Hi Foxy,

When I posted, it was about the same time that the Senate blocked the Bill. I didn't know. I have since been informed, but haven't read, George W., is deverting the money from a Wall Street stash.

Greetings Poly,

There have been infrastructural problems with US industry for a few decades. The was true ofthe US Banks back i the 1980s (and again now). Big is not necessarily better or more profitable.

Dear Col,

In the 1970, the Bank of NSW, published two book volumes on its history. The Chapter on the 1930s financial systems is very informative. In seems the Great Depression didn't just happen. One major problem leading into the GB was multiple borrowings by Government to fund its operations. The cumulative effect was that our Government had difficulty paying the Interest, after dipping into the Market thirteen times, over a couple of years and, the Government itself could not raise further money and, the Commonwealth Bank (then the Central Bank) held huge overdrafts with the Bank of England and Westminister. If we wish to avoid major prblems in 2010, austity and product capacity must be our focus, not creating debt to save non-achives.

Lession: Don't borrow.

The New Deal in US was okay, but limited, to th extent that as each project was finished, the work force became unemployed again.

Protectionism must be avoided at all costs, i.e., limiting trade to protect local industry or protecting mature campanies.

Yes, the small business owning doesn't have the ear of government anywhere near the extent of the top end, whom incidently are very willing to sack thousands of workers to keep the dividends rolling-out.

The ability to create virtual wealth probably goes back to 1974.

Poly,

The free market acts, as you allude. but didn't fully articulate - by meeting consumer needs. It is positioning which meets consumer needs, not handouts, that must drive business strategy. In 1929 Henry Ford's, "in any colour provided it is black" philosphy almost backfired, when GM offered different colours. The last miniute recognition of this fact/demand almost sent Ford under. Likewise, GM had problems with "product orientation" with the Edsel, whereas, market orientation supported the successful Mustang.

Col,

I just realised I commented on small business from the perspective of lobbying. Concurrently,I do agree with you that little fish with innovation and drive, become bigger fish, and, whales (really a mammal) in the case of Microsoft.

Oliver my understanding of the actions which initiated the Depression was a collapse in confidence following people literally signing up for debts in shares which they could not repay… basically similar to a kiting scheme with shares instead of cheques – not dissimilar to your description of NSW government.

But I do not assume that snippet is the sole cause abut would note following the depression a lot of corporate regulations have been enacted or have changed completely from what they were previous.

“Yes, the small business owning doesn't have the ear of government”
And it is 70 % of the work force who are employed in small/ medium business.

“The ability to create virtual wealth probably goes back to 1974.”

Disagree with you on one point :
Virtual wealth is a nonsense, unless you can “cash it in”, there is no wealth

but the perception of it will always increase in a bull market just as surely as it will evaporate in a bear..

maybe your perception of “virtual wealth” is a facet of “public confidence in the future”, which walks in lock step with bull versus bear conditions…?

Microsoft is a useful example in some respects, I had some reservations about mentioning it because it is a-typical but easier to quote than hundreds of other innovative / entrepreneurial names behind the business successes..

Thinking on a couple

Hewlett Packard
Virgin (poly-glot)
Grollo.

There are many food processing companies I know (but not national names)
The wealth of tomorrow is built on the innovations of today and the industries of yesteryear are either cash-cows or extinct.

No point in being ‘sentimental,’ the game is no different to the jungle and whilst “survival of the fittest” is not the creed, certainly those companies which do not embrace the changes brought by innovation will die and deservedly so.

Krudd wrecked public confidence with his incompetent handling of the economy. He is presently popular, he used a big lump of surplus to buy votes but memories are short. He has no surplus left to squander on grandiose schemes.

He deserves to go.

Col,

I have no argument with what you say about the Roaring Twenties and the borrowing for shares as an initiator. What, subsequently, acted to increase the decline was the US protecting its home industries and not importing. In turn, other countries did not by from the US, thus, the total value of World trade fell.

By virtual wealth, I was referring to the practise of riding of the back of a feigned economy built on protracted deficit spending.

Relatedly, if the US becomes backed into a corner with respect to its huge debt, it is feasible it might orchestrate circumstances where others need to devalue their currencies so it can acquire assets via FDI, to built itself up again?

You mention "cash cows". Strategic Marketing 101, suggests "cash cows"
should not be supported, rather, "cash cows" managed into divestment(Boston Consulting Group Matrix)and milked to develop new products/SBUs.

I think the real "Sir Humpheys", i,e., knowledgeable advisors in the public service need to be listened to by politicians. Unfortunately, we too often see policy on the run, by the polies, under pressure from the Press. Were I Kevin Rudd, I would reading every edition of Harvard Business Review from 1925-1935 and, Australian Hansard and the broadsheets of the same period.

Yabby,

If the US automative companies fold, it is certain, as you say, there would be a major impact on suppliers and peripheral industries. Japan and China perhaps can review this situation and expand their offshore operations in the US.

It could prove unwise in the long run for Asia to assume full control over all manufacturing capacity, including parts, because a sustained (not re-employed) loss of jobs in the US diminishes the size of potential Japanese markets. That is why the US built up Western Europe, after WWII (Marshall Plan), to have external markets.

If Asia does take control of World medium tech. manufacture, what new opportunies does this present the West? A winding down of the semi-skilled, yet, the further development of mid-life higher education aimed towards new sectors?

Oliver….”By virtual wealth, I was referring to the practise of riding of the back of a feigned economy built on protracted deficit spending.”

Yes, I did misunderstand you

What you speak of is the path along which Krudd and Co seem hell bent on dragging us down…. And down … and down….

Your interpretation of the role for cash cows is exactly as I had anticipated…

. . . “either cash-cows or extinct.”

I have seen a number of less than imaginative operations which believe they have a divine right to “ride a dinosaur” and seek handouts at every opportunity… more corporate socialism usually disguised as “government picking winners”.

Your suggested reading for Krudd is an excellent idea… but I doubt he possesses the creative insight to pursue it… he prefers to take the council of the pig ignorant and bleeding hearts of the left.

Personally, I will continue to plod my own path,

Following these socialists is similar to following a blind person as they navigate their way through a mine field, quietly moving along, tapping the earth with a white cane… until “boom” (and not an economic boom)