To celebrate or not?

July 17, 2009

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The U.S.'s birthday has come and gone, and while most of us celebrated in the usual way—a day off from work, a cookout, and some fireworks—how many of us took the time to reflect on our nation"s place in the world? At 233 years, the U.S. is an awfully young country; on the other hand, with a population of 300 million, a gross domestic output of $14 trillion, a considerable history in charitable donations and other assistance to less-well-off nations, and substantial military capability, it has created a unique place for itself in the world.

The U.S. kept a low profile in international affairs during much of its history. George Washington encouraged this in his farewell address ("The great rule of conduct for us, in regard to foreign nations, is in extending our commercial relations, to have with them as little political connection as possible."), and Thomas Jefferson emphasized it in his inaugural address ("...& peace, commerce, and honest friendship with all nations, entangling alliances with none."). That aside, most of us would probably say that the U.S.'s stature reached its peak when our alliances were pretty thoroughly entangling. The year was 1945 and U.S. soldiers, aided by our technological superiority and apparently infinite manufacturing output, had just finished rolling up the Axis powers, making the world a better place.

More recent exploits overseas haven"t resulted in quick or clear victories (Korea, Vietnam, Lebanon, Somalia, Iraq, Afghanistan), but combined with charitable work and diplomatic initiatives elsewhere, our overall efforts deserve recognition, support, and praise.

We celebrate our independence from Britain, but we have much more to celebrate.

I noticed another birthday—well, it's more of a milestone—in July. The Dow Jones Industrial Average reached the 14,000 mark on July 19, 2007. It seemed to good to last and indeed it didn't. Some investors may have been ecstatic, but its fall to less than 7,000 was a disaster. Hindsight is 20/20, but even so, the warning signs were clearly visible and we should have expected something to go wrong. It rose from 11,000 to 14,000, an increase of more than 25 percent, in a little more than two years. Granted, it had lost 40 percent of its value just a few years earlier when it fell from around 12,000 to 7,000, so nobody was expecting a second drop like this so soon.

Will I be relieved when it climbs back up to 14,000? Probably not. It"s just a number that reflects investor confidence (or lack of it). No, I"ll keep an eye on some other number. Maybe the capacity utilization among steel mills. Listed as "primary metals" by the Federal Reserve Board, mills were running at 81 percent capacity last May. This May they were running at 45 percent. When they get back to 70 percent (heck, I might settle for 60 percent) we"ll know that manufacturing is getting back up to speed.

That would be worth celebrating.


FMA Communications Inc.

Eric Lundin

Editor
FMA Communications Inc.
833 Featherstone Road
Rockford, IL 61107
Phone: 815-227-8262
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