The American dream of making money by actually "making things" is still alive. Two recent examples are the College of Nanoscale Science and Engineering at the University of Albany and "Robot Wars" preparing kids for manufacturing jobs.
 

Manufacturing has played a strong role in the recovery from the recession. Detroit and Cleveland are showing strength with a rebound by the auto industry. Metal fabrication business is up in Boston and Chicago. In Texas and the Bay Area, high-tech manufacturing is on the upswing.

 

In Upstate New York, in the Hudson River Valley, at the University of Albany, Alain Kaloyeros has created and continues to expand something very special- an initiative to re-create the kinds of secure, long-term middle-class jobs that have long been the foundation of American prosperity. The initiative is an unusual partnership between government and private enterprise. It's not a government bailout of a flagging industry. It's focused on high-tech, future-oriented products and therefore has potentially greater long-term success.

 

Mr. Kaloyeros, who heads the College of Nanoscale Science and Engineering at the University of Albany, is not your ordinary public servant. He drives a black Ferrari F430 Spider and wears bleached jeans with holes in them. New York pays him four times more than the governor for having built his obscure college into a powerhouse for research with applications for electronics, medicine and other industries. It's a bit reminiscent of Babe Ruth's remark when questioned about his salary of $80,000 in 1930, which exceeded that of President Herbert Hoover's salary of $75,000. The Babe replied, "I know, but I had a better year than he did."

 

Indeed, Mr. Kaloyeros has had some very good years. About 250 companies, including such high-tech firms as IBM, Samsung, and Applied Materials have provided $6 billion to the school for equipment, labs, clean rooms and other resources. Mr. Kaloyeros got the State of New York to contribute $1 billion. In about a decade, the college has grown from 70 researchers and staff working inside a single building to 2,600 employees. Its engineers operate $60 million lithography tools and rival companies are working together on research projects that were once unthinkable.

 

Next year, Silicon Valley chip maker Advanced Micro Devices, Inc. will open a $4.6 billion semiconductor factory in Luther Forest, about 20 miles north of Albany. The clean room of the factory is the size of six football fields. It will become the first major chip plant built in a decade. AMD expects to employ 1,400 workers, many of them $40,000 a year technicians and equipment operators. Mr. Kaloyeros sees AMD as the anchor for a cluster of high-tech manufacturing stretching 100 miles along the Hudson River.

 

Once the new AMD plant gets going next year, it will be able to produce 60,000 chips a month for such products as smartphones and portable music players. Mr. Kaloyeros hopes his mix of public and private, competitive and cooperative effort will reduce the flow of investment and jobs to China-revitalizing American manufacturing and with it the U.S. economy.

 

At the same time, the National Tooling and Machining Association is using robot technology to prepare kids for manufacturing jobs.Their technique:"Robot Wars."

 

Robot battles have drawn kids into novels, TV shows and movies for decades. Now companies are using robot wars to attract a new generation of employees to high-tech manufacturing. A few weeks ago, on a Saturday morning in Indianapolis, 100 high school students from around the country gathered in an airplane hangar for the action.

 

Inside an 8-foot-tall bulletproof glass cage, robot gladiators buzz, crash and generally demolish each other. The robots are driven remotely by the students. The objective is not robot demolition; the organizers are trying to interest young people in high-tech manufacturing. National Tooling and Machining Association Chairman Grady Cope describes it this way, "Manufacturing's not a smokestack industry anymore, what we do is cool."

 

Across the country, manufacturing companies are sponsoring robot fight leagues.The young people help build the robot competitors while gaining exposure to a modern manufacturing facility. And, then, on the weekends, they control the robots in battle.

 

As a result, many of the young people have decided to study high-tech engineering. Take a look at the energetic student below as she works on her robot gladiator.

 

Yes, it appears the American Dream is very much alive.

 

For more information: http://www.chicagotribune.com/news/nationworld/la-fi-manufacturing-revival-20110515,0,1363751,full.story

 

 

NPR ran a great educational series mornings from May 16-20 on financial literacy for young people. We applaud them.

  

Here at DWM we've been discussing for years with our clients the aspects of financial literacy, discipline and accountability for all family members. We continue to facilitate family meetings to promote this important objective. 

 

We thought it might be appropriate to include information on financial literacy for young people within our next few newsletters. Here is a quiz which we encourage you to have your entire family take. The answers are at the end of the questions.

 

We look forward to your thoughts and comments regarding this initiative. And, for our clients, let us know if you would like to schedule a family meeting.

 

1. How much should you have in an emergency savings account?

1. $500-$1,000
2. 3 months of living expenses
3. 6 months of living expenses
4. An emergency account? I thought that was what credit cards were for? 

 2. Negative information (other than bankruptcy) can stay on your credit report for:

1. 2 years
2. 5 years
3. 7 years
4. 10 years

3. What's the difference between a Roth IRA and a Traditional IRA?

1. The investments you choose
2. When you pay taxes
3. Whether  you open it at a bank or not

4. Lindsay has saved $12,000 for college, which she starts next year. What is the safest place for her to invest that money?

1. Corporate bonds
2. Certificates of Deposit (CDs) or money market accounts
3. In her closet at home
4. Stocks

5. Under which of the following circumstances would it make sense for you to borrow money now to buy something now and repay the loan in the future?

1. When some new tech items go on sale
2. When the interest on the loan is greater than what you can earn at the bank
3. When you need to buy a car  to get a much better paying job
4. When you really need a week's vacation

6. Your take-home pay is less than your gross income. What best describes what is taken out of your paycheck?

1. Federal Income Tax, State Income Tax, Social Security contribution and Medicare
2. Federal Income Tax, Sales Tax and Social Security Contribution
3. Social security and Medicare contributions
4. Federal Income Tax, State Income Tax, Social Security, Medicare and Property Tax

7. Bill and Jenny have money set aside for emergencies. If they need it right away, which is the least beneficial place to have it?

1. Stocks
2. Savings accounts
3. Invested in a down payment on a house
4. Checking account

8. Your credit card is stolen and a thief runs up $1,000 in bills. If you contact your credit card company immediately on discovering your card is missing, what is the most that you will have to pay according to federal law?

1. Nothing
2. $50
3. $250
4. $1,000

9. What best defines your net worth?

1. Money in your wallet
2. How much money you have minus what you owe
3. Total value of your assets less your liabilities
4. How much is left from your paycheck after you pay your monthly bills

10. What percentage of my income should I pay on my monthly mortgage?

1. Whatever the bank says you qualify for
2. No more than 25% of gross pay or 35% of net take-home pay
3. No more than half your paycheck
4. Whatever you are comfortable with 

11. You owe $5,000 on a credit card that has an 18% interest rate. If you pay the minimum each month of 2% of the bill and you incur no new expenses, how long will it take you to pay off the credit card?

1. 8 years, six months
2. 17 years, 9 months
3. 25 years, 7 months
4. 39 years, 4 months

 

Answers: 1.C, 2.C, 3.B, 4.B, 5.C, 6.A, 7.C, 8.B, 9.C, 10.B, 11.D ($13,396)

 

For more information: http://www.npr.org/2011/05/06/136062128/money-quiz-test-your-financial-know-how  

 

 

The short answer is probably not anytime soon. But, it is happening.

 

Nearly a century ago, the United States, the world's rising economic star, starting pushing for the use of its currency rather than the main international coinage, the British pound.Eventually, the US dollar became dominant and upended decades of monetary world order. Today, China is doing the same. The Wall Street Journal's Alex Francos puts it this way, "China is not only interested in economic growth, it wants international power and prestige."

 

After the US dollar, the Chinese yuan, or renminbi, has the best chance to become a dominant international currency of choice. The problems in Greece and elsewhere have diminished the luster of the euro. Currencies such as the Australian dollar and the Swiss franc attract attention from investors, but those economies are too small to support the monetary float needed for widespread global transactions. Emerging-market currencies like the Brazilian real and the Russian rubble are hobbled by concerns about inflation and political stability.

 

For years, China has made it tough for capital to flow to and from its economy. Now, it is forging ahead with a campaign to bring the yuan onto the world stage. A yuan that's more widely used in international trade and investment could eventually challenge the dollar's supremacy, correct some of the balances that plague the Chinese and global economy, and force the U.S. to live within its means.But the transition won't be easy.

 

For more than a decade, China's closed capital account has been a defining feature of the global economy.It has insulated the mainland from international capital flows, enabling China to ride out the Asian financial crisis in 1997 and worldwide financial crisis in 2008. In addition, the Chinese government has maintained the yuan at an artificially low level which has supported a 30-year export boom. As a result, there are powerful vested interests in China that are satisfied with the status quo and will delay reform efforts.

 

Even so, the first cracks in China's restrictive policy came in July 2009, with a plan to allow settlement of import and export transactions in yuan.  By the first quarter of 2011, $55 billion of China's trade, or roughly 7%, was settled in yuan. At the end of April 2011, yuan deposits in the Hong Kong banking system had risen to 511 billion or $79 billion, up roughly 9 times since July 2009. 

 

More substantial expansion of the yuan will require progress in two areas:an exchange rate that is close to fair value and market-set interest rates. The Chinese government is using Shenzhen and Hong Kong as sites for experimentation for reform of the system. Yields on yuan-denominated debt trading in Hong Kong are already set by the market rather than the People's Bank of China's benchmark interest rate. In August of 2010, McDonald's became the first nonfinancial foreign company to issue yuan bonds in Hong Kong. Caterpillar and other multi-nationals have followed suit.

 

A more expensive yuan will limit demand for exports. This could result in Chinese companies moving production facilities inland, to find cheaper labor away from the coast. And, it could cause a boom for India and Vietnam. The higher valued yuan could be good for U.S. businesses who hope to cash in on the rise of the Chinese consumer.

 

Even with the progress that is being made, it will be some time before the yuan is a true international reserve currency held by central banks. Chinese capital remains tightly controlled and therefore is not a liquid asset that central banks can use to stabilize the value of their domestic currency.

 

In their comprehensive report on the yuan last week, the Wall Street Journal identified some probably upcoming developments:

• Gradual and steady appreciation of the yuan against the dollar.
• Continued rollout of the yuan-based-trade settlement.
• Establishment of more offshore yuan clearing centers.
• A wide scope of yuan business in Hong Kong.
• Creation of more yield-generating investment products, including more yuan bond issues.
• More currency swap lines with other central banks to increase the supply of yuan overseas.
• A formal recommendation to include the yuan in the IMF's special reserve asset.

Jeff Frankel, an economist from Harvard, says talk of the yuan's rise is "getting ahead of itself." He figures it will take 5 to 10 years before the yuan is widely used outside China and sees a horizon of 30 years for China to achieve the stability and openness a premier international currency requires. We'll see.

 

For more information: 

http://online.wsj.com/article/SB10001424052748703864204576320953366438500.html