Cartoon 701: Rats Deserting

In our perception we need to uncouple America business domestic malaise from the international market.  American consumer spending has been slowing for decades.  It tracks with the pessimism about wages, job security and relative disposalable income.  The recent acknowledgement as a result of the financial crisis is only stating a more serious cut back in consumer spending.

American businesses use a business model predicated on constant growth. This translates into higher profit expectations reflected in stocks and dividends. Consumer spending is the engine that drives the growth. American businesses have had to seek over avenues other than America to protect their business models.

Despite the travails of GM here, it is going great in China. Apple announced it is on the verge of being able to sell the iPhone in China. Greyhound Bus Company was in the news. They have cracked the British market and will offer service in London. Leveno, the computer making has announced it is refocusing its major efforts from America to China. GE, HP and Dell’s largest sales are not domestic but international. The same is true for Nike. Coke and Pepsi follow the trend.

When a major American business cries woe, you need to look at their balance sheet. Where are the bright financial spots?  You can believe this is where they are going to place their bets. You can also bet it is not the American domestic market.