Monday, September 27, 2010
Monday, September 27, 2010 4 comments
The fact that our pod of big fat American whales has been swimming circles in ever more shallow water is demonstrated by a survey done several years ago that showed 80% of non-food items at Walmart were in fact made in China. It’s doubtless gotten worse by now and don’t kid yourself, Walmart is not the only place where this is true. Even the remaining American manufactured products are heavily dependent on China for parts and materials.
Some time back I mentioned that China has a stranglehold on exotic metals known as rare earths that are essential to all manufacturing from the alloy used in steel to make magnets for motors and generators to a long list of metals needed to make computer chips. Really anything more advanced than blacksmithing absolutely requires one or more of these metals or nothing happens. The US government recently announced that they have found a couple of trillion dollars worth of these metals in Afghanistan. In fact they aren’t all that rare, we have several huge proven deposits in the US but no longer have any facilities to refine them from ore.
So why does China control 95% of the entire world’s production? The answer is pretty simple, they haven’t been allowing their country to be run by idiots for the past 30 years. It was their policy to simultaneously develop their own industry while using China’s immense economic clout to put their competition out of business. It’s not just a matter of reopening production elsewhere in the world, China’s systematic approach was to buy the factories and ship them to China.
This embargo doesn’t affect America that much since we don’t make much of anything here anymore but what output is left will go straight to zero right now. Those fancy new battery factories that Obama takes credit for are not going to be around very long. New green manufacturing jobs? Not on this continent. Soon there will be nothing more high-tech than blacksmithing, the days when the US was dominant in technology are gone, third world status is here right now.
So from now on everything high tech comes from China and China can name the price. The Obama Administration is scrambling to react to this national security threat but there are severe limits to what you can do with the remaining 5% of the world’s supply even if you can get your hands on it. It seems that gun sights for tanks, guided missiles and night vision equipment can’t be made by the Amish blacksmith. Say it in a whisper, “we’re screwed”, don’t say it out loud, it will frighten the children. They’ll learn soon enough.
It takes fifteen years or more to develop a rare earth supply chain and this assumes you have the needed resources available to do it. We are either going to submit to draconian demands from China or have a flow blown trade war that will more closely resemble real war depravation than anything else. Want to know what this kind of trade war could look like? Cuba is a perfect example what living under the embargo of manufactured goods looks like or maybe more like Iraq in the nineties or we could become Somalia. Which example fits best depends on whether we allow the same idiots to be in charge that led us into shallow water in the first place. Are your flippers touching the sand yet? www.prairie2.com