Don't Count America Out

The storyline around America has taken a sudden, and to many, unexpected turn in the past couple months. Just two weeks ago, The Economist featured a cover with a shirtless Uncle Sam flexing with the words "Comeback Kid" above the muscle-bound American icon. This wasn't your father's Uncle Sam poster. This Uncle Sam had red, white, and blue pasties on its nipples. The new America seems to have an edge.

The message behind that Economist cover? America has managed to come out of the recession with a leaner, more powerful economy, and is quietly becoming an energy superpower on par with Saudi Arabia thanks to recent advancements in finding new oil and gas. Along with a revitalized energy future, America has begun paying down its debts, closing its trade gap, and was the first to clean up its banking system.

Doom and gloom is gone, and in its place is a surprisingly positive view of America's future, pasties and all.

For Americans who've seen continually high unemployment and essentially flat real GDP growth over the past five years, such a notion of American greatness could seem foreign. In the minds of investors who are pricing the S&P 500 (INDEX: ^GSPC  ) at its lowest P/E since the middle of the '90s and are pricing many Dow Jones (INDEX: ^DJI  ) stalwarts themselves near single-digit P/Es, "greatness" doesn't seem to be the word they're associating with the country's future.

Hope on the horizon
Yet, The Economist is hardly alone in beginning to ponder the weight of America's dawning economic transformation. When discussing America's future with Fool writer Morgan Housel last month, who's one of the sharper macro writers around, he described America's sudden rise as an energy giant as an enormous shift which is just starting to get press coverage in line with its importance.

The May/June issue of the magazine The American Interest featured its own cover story proclaiming America "The Comeback Kid." The essay, written by economist Tyler Cowen, had arguments similar to those in The Economist, saying that America would once again become an export powerhouse. He listed not only increased energy exports, but also leadership in artificial intelligence and next-generation manufacturing as key reasons for our rise.

In addition, Cowen pointed out that as poorer countries first develop, they crave raw resources to build infrastructure like copper. America doesn't specialize in these resources and has missed out on a big part of the emerging market export bonanza thus far. However, as these countries get wealthier and begin to import more high-end services and goods like pharmaceuticals, entertainment, and advanced technologies, they'll shift their demand to America.

The makings of a 21st century powerhouse?
On that last point I'm the most hopeful. No industry shows America's promise across the 21st century like technology. It's an industry which harnesses the best traits of America: the drive for innovation and entrepreneurialism. It's an industry all Americans can truly be proud of.

We've already seen the impact of how emerging countries' changing tastes are boosting American companies like Intel (Nasdaq: INTC  ) , which routinely credits growth in countries like China, Brazil, and Turkey for its sales growth.

To truly grasp America's dominance of the technology space, one only needs to look at a list of the largest tech companies in the world. Nine of the ten largest are American. The first European company doesn't show up until No. 11 on the list.

Rank

Company

Home Country

Market Cap

1 Apple (Nasdaq: AAPL  ) USA $565 billion
2 Microsoft (Nasdaq: MSFT  ) USA $252 billion
3 International Business Machines USA $219 billion
4 Google USA $199 billion
5 Oracle USA $147 billion
6 Samsung South Korea $136 billion
7 Intel USA $128 billion
8 Qualcomm USA $98 billion
9 Cisco USA $88 billion
10 Visa USA $85 billion
11 SAP Germany $73 billion

Source: S&P Capital IQ. Market caps are reflective of July 20 closing prices. Sorted by companies in the information technology sector.

Other sectors set to see exports soar in coming decades aren't quite as American-dominated as technology, but they have a much stronger American presence than areas like copper and iron ore exports that drove worldwide export growth in the last decade. A shift to new exports and demand for technologies higher up on the "value chain" speaks well to America's future.

Why now?
Why all the sudden media interest in the potential of American greatness? Or, more specifically, what has changed in America that wasn't present during its sub-par growth years between 2007 and today?

A large part of the storyline is the reforms America enacted earlier than other nations across the globe. The country recapitalized its banking system aggressively in 2008 and 2009 and started chipping away at the amount of credit outstanding in the country.

In contrast to America's banks and consumers cutting credit and tightening their belts, China moved full-steam ahead, seeing credit as a percent of GDP move from less than 125% in 2008 to north of 175% today. China is now balancing cutting its reliance on increasingly misallocated investments with keeping its economy chugging ahead at high levels. Throughout much of Europe, the banking system is still a mess, and deeper structural reforms to backstop banks across countries like Spain have been necessary lately. Even with the recent progress, Europe still has a long way to go before there's faith not only in its banks, but in the continent's nations themselves.

Another explanation might just be timing and advancements that were impossible to predict. Five years ago, few foresaw the enormous impact new unconventional energy techniques like fracking would have on America's future. Now, the effects of these techniques are apparent: the price of natural gas in America is less than a third of the price in Asia and far below Europe. It's hard to ignore that kind of change for long.

Reforms, trends, and timing are all tipping in America's favor.

Can America rise alone?
However, an important aspect of the storyline surrounding America's future prosperity is the lack of other bright spots across the globe. Emerging powers India and China are seeing their lowest growth rates in a decade, while Europe is stumbling through crises in several countries.

Talk of an American economic revival accompanies scrutiny of the Chinese economy and its ability to maintain huge growth rates. It's easy to see why this would be popular counter-programming; as America slogged through the last five difficult years, stories of the "inevitability" of China's rise to become the world's next economic superpower grew in volume. The 2010 midterm election season included a commercial where a Chinese classroom in 2030 laughed at the demise of the United States.

While these stories often play on Americans' insecurities of losing their position as top dog, it's important to remember a healthy America relies upon a healthy global economy. Those next-generation exports require growing economies across the world. Many unconventional energy plays aren't economical unless demand for resources continues in emerging markets.

Furthermore, under a scenario of an America reborn as an export powerhouse through energy and new technologies, its trade imbalance with China would largely close. The popular convention today of China "owning" America would fade and become a curious afterthought of a generation past. Such a scenario isn't too much of a stretch; back in the 1980s it was believed Japan would soon own the U.S. itself. Today, we see how the conventional wisdom of the past played out.

A better tomorrow
The pieces for a better America seem to be in place. That's not to say there aren't sufficient reasons to be worried about the country's future. For one, much of the conditions for a stronger American economy rely on the economy of other countries to stay on track. Second, with situations like the impending fiscal cliff coming at the end of the year, America has the chance for inflicting more wounds on itself like we saw in last year's debt stand-off and resulting credit downgrade.

With five years of doom-and-gloom headlines behind us, sometimes it's important to remember how resilient the economy can be. It's important to remember that recessions give us a chance to reform broken systems and clean out waste. It's important to remember that America has been through worse, and that great economic revivals can come at times of despair, when no one saw it coming.

More ideas for the road
If you're looking for companies that could profit from better times in America, the best place to start is with solid blue chips with a global influence that can be found on the Dow Jones. To discover three companies our analysts believe are set to outperform in coming years, check out our newest free report: "The 3 Dow Stocks Dividend Investors Need." You can download it now, for free.

Eric Bleeker owns shares of Cisco. The Motley Fool owns shares of Apple, Oracle, Cisco Systems, International Business Machines, Microsoft, Qualcomm, Google, and Intel. Motley Fool newsletter services have recommended buying shares of Microsoft, Visa, Google, Intel, and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft, a bull call spread position in Apple, and a synthetic long position in International Business Machines. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that
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Read/Post Comments (38) | Recommend This Article (73)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 26, 2012, at 11:52 AM, mdk0611 wrote:

    1. IF, IF, IF those energy resources are permitted to be developed.

    2. IF, per your excellent point in the article, the rest of the world doesn't fold, and

    3. IF, federal debt doesn't rise so rapidly that it disrupts the private sector.

  • Report this Comment On July 26, 2012, at 12:02 PM, TMFRhino wrote:

    mdk,

    Heh, that's one way of summing it up! :)

    -Eric

  • Report this Comment On July 26, 2012, at 8:02 PM, NovaB wrote:

    Don't count that fossil fuel development too soon. Almost every location where fracking is occurring is also reporting ground water contamination. Once we poison the land there are zero options. No drinking water, no food grown, no economy, no life.

  • Report this Comment On July 26, 2012, at 8:20 PM, portefeuille wrote:

    The first European company doesn't show up until No. 11 on the list.

    -----------

    Well, if you consider Visa a "tech company" you might as well add "tech companies" like Nestlé ($193 B) and Volkswagen ($73 B) ;)

  • Report this Comment On July 27, 2012, at 1:36 PM, StopPrintinMoney wrote:

    Economist is a Keynesian's Bible published by Rothschilds.

  • Report this Comment On July 28, 2012, at 12:59 PM, jracforr wrote:

    America is said to have a $600 billion trade deficit with China, and China is a mature economy like Europe and Japan, but this has not boosted their demand for US technology. So what will be different this time around if we get the US economy back on track. It seem we will be right back in this position ten years from now. I wanted to believe that our technological advantage would be our savior as the article suggested, but it never provided the capital flow to balance our import in the past ,so it is unlikely to do so in the future, if we maintain our present consumption rate. Beside China will copy every US technology in a few years, note the recent fines levied on United Technologies, for selling helicopter engines to China, hoping to gain access to their commercial market. Instead china is said to have, copied the engines and used it in their new military attack helicopters, which they will soon be selling to other nations.

  • Report this Comment On July 28, 2012, at 1:14 PM, MrWooden wrote:

    This is a pretty solid assessment I must say. Although it is largely contingent upon everyone else's economic resurgence. But like the saying goes, "A rising tide raises all ships."

    Great article Mr. Bleeker!

  • Report this Comment On July 28, 2012, at 2:17 PM, HarryCaraysGhost wrote:

    Porte why would'nt you consider Visa a tech company?

    "Visa operates a global electronic payments network, allowing customers to use credit cards instead of cash."

    Remember Visa makes no loans, just processes them.

    Nice article Eric.

  • Report this Comment On July 28, 2012, at 2:23 PM, donsguesswork wrote:

    In response to NOVAB, oil & qas well fracking is taking place miles under the ground, miles below our water tables. Some petroleum service are making lots of money for their investors supplying water and water reclamation and purificatio from fracking with water. Some of the fracking materials include, natural gas,water,carbon dioxide and many others, but it all happens miles under the ground, but, the presidents forces would have you believe in this "contamination of ground water and aquafiers" it is impossible! why would oil well service companies frack so close to

    the surface? Make sense to you?

  • Report this Comment On July 28, 2012, at 4:54 PM, xetn wrote:

    "America has begun paying down its debts, closing its trade gap, and was the first to clean up its banking system."

    Where are you getting this drivel? Take a look at the U.S. National Debt Clock and tell me where America is paying off its debt (with the exception of citizens (which is largely write-offs of real estate debt).

    http://www.usdebtclock.org

    Additionally, the banks are not being cleaned up, they have been mostly taken over by the largest banks via the FDIC. Both are being propped up by the Fed and its money printing machine.

    The US has the highest taxes in the developed world coupled with a huge government regulatory system that insures a lot of companies moving off-shore.

    I believe this site has been drinking the Keynesian juice too long. It also limits posting which would give an alternative view. I have first hand experience with posts being deleted.

  • Report this Comment On July 28, 2012, at 5:13 PM, xetn wrote:

    Lest we overlook some other important data: consider that much of the banking reserves are nothing more that electronic entries on the Fed's books created by the Fed's mouse clicks. As some of our foreign buyers of US debt have been backing off (China for instance) the Fed has had to step in and monetize the debt with more mouse clicks.

    All of that "money creation" by the Fed has created several trillion of new money and the main reason we have not seen huge increase in the cost of living is because the US keeps changing the formula (to improve the data?). Based on the original calculation, the current rate according to shadowstats.com: http://www.shadowstats.com/alternate_data/inflation-charts

    As for unemployment, that rate is a joke as well:

    http://www.shadowstats.com/alternate_data/unemployment-chart...

    Inflation is a killer when foisted upon people with fixed incomes and wage earners who cannot get pay increases.

    Take a look at Tom's Inflation Calculator and you can work the numbers yourself and see the effects the Fed's actions has on your economic well-being:

    http://www.halfhill.com/inflation.html

  • Report this Comment On July 28, 2012, at 5:28 PM, steveg541 wrote:

    Very well said xetn..all of it. "america,paying down its debts and the first to clean up its banks"..what a joke!

  • Report this Comment On July 28, 2012, at 7:18 PM, Janine110 wrote:

    Who writes this stuff?????

  • Report this Comment On July 28, 2012, at 7:41 PM, lowmaple wrote:

    And I believe in Santa Claus.

  • Report this Comment On July 28, 2012, at 9:39 PM, looneyfooler wrote:

    What is this guy smoking? He is so far out in left field that it is ridiculous....

    Must be a big obama supporter to spit out all of these false statements..

    A joke-I'm not laughing....

  • Report this Comment On July 28, 2012, at 10:43 PM, chbelz wrote:

    I thought Motley Fool was a good service until i read this article. Is this guy a member of the DNC? Do you think all your subscribers are so stupid as to believe this drivel? My subscription is not being renewed.

  • Report this Comment On July 29, 2012, at 6:52 AM, vigates wrote:

    what planet houses motley's commentaters?

  • Report this Comment On July 29, 2012, at 10:06 AM, JDLove wrote:

    You Fools should stick to the numbers and let us decide what commentater to read. I don't pay you to jam a bunch of crap onto my computer. I'm out of your foolish world!!!

  • Report this Comment On July 29, 2012, at 3:48 PM, colleran wrote:

    I think we forgot during this recession, how innovative and resourceful a country we are. We look at problems and find solutions, rather than complaining about them. It is what has made America a great country and I am convinced it will continue to do so. Watch us go!

  • Report this Comment On July 29, 2012, at 9:58 PM, SaraW946 wrote:

    StopPrintinMoney wrote: "Economist is a Keynesian's Bible published by Rothschilds."

    The Economist is also an advocate for Thatcher-style economic policies. :)

  • Report this Comment On July 29, 2012, at 10:16 PM, skypilot2005 wrote:

    Author wrote:

    "The new America seems to have an edge.

    The message behind that Economist cover? America has managed to come out of the recession with a leaner, more powerful economy, and is quietly becoming an energy superpower on par with Saudi Arabia thanks to recent advancements in finding new oil and gas. Along with a revitalized energy future, America has begun paying down its debts, closing its trade gap, and was the first to clean up its banking system.

    Doom and gloom is gone, and in its place is a surprisingly positive view of America's future, pasties and all."

    Could be The White House had TMF management over for a "Pep Rally", again.

    Friday's report of 1.5% growth, which is a fact, casts a very critical "light" on this opinion piece.

    This article is a joke.

    Stick with stock analysis, something The Fool is good at.

    Sky

  • Report this Comment On July 30, 2012, at 12:17 PM, overley wrote:

    If America doesn't mire itself in crushing debt and over-regulation trying to emulate the European social welfare state this may be true. I wish I were as optimistic. The taxes to pay for todays profligate irresponsible spending will weigh heavilly on future generations, reducing their incentive to create new and greater businesses.

  • Report this Comment On July 30, 2012, at 12:28 PM, shsscar wrote:

    Eric should be writing for Hollywood.

  • Report this Comment On July 30, 2012, at 1:59 PM, PostScience wrote:

    I hate Obama and therefore want the economy to fail. Can you please write a different article that appeals to my prejudices? Thanks.

  • Report this Comment On July 30, 2012, at 6:13 PM, marctech wrote:

    No one appreciates more than I do optimism, hope, and outcomes bringing about optimal benefits for the optimal good -- to one and all to greatest degree reasonably possible. However, apart from the unfortunate fact that many of the negative comments above have several elements of truth and practicality to them -- as inelegantly stated and as blatantly emotional as some them were -- their arguments, and feelings, are generally far closer to the reality of circumstances; circumstances caused by far more than just global and domestic economic events and trends The values, core beliefs, and shared responsibilities and sacrifices that have been, until the Baby Boomer generation grew up (if you call this growing up by previous civilized standards), the sacred underpinning of this formerly extraordinary and unprecedented success story called the United States of America continue eroding to a crumbling, and perhaps irredeemable, state. It's a long and so unnecessarily grim and unpromising list: pitiful levels of selfishness and greed... rampant uncaring for the basic needs and sensitivities of others... simply not knowing or not sufficiently caring about what constitutes the greater good -- of one's immediate surroundings, of one's community, and of the community at large, as in the collective good of all fellow citizens near and far.... the full buy-in to mass consumer culture, and it's almost near-consumption of our time, our brains, and our critical need for real knowledge and insight... and on and on.

    But enough. Forget the rah-rah nature of the article, as much as any hope and positivity, of any kind, should be welcomed with open arms these days. Like with most everything in life, until the most basic and essential of human qualities and commitments fight their way back in, in some enduring manner, as ever-more difficult -- or very soon to be as ever-more improbable -- as that becomes with each passing year, then forget about solid, long-term domestic growth and stability of any kind, as beautiful a vision as that otherwise (and so nostalgically) is.

    In the meantime, I give the author a solid B+ for building an otherwise impressive castle in the sky. Now who, collectively, is willing to step forward and begin the process of paying any price necessary to initiate at least a partial rebuilding of the foundation underneath it?

    P.S. to Dave and Tom: Consider writing this talented author a very nice recommendation and suggest that he take it, along with his resume and cover letter, to another media outlet with an entirely different set of values and commitments. Keep the wonderful Fool just that: a company, and a cause, that really is fully devoted to the greater good -- the long-term investing success and overall well-being -- of its stellar community.

  • Report this Comment On July 31, 2012, at 1:02 AM, MidasInvestor wrote:

    Your comment that we have been through worse is true, but I don't think we have the kind of tough rugged leaders that we had then. The politicians of today are too shortsighted and I am not at all confident that they can get us out of the mess that they created.

  • Report this Comment On July 31, 2012, at 1:53 PM, marctech wrote:

    Exactly -- and they're the ones at the very top, who need to be leading the way, and with all the necessary strength, courage, foresight, and wisdom. Name one leader since Ronald Reagan who's even come close to having all of those absolutely essential qualities in one cohesive and readily-actionable package...

  • Report this Comment On July 31, 2012, at 4:22 PM, Ccerqueira wrote:

    our debt is being paid really??!!

    Maybe personal, and business debt, but my son is still on the hook for TRILLIONS US debt, that I have NOT been working hard enough to try and reduce by talking to my reps and Senators and Pres.

  • Report this Comment On August 03, 2012, at 2:05 PM, nnamlips wrote:

    I like this article first because it is positive

    and second because it makes a lot of sense.

    All America now needs is a "Ronald Reagan II". Unfortunately, neither Obama nor Romney have the caliber to motivate the American people to go ahead and fight for it!!!

  • Report this Comment On August 03, 2012, at 6:10 PM, Firsk wrote:

    Of COURSE the author is referring to private debt when he said it's being paid down- the recent crash was a crisis brought on by private debt. Public debt was not the problem, not by a long shot. The market doesn't seem to think that the Federal government is carrying excessive debt now, since its price keeps getting bid lower and lower. Ten year T-bill yield is now at 1.6%. Individuals and investment banks on the other hand, got in way over their heads, and are having to work it out- or be bailed out. As much as people love to complain about government waste, no government program has ever wasted resources on the scale that the private securities markets did in the runup to the recent market collapse. And to the economy, waste is waste.

    Federal debt is overwhelmingly (85%) money we owe to ourselves, and almost all the rest to close trading partners. Our children aren't "on the hook" for it, because someday we will be dead, and they will inherit everything- the debt, the paper, and what we built with it. The challenge is to invest these resources wisely- and just sitting on them is not wise. I'm very happy earlier generations incurred debt- which was passed down to me- to build universities, public utilities and a GPS system, to research diseases and win WWII- those things help me be more prosperous, safer, and healthier.

    In light of the Fool's commitment to objective data and measurable results, I'll just point out to the commenters above who are using the term "Keynesian" as a pejorative label, that the "New Keynesians" have been quite accurate in predicting the path that recent economic events have taken, while the freshwater economists and followers have been consistently and resolutely wrong on all counts. The world does not, apparently, work the way they thought it did. Actual scientists, faced with such failure of their models, would be reconsidering their theoretical framework, but no, I hear ideological fundamentalism drowning out rational thought.

    The caveat I have re. the article is the question of our national willingness to invest in the future. Countries with excellent physical and information infrastructure and highly educated populations are going to be much more effective places to innovate and create wealth. The same entrepreneurial effort generates better returns when the national infrastructure works well. Historically we benefited from a solid willingness of citizens to invest in the long term public good. That seems much less the case now.

    For what it's worth, I am an entrepreneur who built a corporation that designs technology- specialized electronic instrumentation- products. These are currently being manufactured in the US and sold globally. I created jobs here. Nearly everything that makes my business possible- the existence of the microprocessor, the internet, the communications and transportation systems, the GPS satellite system, the sensor technologies, the excellent universities that educated me and our engineers and that created the basic research that made these technologies possible- it is all the result of government investment made by earlier generations.

    Will we be willing to make the same sort of investments in the future that earlier generations did? I wonder. Now, with much of our infrastructure in a shabby and outdated state, particularly information and communications, but also basics like roads and water systems, and with the ability to borrow long term at essentially 0% interest (since companies are sitting on trillions in cash with nowhere to invest, as demand is insufficient for even existing capacity), it seems bonehead stupid not to be taking advantage of this situation. We should be building the structures we know we will need NOW, while people and machinery are idle, and while we're not competing with private expenditures in a way that would drive up inflationary pressures. Instead we have a political climate dominated by fear of (short term) debt, that would rather hold onto abstract cash than build actual infrastructure that could help create wealth for generations. It's the equivalent of stuffing your money into a mattress.

    Future generations will shake their heads at the stupidity of our current political focus on incremental short term debt, when there is such present opportunity, and when investing wisely now would reduce long term government debt.

  • Report this Comment On August 03, 2012, at 10:45 PM, skypilot2005 wrote:

    The only thing we have gotten in return for our trillions in increased national debt during the past 3 ½ years is increased debt not increased growth.

    History has shown that businesses won’t produce and workers won’t work when their government threatens to confiscate their returns.

    The recent 1.5% growth rate for our economy clearly shows we need new leadership in Washington starting with The President.

    In November we can “make it happen” via the ballot box.

    Sky

  • Report this Comment On August 04, 2012, at 1:41 AM, Firsk wrote:

    What we have gotten for our trillions in public debt is filling most of the hole that local and state governments created by cutting expenditures, as most were required to do. That may well have kept a deep recession from becoming a depression. It certainly helped educate kids and protect families. In the long run that pays returns and leaves us better off, whatever the short term costs.

    History shows that we worked plenty hard under far higher top marginal tax rates. Better to ask why, with worker productivity tremendously higher since the 80's, and with vastly more wealth being generated by the economy, the incomes of the middle class wage earners have been flat, while the share of income going to the wealthiest has skyrocketed. Someone has been "confiscating" all right, but it isn't the government.

    50 years ago, about a third of the federal budget was supported by the broad middle class, about a third by business and corporate taxes, and about a third by the wealthiest 10%- top marginal rates were far higher then. That money paid for the highways, airports, universities, developed the microprocessor and enabled the computer industry, enabled the foundation of the internet, made huge advances in health care, built the GPS system, funded a huge amount of basic research, and on and on. I'd argue we are all- rich and poor and in between- a lot better off and have more opportunity for free enterprise businesses like mine because of those investments.

    Today the richest 10% support about 10% of the federal budget (though they have a vastly larger proportion of the national income than they did 50 years ago), corporate and business taxes support about 9% (though corporate profits are vastly higher than they were 50 years ago, and US corporations are sitting on 2 trillion in cash they can't figure out how to invest), and the broad middle class pays for the rest. As a consequence of tax rate changes, increased payroll taxes (and many new loopholes) since the 80's, the tax burden has shifted onto ordinary working people just as their share of the national income has fallen.

    These are patterns that have been in place for generations- the economy is like a supertanker- you can put the rudder hard over, but it may be a long time before you see the change in heading. To say that what has happened in the last 3-1/2 years has so far made much difference at all is just silly election year hyperbole.

  • Report this Comment On August 04, 2012, at 6:28 PM, modeltim wrote:

    Hydraulic fracking is very bad and may end up contaminating all of our groundwater: http://www.scientificamerican.com/article.cfm?id=are-frackin...

    You know, Fools there is something to life besides getting a financial edge on your neighbors.

  • Report this Comment On August 04, 2012, at 7:00 PM, Wade32ru wrote:

    Cheap energy - especially natural gas - is an excellent opportunity for us. The data shows that yes, accidents happen, just like planes occasionally crash - this does not mean that we stop flying. Cheap nat gas = Cheaper feedstock for many industries - and this could lead to a renaissance in US manufacturing. Lots of headwinds, but I think the US will have a comeback that will become clear in a year or two. Great article.

  • Report this Comment On August 04, 2012, at 8:56 PM, HarryMoser wrote:

    Overall a good article but too much emphasis on exports. The larger, easier, more immediate opportunity is to reclaim more of the domestic market by reshoring production and sourcing to the U.S. We calculate that about 10% of manufacturing job growth since the low of Jan 2010 is due to reshoring.

    Our free tools for helping companies make a better sourcing decision are at www.reshorenow.org.

  • Report this Comment On August 05, 2012, at 3:05 PM, winthrop264 wrote:

    What is up with these folks calling people Obama lovers and DNC cronies for reporting any good news? I don't support Obama, but when you try to report the FACTS about all this new oil, they get SO freakin' mad, they want to kill you. Quit dinking the Rush Lamebrain Kool Aid. It'll kill you if you try to make that your investment strategy.

  • Report this Comment On August 05, 2012, at 4:14 PM, ChrisBern wrote:

    If America is in such a strong economic position now, and poised for even greater things in the future, then why not re-establish mark-to-market accounting, eliminate Fed QE and its zero-interest rate policy, let old tax cuts expire, reduce its record-high entitlements such as food stamps and disability payments, and bring its fiscal stimulus (i.e. deficit) back down to more normal levels?

    If all of the above were to happen, America would suffer a depression of the 1930s variety. As it were, America can't do all of the above BECAUSE its economy is in such distress. If and when the artificial props can be safely removed from the economy--which might not happen in my lifetime--only at that time will America's inherent advantages start to once again work in its favor.

  • Report this Comment On August 29, 2012, at 11:03 PM, MHedgeFundTrader wrote:

    I was researching comparative Asian wage data the other day and was astounded with what I found. Textile workers earn $2.99 an hour in India (PIN), $1.84 in China (FXI), and $0.49 in Vietnam (VNM). This is an 18 fold increase in labor costs from ten cents an hour since Chinese industrialization launched in 1978.

    This compares to the $8 an hour our much abused illegals get at sweat shops in Los Angeles, and $10 in some of the nicer places. What’s more, the Indian wage is up 17% in a year, meaning that inflation is casting a lengthening shadow over the sub continent’s economic miracle. A series of strikes and a wave of suicides have brought wage settlements with increases as high as 20% in China.

    This is how the employment drain in the US is going to end. When foreign labor costs reach half of those at home, manufacturers quit exporting jobs because the cost advantages gained are not worth the headaches and risk involved in managing a foreign language work force, the shipping expense, political risk, import duties, and supply disruptions, just to get lower quality goods. Chinese wage growth at this rate takes them up to half our minimum wage in only five years.

    This has already happened in South Korea (EWY), where wage costs are 60% of American ones. As a result, Korea’s GDP growth is half that seen in China. These numbers are also a powerful argument for investing in Vietnam, where wages are only 27% of those found in the Middle Kingdom, and where Chinese companies are increasingly doing their own offshoring.

    This is why I have pushed the Vietnam ETF (VNM) on many occasions. I know every time I do this I get torrents of emails from that country bitterly complaining how difficult it is to do business there, and how the hardwood trees are still full of shrapnel left over from the war, and why I shouldn’t buy a 50 acre industrial park there. But, the numbers don’t lie.

    The Mad Hedge Fund Trader

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