Yesterday I wrote a little about countries that export their primary jobs. You know the kind – the work that came before the work most of us do now. Designing and making things. Growing stuff. Processing materials. Jobs with tangible results.

Lately leaders’ heads have been jammed with globalization thoughts. The result has been a migration of historic proportions. Factories close in southern Ontario and open in that huge industrial park outside Shanghai. Even call centres in Mumbai replace ones in New Brunswick. Our largest industrial corporations, the car companies, stagger in and out of bankruptcy. And the biggest corporation of all, Wal-Mart, becomes the largest employer in North America. What do the people there work at?

Yeah. Selling things made in China.

Globalization was supposed to mean we get all the jobs that don’t make you dirty and pay eight times as much. They get the greenhouse gas emissions, toxins, subsistence wages and the promise that workers can go from bicycles and rice to cars and chicken.

And folks seemed more or less content until about a year ago when we learned how much of our elevated, clean-hands, everybody-deserves-stainless-appliances lifestyle was based on debt. Since then contentment’s been harder to find.

The irony is that Canada and America are now more indebted than ever, and the guys with the factories and the primary jobs are holding a lot of the mortgage. We may delude ourselves for weeks or months at a time borrowing and spending more money and pretending nothing’s changed, but it has. Inexorably. For at least the next decade or two, billions of tax dollars a year will flow east, just as those containers of manufactured goods float west.

This will happen as we enter a period of peak oil, as ever-rising demand outstrips new capacity. A barrel could be $200, easily, by 2015. In fact, that should be a fascinating year. The leading edge of the largely-pensionless Boomers will be raiding their meagre RRSPs and dumping their houses as they move towards seventy. And we should be in the critical last period of the climate change debate. That’s the part where we have to teach kids about frogs, warblers and the arctic fox in history class.

But I digress. My point’s simple: There is a huge amount about the future that’s predictable.

Sadly, the guys with the mortgage income and the steady jobs making stuff for Wal-Mart may just end up eating our lunch.

This brings me to Bruce:

I’m glad I bought your book “After The Crash.” Tremendous food for thought and more importantly, an excellent assessment of risk for our situation. As well, it’s a very helpful and do-able manual for self preservation and sufficiency. Thanks.

My question: Real Estate stinks. Do you think that the stock markets at their current valuations, give or take ten percent, offer a reasonably secure place to store wealth or are they likely to suffer like real estate? If you’re familiar with Harry Dent’s writings, www.hsdent.com he currently sees a market top now with a long protracted drop in market values for several years, akin to the ’30′s depression. He arrives at his conclusions primarily based on demographics (we boomers are all becoming net savers so don’t expect us to keep the consumer economy going) and through analyzing numerous categories of cycles. I have had the same broker (and friend) for the last thirty years and he has talked me out of many crazy things over the years so I’m not trying to be a do-it-yourselfer. He and I took in a couple of your financial presentations together in the KW area several years ago. Would you comment on my question? Thanks for your time. Sincerely, Bruce

Hey, Bruce, Dent is an interesting guy whose work I have followed for years. I agree with him on the impact of demographics (obviously), which will be resolutely negative for housing values and consumer spending in general – but bullish for financial services and health care.

As far as the market goes, predictability is now a mug’s game. Last winter I said stocks would charge ahead in advance of any economic recovery, and that’s what has happened. However, easy call. Saying where the TSX or Dow will be in 2015 is something else entirely.

But I do believe this…

• The age of asset inflation will be over soon enough. My bearish outlook for real estate is utterly undiminished.

• Commodity prices, in contrast, will spiral higher. Energy and food will be in critical supply as the society where our bondholders live ascends.

• North America will pay a heavy price for having gutted its manufacturing capacity. Most people have no idea yet how this will affect them.

• The years ahead seem ripe for shocks – terror politics, energy-related conflict, climactic events and the consequences of American decline.

So, I think we know interest rates will rise, bond prices will fall, energy and agricultural issues will rock higher, pharmas and banks will outperform, Asian markets will dominate and the last thing you want to own is coastal real estate.

For the price of an average home in Toronto, you can buy 65 of them in Detroit. That’s practically a village. You could be mayor.

The median house price is around $6,000, and not improving. There are just under 5,000 properties for sale in that city right now, 3,250 of them for $50,000 or less.

The reason: 28% unemployment, in a state where 15% are jobless. The city will be bankrupt by October and Michigan’s total revenues have crashed by a third.

This is of interest to the 11 million Canadians who live in the province next door. A quarter of all the trade between the two countries flows over a single bridge linking Detroit to the other side. In fact, the economies of Ontario and the Great Lakes State are inextricably entwined.

I mention this because it interests me. Instructive how a city of almost 2 million people in 1950 can become a derelict metropolis with half that number rattling around five decades later. It’s eye-opening what can happen to an industrial powerhouse when a country decides to export its industries, and concentrate on selling stuff, not making it.

Of course, Toronto is not Detroit, nor is Saskatoon or Burnaby. But are we on the same path of inevitability?

I remember chatting with Jim Flaherty one day (when he’d still talk to me), and he said proudly that nobody in Ontario – not a single worker in any company working in any factory – makes shoes anymore. But, he added, whipping the Blackberry off his belt, we make these! And so we do in Kitchener-Waterloo, where Electrohome used to churn out televisions. But those are gone, too.

Interestingly, everybody has shoes. Usually many pairs. Every home has at least one TV. But 94% of us don’t have a Blackberry.

Some chi-chi social provocateurs say the future is globalization and urbanization. Let the manufacturing, fabricating, assembling, engineering, materials handling and support jobs migrate to Chindia. Go ahead and shut those unsightly single-story plants with their hazardous wastes and send them packing. Hollow-out small town Canada. Hell, the locals can move to an apartment in Toronto, go to York University and learn something useful.

In reality a green, knowledge-based society filled with highly-educated workers making ever more money is a dream more distant now than ever. Over the next few years immense amounts of wealth will flow out of countries like Canada and the States as we send cash to Asian bondholders. At the same time, we’re helpless without that offshore manufacturing capacity, and now snared in sluggish economic growth and chronic unemployment.

This week the IMF reinforced a point I’ve been making for months: The only certain thing about the years to come are higher taxes and slower growth (and you can in add higher interest rates). The legacy of the 2008-9 meltdown is already known: Debt. Steamy piles of it. The inescapable consequence of the greatest government spending orgy in history.

Sales taxes will be first (the new HST and more GST), followed by capital taxes and income tax. This will be accompanied by stiffer energy bills and lots more interest.

If you don’t see this coming, you’re not looking.

The hell of it is, we’ll still need shoes.