3 posts categorized "economy"

12/31/2009

My $380 shoes and why American manufacturing may not be dead


 

 

 

Recently, seemingly against all logic and reason, I purchased a pair of $380 shoes.  I had a gift certificate which helped a little, and I purchased them in tax free New Hampshire which helped a little more.  But the brunt of this purchase was taken by yours truly.  Now here’s the sentence you didn’t expect: these shoes were a tremendous value.

 

Those of you who know me personally know I have no fashion sense whatsoever.  I cannot recognize which brand names are in or out and I am usually a decade away from whatever is hip.  So why such a purchase?  One word:  quality.

 

I realize you think the shoe salesman took old Pete for a Kansas City Shuffle, tricking me into buying the priciest shoe in the store.  (It was actually the third priciest shoe in the store BTW.)  But truly, this brand of shoes will literally last me ten years.  (And since I am always a decade behind in fashion anyway this is the ideal fit for me.)  They’re real leather, hand stitched and most important to the point of this blog, made in the USA. 

 

Less than a year ago at the same store I purchased a pair of $85 shoes made in another country.  (I won’t say which but you can guess.)  And these “cheaper” shoes are already falling apart.  So you tell me, if I have to buy a new pair of these cheap sleds every year, which pair is really the better deal?

 

I’ve bought Wal-mart screw drivers and literally bent the metal on them.  Not bent the metal Uri Gellar style, I mean bent the metal trying to turn a screw.  The “price” of the screwdriver was terrific.  But was there any real value when it cannot do the job it was made for?  Ever bought a $65 DVD player that breaks after a 6 months?

 

America is not going to win in the cheap sandals price war.  But if manufactures can convince consumers that high quality and high price is actually a bargain, American manufacturing has a chance.  It’s not easy, but I hope this blog will help. 

11/14/2009

Buffet's Secret Motive

Buffet’s Secret Agenda

 

A short while ago when the Oracle Of Omaha purchased the remaining 77% stake in Burlington Northern Railroad, Buffet commented that the move was “an all-in wager on the economic future of the United States.”

 

I do hope so.

 

But look a little deeper and there is probably a backup bet in there (only in high finance could such a thing as a “backup bet” exist!)

 

Buffet may be worried about increased environmental regulation which could drive up the cost of fossil fuels.  (If that happens it’s more attractive to move people and stuff by rail.)  He may also be worried about inflation (and who isn’t besides the boys at the Fed?)  Inflation means higher oil prices (because as the value of the dollar goes down the price of “stuff” goes up.)  Higher oil again means railroads get more attractive.

 

There may be yet another reason and that is this new administration will increase economic incentives for environmentally friendly companies (there’s about $8 billion in the stimulus bill already for high speed rails, but to build high speed rails it’s nice if you already have the easements.  Now Buffet does.)    

 

Let’s all hope Buffet is right.  Let’s hope he makes money off his railroad because the economy starts humming again and people and businesses are buying more goods and raw materials and those goods and raw materials somehow need to get to the people and the businesses buying them.  (How’s that for a run on sentence?)

 

But this railroad purchase once again shows Buffet’s brilliance.  Even if he is wrong about the economy he may win again through tighter regulation, higher oil prices, and environmental incentives. 

10/19/2009

The End of The Recession? Don’t Be So Sure.

 

There is little that delights a politician more than being able to state that a recession is over.  But much like trying to identify when a recession starts; it is difficult to determine when one ends.  Because many scales in the economy move in different directions, when one thing gets better, some other things remain stagnant or even get worse.

 

Everyone’s favorite yardstick is the US stock market.  Indeed the market has its fingers in many pies.  Stocks can be sold for cash or used as collateral for operational loans.  Stocks are where most Americans have sunk most of their retirement savings so when stocks rebound Americans get a bit more confident. In economics “confidence” is a code word for “more spending” and “more spending” means more people need to be hired to paint your nails, sell you a plasma TV and mow your lawn.  The market’s rebound then, offers a little to be excited about.


A little.

 

The thing to watch in this supposedly-soon-to-be-over-recession is unemployment.  High unemployment is a heavy ax that cuts into that ballooning confidence that an equities rebound creates.  If you don’t have a job you won’t spend much.  Even if you do have a job, high unemployment still scares you because that means there is a dude or a dudette out there who is willing to do your job for $5000 a year less.  So with your job hanging by a string, you hold onto your cash almost as much as your unemployed neighbor.

 

The message here is keep an eye on your spending and your long term commitments.  Save as much as you can (timeless advice even without a recession around.)