deficit with QE2, for all practical purposes), and huge cutbacks in the promised benefits (with social unrest/violence a definite chance...see France and Greece).

    2) As has been pointed out here, the success of an American company which is doing a large share of its sales, and the bulk of its manufacturing, overseas does little to nothing for the average American. We need to restore a reasonable balance of domestic manufacturing; this "service economy" stuff is nonsense. And how will we restore manufacturing, when there is such cheap labor available elsewhere? Trade barriers? If that, then what do you think will happen to inflation?

    3) Speaking of cognitive biases...what is the term for the failure to realize that the features which made the United States so prosperous and exceptional (individual liberty, limited government, low taxes, etc.) are currently like sand falling between our fingers? This is rearview mirror thinking: since America had always been great, it will continue to. Looking through the windshield, I see stifling regulations, spiraling taxes, a Federal government that is like a metastasizing cancer, a sense of entitlement replacing the old American work ethic, etc....and I am indeed worried the car will crash.

    4) As far as investing goes, I want my portfolio to be diversified enormously in terms of the countries in which my businesses earn their money, with a substantial overweight in emerging markets. And just in case things get really, really crazy here, I want some of the businesses/stocks to be domiciled in those foreign countries. It seems to me that the chance that the US dollar will outperform a basket of emerging market currencies seems pretty close to zero. Likewise, the chance that our GDP will outperform is likewise zero.

    Rather than making you laugh, this ought to make you cry (if you have loved ones in the US). The average American is in for a very painful experience, and unfortunately most do not have the ability to mitigate that by investing overseas.

  • Report this Comment On October 26, 2010, at 3:46 PM, miteycasey wrote:

    Did Rome fall?

  • Report this Comment On October 26, 2010, at 3:49 PM, cmfhousel wrote:

    "Speaking of cognitive biases...what is the term for the failure to realize that the features which made the United States so prosperous and exceptional (individual liberty, limited government, low taxes, etc.) "

    We got into this mess in no small part thanks to a thick round of financial deregulation, and marginal taxes are near the lowest levels in modern history. Just sayin.

  • Report this Comment On October 26, 2010, at 4:22 PM, commoncents33 wrote:

    <<We got into this mess in no small part thanks to a thick round of financial deregulation, and marginal taxes are near the lowest levels in modern history. Just sayin. >>

    Far more than any financial regulation in bring about the recent financial collapse was the Fed's always stepping in to bailout any market decline with low interest rates, and the Federal Governments' encouraging lenders to lend money to people who could never pay it back. Then we make it far worse by bailing out all the excessive risk takers--from banks to those who took on mortgages they shouldn't have. If we had truly free markets, there would have been blood in the streets...BUT...people would then learn, and that kind of excess would not repeat itself for at least a generation.

    As far as marginal taxes being so low: again, don't look in the rearview mirror. Do you really think they're going to stay this low? That seems next to impossible. And if they were to stay that low, without an enormous decrease in govt spend (which is certainly not going to happen), then the deficit will spiral out of control just that much faster.

    If you have a rationale for how the average American can prosper going forward, I'd absolutely love to hear it. But it can't simply be that we did in the past, or that a handful of multinationals are doing well, and it must take into account the roughly $333,333 burden for each and every person in the country that our Federal government owes (not to mention State and local burdens). Just saying...

  • Report this Comment On October 26, 2010, at 4:26 PM, naFOG wrote:

    Different times. The complete collapse of the US would be catastrophic to the entire world. I don't think we'll continue to enjoy the dominance the US enjoyed over the last 150 years, but a complete collapse is likely out of the question.

    We need more balance in the world. I think we're entering a new age of global cooperation. WHile the US might have to take a few steps back in the short term (short being 20+ years) it doesn't do anyone any good to see the US decline into a failed state.

    We still have a massive country, with a ton of bright people and a lot of natural resources. We are here to's just unlikely that we retain the amount of power we currently have. Spread out the risk, wealth, resources and in the end, the whole world ends up better off.

    Just my two cents.

  • Report this Comment On October 26, 2010, at 4:27 PM, commoncents33 wrote:

    Speaking of regulations, I'm not saying all regulation is bad. However, I think we're getting overwhelmed by regulations that don't help, while we're not making the kind of actions that would.

    I would love to see the government take down the insane casino that options trading has become. If I'm not mistaken, Buffet testified years ago that such gambling would not help the U.S., and he was right. Similarly, I would love to see the tax code changed to take short term capital gains much, much higher, while at the same time removing capital gains on long-term investments. Again, this would transform the capital markets from being the casino they are today, back to efficient ways to fund worthwhile business ventures.

  • Report this Comment On October 26, 2010, at 4:49 PM, commoncents33 wrote:

    <<The complete collapse of the US would be catastrophic to the entire world. I don't think we'll continue to enjoy the dominance the US enjoyed over the last 150 years, but a complete collapse is likely out of the question.>.

    First, the fact that a U.S. collapse would hurt the rest of the world will not stop it from happening. World War II was pretty catastrophic, and it still happened.

    Secondly, unless you can give a reasonable scenario of how we deal with the per capita Federal burden of $333,333 without it collapsing us, then your view would seem to be simply wishful thinking.


    <<We still have a massive country, with a ton of bright people and a lot of natural resources. We are here to stay...>>

    Sure. I don't think many are thinking we'll end up wiped off the face of the Earth, or that we'll find ourselves a Third World nation. However, that does not mean there could not be a temporary collapse. Look at Germany. They had their country physically destroyed by war, and their economy abolished by hyperinflation. Now they're one of the best economies in the world. But that would be small comfort to a German looking forward in 1930.

  • Report this Comment On October 26, 2010, at 5:01 PM, bhessel wrote:

    tweet of potential relevance:


    Matt Taibbi on how Chicago parking meters ending up in the hands of Abu Dhabi investors exemplifies the USA’s decline.

  • Report this Comment On October 26, 2010, at 5:13 PM, mtf00l wrote:

    Ok, I agree, the US won't collapse. It will just become a wholly owned subsidiary of...(fill in the blank).

  • Report this Comment On October 26, 2010, at 5:33 PM, Masworth wrote:

    I think Matts' argument is painfully shortsighted. To say that American dominance will continue based ONLY on the fact that American-based firms dominate a list of bran values is, well, shortsighted. He fails to talk about enormous deficits, huge debt burden, un-payable liabilities like social security, the housing glut, deep unemployment, and the Fed's all-out efforts to debase the US dollar by printing money. No, the US will not collapse overnight, but serious structural problems loom and yet, people like Matt, continue to assume that these difficult times are transitory and that, otherwise, everything is A-OK.

  • Report this Comment On October 26, 2010, at 5:42 PM, awabi wrote:

    Coca-Cola, Mercedes Benz, and Budweiser....Since when is Mercedes Benz an American Company???? Try German.............

  • Report this Comment On October 26, 2010, at 5:48 PM, mtf00l wrote:

    Jul 14, 2008 ... July 13, 2008 - Anheuser-Busch Cos., including its Budweiser brand, have agreed to be purchased by InBev, a Belgian Company.

  • Report this Comment On October 26, 2010, at 6:08 PM, TMFKopp wrote:

    @awabi and mtf00I

    Neither of those brands were cited as being American. From the article:

    "What's more interesting is that on a list that includes venerable brands that are more than a century old, like Coca-Cola, Mercedes Benz, and Budweiser"

    Both Mercedes and Budweiser are, in fact, venerable brands that have been around for a century-plus.


  • Report this Comment On October 26, 2010, at 6:12 PM, ecloud wrote:

    I think a better comparison is the British empire rather than the Roman: far from a complete failure, but not the global force that it used to be.

  • Report this Comment On October 26, 2010, at 6:46 PM, cmfhousel wrote:

    I love when people talk about how free this country "used to be." You realize some schools were segregated just 50 years ago, right?

  • Report this Comment On October 26, 2010, at 6:57 PM, bretco wrote:

    Anybody know how to say (once Great) Britain ?

    That is exactly where we are headed. the once-Great country of the free and the brave, soon to be fighting in the streets for our entitlements, just as the French are now doing.

  • Report this Comment On October 26, 2010, at 7:12 PM, SMFT wrote:

    I don't think Matt's argument is the SOLE basis of his belief that the U.S. economy has staying power. I do LIKE this argument, though. The ability to develop international brands is a definite indicator of economic competitiveness.

    For those who cry "insurmountable deficit", take a look at this chart :

    At 11% of GDP, we are no where NEAR the total debt we carried in 1941 (nearly 30% of GDP). Of course, recovery from that enormous debt-load took a special set of circumstances -- namely, the need for the US to rebuild the whole world after WWII.

    My point being, an 11% debt-to-GDP ration is alarming, but not the end of the world... as for "$333,333 per person".. just grow our population and that number goes down...!!!

  • Report this Comment On October 26, 2010, at 9:05 PM, commoncents33 wrote:

    <<.. as for "$333,333 per person".. just grow our population and that number goes down...!!!>>

    First, you'd need to increase the population nearly tenfold to make that number reasonable.

    Secondly, given that the majority of the people that are increasing the population are getting their own handouts from the government, even increasing the population likely could not solve it.

    Bottom line: we've dug an enormously deep whole. Somewhere along the line there will be a horrible crisis as a result. We will have failed to learn by history, so instead we'll learn by the harshness of reality. As Thatcher said, the problem with socialism is that eventually you run out of other peoples' money.

  • Report this Comment On October 26, 2010, at 9:14 PM, BillyTG wrote:

    SMFT, debt and deficit are different. Then there's public debt, external debt, and private debt.

    Anyways, Here's the debt-as-a-percentage-of-GDP chart from your website:

    On that website, I couldn't find a chart for it, but look up unfunded liabilities. That's another problem we have.

    WWII's economy (enormously productive, booming demographically) and energy (abundance of cheap domestic oil) situation was nothing like today's economy (debt-riddled and vulnerable, enormously consumptive) and energy (foreign-dependent, expensive, and declining).

  • Report this Comment On October 26, 2010, at 9:42 PM, xetn wrote:

    "But much of the direst rhetoric is coming from folks that have something to sell you -- whether that's gold coins, bomb shelters, financial advisory services, or a political ideology. If Peter Schiff gave up on the idea that the dollar -- and the U.S. as a whole -- could be headed for a complete collapse, his opportunities for shameless self-promotion would plummet."

    Unlike TMF who never promote anything, right?

    As for giving up on the US dollar, it isn't Shiff, it is the fact that the Fed has been doing everything possible to drive down the purchasing power since the Fed's inception (over 97%). If the Fed does begin QE2 in November, that will further exacerbate the problem. Perhaps you should read:

    and understand the real problem.

  • Report this Comment On October 26, 2010, at 9:46 PM, DDHv wrote:

    After we experienced being laid off a few decades ago, we found ways to work for ourselves when laid off. Backyard garden, food preservation, solar & conservation, etc. Worth knowing, even without a collapse. Now retired, about a fourth of our social security is going into some form of investment, and we are living quite well, thank you. We might need to draw on the investment in case of ill health or something, but don't at present.

    The Mother Earth News magazine is a good info source for those interested. They started forty years back, realizing that fossil fuels won't last forever.

  • Report this Comment On October 26, 2010, at 10:25 PM, xetn wrote:

    I just read this from Casey' Daily Dispatch, which is very relevant:

    The issue I’d like to touch on is the decline of U.S. manufacturing. True, it’s no secret that manufacturing in the U.S. is suffering. But you may find a couple statistics on the rate of decline, particularly over the past decade, truly shocking. Here are some facts:

    In January of 2001, according to the Bureau of Labor Statistics, 17.1 million Americans were employed in manufacturing. Today, a mere 11.7 million Americans work in manufacturing, which reflects a decline of 5.4 million jobs and 32% in just ten years. The last time fewer than 12 million Americans were employed in manufacturing was in 1941.

    The U.S. has lost approximately 42,400 factories since 2001.

    In 1959, manufacturing represented 28% of U.S. economic output. In 2008, it represented 11.5%.

    Mass production and advanced manufacturing techniques were born in the U.S. But thanks to a heavy-handed regulatory establishment that makes manufacturing here cost prohibitive in many cases, even homegrown tech powerhouses like Dell and Apple are opting to manufacture their products elsewhere. Just last year, Dell announced that it would be closing its last large manufacturing facility in the U.S. while greatly expanding operations in China. And according to Apple, “significant portions of the Company’s Mac computers, iPhones, iPods, logic boards and other assembled products are manufactured by outsourcing partners, primarily in various parts of Asia.”

    These days companies prefer to manufacture products anywhere but here, it seems, and the U.S. is now left with a “service” economy (jargon to hide the fact that the country no longer makes anything). What’s more, if the U.S. continues to allow its manufacturing base to erode at such a pace, how long can it be before the whole thing collapses under the weight of the debt accumulated to fuel consumption at the expense of production?

  • Report this Comment On October 26, 2010, at 11:11 PM, Rowants wrote:

    As an extremely low level employee, here's my take on the US. We're screwed. Too many deadbeats at work. Can't fire the guy who's lying on his timecard thanks to affirmative action. Can't fire the 350lb guy who can't do hardly any work thanks to ADA. When wages and benefits cost employers so much more here than abroad, it's hard enough to keep jobs, but then throw in the inability to productively manage your workforce (1 deadbeat for every 1 active worker, you just doubled your costs again), and its no wonder companies move to friendlier places. Just my opinion from the bottom of the trench.

  • Report this Comment On October 26, 2010, at 11:18 PM, Ruleoflaw wrote:

    Let's take a break from saluting past achievements long enough to get to the polls on Nov. 2 (and in 2012). These companies will make it into the future, but not the U.S. population if we don't throw out the Marxist, racist, ward-heeler government in Washington.

  • Report this Comment On October 26, 2010, at 11:33 PM, FlorisHJ wrote:

    A lot of these comments point to a dismal future for the US. Does anyone have any good suggestions on how to

    1) turn around the country's future (on the premise that until the train hits you there is time to step off the tracks) , or

    2) how an individual might protect himself and his family from the worst of the predicted fallout? I suspect that DDHv has it right: be less dependent on others and become more self-sufficient. Easy to say when you live in the country, not so obvious for the majority of city-dwellers.

    So a question to all of you: what investment strategy do you follow if you believe in the imminent demise of Uncle Sam as a superpower? Personally I have a much greater exposure to non-US stocks (my financial "advisor" recommends about 15%, I am nearer 60% - to me that makes sense given the relative size of the US economy vs the world as a whole. Seems like prudent diversification to me - right up there with "don't buy too much stock in your employer's company"). The other thing: lots of natural resources ( mining etc). As the world population grows and resources become scarce, miners (for useful stuff, not gold) will be the new kings.

  • Report this Comment On October 27, 2010, at 12:36 AM, holosys wrote:

    Looking at Coca-Cola is a scary preview into soaring rates of diabetes with all its extreme health problems (and crushing economic burden to an over-burdened healthcare system). I think Coca-Cola's success is ironically a sign that, in spite of the dangers of diabetes, people simply will not change. When diabetes reaches a critical mass, unless Coca-Cola has an alternate "health" plan for its products, how can it possibly remain such a formidable international powerhouse?

    I do see rays of hope in that out of six corporations you listed, only two (MacDonalds and Coca-Cola) pose a serious health threat to an aging population.

  • Report this Comment On October 27, 2010, at 12:44 AM, BillyTG wrote:


    to take your metaphor, the Unites States ARE the train! There's no stopping this disaster. As an American living in the US, you can jump off the runaway train and it will hurt, but you will live.

    In my opinion:

    1) There is nothing that can be done to stop what is happening. There are things that can be done to shorten the transition to the new post-industrial age like inventing better renewable energy technology.

    2) I'll tell you what I'm doing and plan to do. Buy a bunch of 55 gallon barrels and store water in your basement. Buy a bunch of foods like rice, beans, oats, sugar, flour, canned goods. Stock up on medical supplies including antibiotics. Basically, imagine yourself without food or electricity and figure out what you would need: food, water, warmth. That might mean having a generator, having some solar equipment in case you can't get gas, having some silver or gold coins in case the dollar crashes, having a solar oven for cooking, firewood, prepping a garden. The list goes on and on depending on how well you want to prepare. Any skills you can learn for living off the grid will serve you well. City Dwellers? Stock up on lots of food so you don't get killed in the looting of the stores, or so you have extra for when you get stuck with the tiny rations doled out by the National Guard. Hey, you asked for "the worst" case scenario, right? haha Here's more:

    I own physical PMs, and some PMs and energy stocks...eyeballing some farm land, too. Good luck, and don't sweat it too much. The rest of the country will be in the same boat! The best you can do is prepare so that you have a leg up on them if things get rowdy or food gets scarce.

  • Report this Comment On October 27, 2010, at 2:21 AM, jaketen2001 wrote:

    You conflate the the US with US based, international companies. They would all sit around, perfectly happy while the US could be in the drink for decades. To whit: Jack Welch once said that the best manufacturing plant would be on a barge so he could move it around to wherever labor costs were lowest. Google hardly pays any US taxes. Intel doesnt manufacture a thing here. All of McD's growth comes internationally.

  • Report this Comment On October 27, 2010, at 4:46 AM, tsvieps wrote:

    Oil patch tech is increasing supply of fuel, especially natural gas. We have at least 100 years to deal with "peak oil".

    We are living longer, so we can have people work longer and solve the Soc Sec future debt problem.

    Debt can be a problem, but it needs to be looked at in comparison to assets. What are the assets of our, forests, minerals, buildings, etc?

    The number of jobs is not fixed. Apple makes new designs that are mostly manufactured in other countries, but this allows more jobs of a different kind here.

    I think 150 years ago we had more than 80% of our population working on farms; now it is a low single digit number. Are we worse off? A lot of manufacturing is similar. But some manufacturing is returning here as automation makes labor costs less important. Lack of barriers betweens U.S. states was a big factor in raising productivity and wealth here. Now it is happening on a world scale. But some who lose jobs do not recover if they do not develop new skills. In many cases it is their kids who are trained in the next thing and get the high level replacement jobs.

  • Report this Comment On October 27, 2010, at 9:10 AM, Smockracy123 wrote:

    Deficits are inevitable in a democracy providing inflation. Give them a while and once international nations start paying their levy's owed from economic "strangleholds" - imposed by infrastructure "buildups" - then America can reciprocate towards domestic stability. Reigning dictators will cut off huge portions of GDP for consolidating debts, with U.S institutions, from war subsequences and world aide investments financing U.S companies, in foreign affairs.

    Deficits, is a damper for part of this economic battle repertoire. Inflation will erode this factor. How much longer can this go on?

  • Report this Comment On October 27, 2010, at 12:17 PM, jrj90620 wrote:

    The U.S. empire peaked around 1970 and has been in decline since.Every leading country in the history of the world has eventually declined.I believe a country gets what it deserves.The U.S. with it's 100% dishonest fiat currency(since 1965-71) and a huge govt where citizens use their vote to steal from each other isn't going to prosper.That doesn't mean every person or company will fail.

  • Report this Comment On October 27, 2010, at 1:10 PM, BillyTG wrote:

    @tsvieps, can you post a source for your 100 years more before peak oil assertion.

    I want to believe everything you're saying because it sounds like what's happening is no big deal. But I need to see where you're getting this information, particularly about the oil.

  • Report this Comment On October 27, 2010, at 6:04 PM, thomyoung17 wrote:

    Wait until Benny and the Feds bring in QE2 (which has already begun) Q3, Q4, and Q5 etc.(it won't matter) it will be a bull market for sure with inflation rising by the second. The papyrus raft known as fiat will tank in a pool of derivative bliss. The dollar is going to devalued big time but the rest of world can't escape the printing press. Don't worry the IMF will save the day, with their new fiat global currency the bancor. The bubble begins again. In the mean time, buy gold and silver related assets. Any commodity really. The prices for everything you need are rising, but you can still cheap stuff at Wally-world. Go back to sleep, everything is fine.

  • Report this Comment On October 27, 2010, at 6:11 PM, FinnMcCoolIRA wrote:

    Sadly, "The U.S. has seen its best days and is now in a state of decline" is accurate.

    Not because the economic conditions are so bad [they can be overcome] but because the current political administration is ideaologically hell bent on 'fundamentally transforming' America (just who asked them for such a transformation?).

    There is ZERO chance of true recovery/growth until such time as the anti-business, anti-capitalist, pro-socialist/statist administration and bureaucracy are purged from office.

  • Report this Comment On October 27, 2010, at 6:16 PM, lctycoon wrote:

    "Debt can be a problem, but it needs to be looked at in comparison to assets. What are the assets of our, forests, minerals, buildings, etc?"

    Less than the unfunded liability of Medicare by itself - not including all the other spending.

    The total assets of every citizen in the USA (you heard that right, EVERY citizen) is about half of the total debt of the country once the unfunded liabilities are put in.

  • Report this Comment On October 28, 2010, at 7:58 AM, randyk56 wrote:

    America as we know it is doomed. Just look at what you are saying. Most of our money is being spent on food and entertainment. Americans for the most part are fat and lazy and simply will not work unless they can start off at $25-30 an hour. Otherwise let the immigrants do it for minimum wage. Why work? the government will give me food stamps, gas, a cell phone, spending money and housing, Yes Elizabeth we are doomed.

  • Report this Comment On October 28, 2010, at 10:40 AM, cmfhousel wrote:

    "the current political administration is ideaologically hell bent on 'fundamentally transforming' America (just who asked them for such a transformation?)."


  • Report this Comment On October 28, 2010, at 10:56 PM, topsecret10 wrote:

    (just who asked them for such a transformation?)." Voters.

    Not this voter. I saw this coming from miles away. Obama Is a fraud that speaks with a silver forked tongue. Obama,and this DEMOCRATIC CONGRESS abused their power to the ultimate detriment of OUR country. The past two years of this administration (and that Includes the FED) Is like watching old re-runs of The Three Stooges over and over again. This Is a very dangerous path that we are on with regard to the Federal Government,and the Federal Reserve. The stock market has priced In a Republican takeover of the House at the very least. Buy the rumor SELL the news. Should be a November to remember... TS

  • Report this Comment On October 29, 2010, at 2:24 PM, zorrojaz wrote:

    Someone actually has the Global Economy right - 2 Billion people are coming on line from $200 per/month to $2000 in the next 20 years - guess what - all those services and goods to do that are dominated by US multnational Corps - and yes - we are rebuilding the world - taking it into the next stage Global Economic Age - the Age of Instantaneous Information that the US is the worlds leader!

  • Report this Comment On October 29, 2010, at 2:47 PM, FleaBagger wrote:

    If you lived in Africa in 1950, and wanted some imported wine or cheese, or wanted to hire a chef, which country would have the best branding for those products/services? The richest country in the world, or one that had collapsed economically, but still maintained a strong brand presence in a few key areas?

    Strong branding does not mean we won't fade from dominant global empire to economically sad has-been.

  • Report this Comment On October 29, 2010, at 3:47 PM, indiobravo wrote:

    Some people may think that Wall Street and Main Street are necessarily headed in the same direction. Well, they are not. Global sales of Big Mac won't pay for people's mortgages in US. Nor for health services, high education, utilities bills, etc.

  • Report this Comment On October 29, 2010, at 8:19 PM, cwpnewpaltz wrote:

    The most important brand in the world is this: "The United States of America."

    I happen to have been born in France during WWII, of European parents. I've been an American citizen for almost sixty years. I get tired of listening to Eurpeans in bespoke Saville Row suits belittling this country or arguing it's on the path of inexorable decline. They make stuff they can't absorb into their own economies, so they ship it to us, and we buy it in a very beneficial cycle of trade. They take our dollars in payment and complain. Fine. Let them buy their own stuff. I figure that what with their 32 hour work week and retirement at 60, 6 weeks paid vacation from day one and all those other great bennies, they should be able to afford buying their own stuff, but if they'd rather not make it and not ship it to us and not have to take our dollars, cool. They should scale down to making only what they can or will buy, which probably means a 20% GDP shrinkage for them and 18% unemployment. All their governments will then collapse.

    The USA will still be standing. We have the only reserve currency in the world because of our political stability and the resilience of our economy. And the next time the Huns want Paris or London, they can have it.

  • Report this Comment On October 29, 2010, at 11:54 PM, adlib5 wrote:

    cwpnewpaltz hit on one important factor of our sure decline-that being that we are the worlds reserve currency. When this goes away because we debase our currency then changes will happen that citizens with no international experience will simply not understand. It has given us a huge advantage in domestic consumption of internationally traded goods. There are more people backing the Euro these days than the dollar, it may replace us as may a basket of currencies. China has been signing direct payment/trade agreements with all of the other brics and raw material countries so that they trade directly in those countries currencies. We should have never let an authoritarian communist government in on the game and the Corps that benefited should be taxed to oblivion unless they pull production back to the US.

    I recently read a book called the death of Capitol. It should be called the Death of Labor. We are headed down a path of being a total service economy, there will be a bigger difference between rich and poor, fewer middle class if there are no good jobs and we do not produce anything. Anyone who wants to see the model should ignore the Mad Max crowd and just look at the former British Empire. There are worse places to live but they have lost a lot of their potential.

    Bundling securities does not count as productive work, mostly it is thievery and produces no real value except as a way to pick the pockets of us normal investors and raise leverage to precariously dangerous levels. That is simply a fact.

  • Report this Comment On October 30, 2010, at 11:11 AM, maguro01 wrote:

    It's strange that an important, historic detail has been omitted. What changed the US from more or less viable, though with disturbing trends, in 2000 into a near basket case today? Why are we in denial?

    Sometime before that China set its currency at half value and pegged it to the dollar. It set up fairly high tariffs with a big break for re-export. The set and peg were actually economic warfare. If currencies aren't free traded, nothing else is.

    Perhaps the Administration after 2000 thought that Sun Tzu is a fancy dessert. But that's unlikely - what happened is that they pawned the USA in China to fund grand schemes in war and politics and social change that were all failures. Through most of that administration's time the US trade deficit ran over $2 billion per day which was known to be unsustainable. They got China admitted permanently to the WTO anyway. The voters were lulled by the low prices and assumed someone minded the store. Instead they ran up the national bar tab, spending their kid's money for everyday junk. The government then borrowed back the money to fund wars, income redistribution upwards, a bloated government, and a $440 billion low income housing scheme to acquire an Hispanic constituency. That last synergized with special interest deregulation to produce a wave of corruption and a major crash that sped up the game considerably.

    What I am stating is that for all the problems China has, it won. Period. The only country it saw as an adversary has been humbled albeit prematurely. We are so vain we cannot even acknowledge what has happened.

    The present US government is playing a high stakes game lining up the rest of the world to crack the yuan/dollar peg which so effectively bleeds out the US. If it is paralyzed there will be no solution and the endgame is no more than five years away. There will be no more chances and various ambassadors in Washington will become essentially Viceroys. I wish that were hyperbole but it is not.

    This election cycle we even have the spectacle of transplanted US multinationals contributing for their present interests which lie outside the US, some with China.

  • Report this Comment On October 31, 2010, at 11:22 PM, PhillyFrog wrote:

    Note, Mercedes is a German company, not an American one.

    My comment: The thesis of the article is that the U.S. is not going to collapse. The content of the article is that the U.S. has many successful companies and continues to innovate. That is not why or why not the U.S. is failing. It is the government and the many problems it has caused. We can all enumerate these, but how does the author think that business will overcome them? A successful country is made up of much more than successful firms. It also has to compete against other countries. We are way behind in this respect. Even the socialistic Europeans are cutting spending and benefits. We need to wake up.

  • Report this Comment On November 01, 2010, at 3:54 AM, TaigaTaiga wrote:

    These problems will work to solve themselves in some ways. The key cost of labor, suppressed in totalitarian and authoritarian countries by threat of violence against the workers (China, Vietnam, Indonesia) is further supported by low transport costs. If peak oil is truly here, the market will fly in with its invisible hand and raise transport costs. Local (continental US/greater North America) manufacture will become more competitive even if labor doesn't reach parity, incentives to increase energy efficiency will increase, and the vigor in establishing alternatives to more costly oil and other strategic materials will encourage true innovation. This was part of the reasoning behind a carbon tax and the cap and trade legislation-increase those costs to encourage innovation and conservation to benefit the much dumped upon "external" world.

    Low cost foreign labor is only possible due to the threat of political violence by the states that suppress their workers. China will not always be the manufacturer's slavery wonderland-those people will want to improve their lives and they will resent the incredible inequity in their "communist" society-same with Vietnam.

    When we stop maintaining an absurdly outsized military, incentivize shifting to more sustainable and less harmful energy sources, and regulate our capital markets to cut out the worst of the peaks and valleys we will no longer have to worry that we are an empire on the verge of collapse.

  • Report this Comment On November 02, 2010, at 2:48 PM, HowthCastle wrote:

    I am somewhat frightened by another parallel, not the Roman Empire but the medieval Muslim empires. These were dynamic, progressive societies, dominating their world in commerce, science, mathematics, and general cultures. That is why one finds so many Arabic words in textbooks of chemistry, astronomy, and mathematics (alcohol, alkali, Aldeberan, Betelgeuse, algorithm, etc.) But then they turned and became insular, Fundamentalist, and reactionary, and slipped into the cultural doldrums where they languish today.

    Today, so many Americans seem to think that doctrine trumps information, ideology trumps science, and so on. Are we walking that same path?

  • Report this Comment On November 03, 2010, at 6:55 AM, TigerPack1 wrote:


    Most have romantic, idealized feelings for America also, that were ingrained into U.S. during schooling.

    Please give U.S. your plan to balance the historic and massive trade and spending deficits to save this great land, without creating HYPERINFLATION or a Depression. I cannot find a happy way out our disastrous math situation.

    I am all ears. Stronger than average economic growth, for good no reason, is what every bull is pinning his hopes on today. Good luck with that.


  • Report this Comment On November 04, 2010, at 9:09 AM, tbohern wrote:

    No one disputes that many US companies are doing well and will continue to do well for years to come. However, when speaking of a US collapse the word collapse is in reference to the staggering debt load, pending inflation, and continued government distortion of markets.

    Staggering Debt Load - It is common knowledge the US national debt is simply beyond explanation and government deficits increase this burden every year. The government (any government for that matter) operates on the erroneous assumption that by propping up the market with government spending and cash injections via the FED can indeed lead to economic growth. This strategy does indeed result in growth but it is fleeting. While the political keeps the boom cycle going they only make the bust that much worse and then we realise what a waste it all was i.e. housing bubble, dot-com bubble, savings and loan crisis, Y2K, etc.

    Pending inflation - The FED has injected massive amounts of cash into the economy and will continue to do so through various means (see St. Louis FED posts of FED balance sheets). The amount of increase in the FED balance sheet as well as the enormous amount of reserves currently held by banks who refuse to lend out the paper from the FED is tsunami of inflation waiting to happen. Of course it is all an effort to rid of the bug bear of deflation but then again when was lower prices ever a bad thing? If a market is calling for deflation it probably needs it.

    Government distortion - The government is throwing trillions of dollars to any state wishing to use it for various shovel ready projects are other developmental goals. By increasing demand in a sector of an economy you create malinvestment most recently exemplified by the housing bubble. The government has limited what banks can do in their daily operations in regards to credit cards and checking accounts resulting in higher costs to consumers and another disincentive to save dollars in a bank. By continually pumping money into the economy you merely hamper the natural liquidation process which should take place during a bust cycle. However, a government loses credibility during hard times so in order to preserve itself merely wishes to continue the unsustainable boom period. Housing went bust but it is certain that another bubble will be created elsewhere in which an industry or sector is favored by government. Holding down of interest rates is part and parcel of credit expansion causing once unprofitable projects to seem profitable. However, under a market interest rate not an artificially lowered one the project or investment is a waste of resources. Now, if you replicate that situation hundreds of thousands of times over you have a big problem on your hands when it goes BOOM!

    For more information on the ideas expressed in this post please visit or grab a copy of Murray Rothbard's Man, Economy, and State.

  • Report this Comment On November 05, 2010, at 12:16 AM, thidmark wrote:

    "the current political administration is ideaologically hell bent on 'fundamentally transforming' America (just who asked them for such a transformation?)."



    How the hell do you explain Tuesday night?

  • Report this Comment On November 05, 2010, at 1:56 PM, TMFBent wrote:

    "Intel doesnt manufacture a thing here."

    The problem with America is too many people confusing their ill-informed opinions with fact.


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