America: Is This the End of an Era? 69 comments
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Can you imagine a world without the United States in it?
The latest headlines would have you believe that we are moments away from such an eventuality. But while history has taught us that all empires must end, America shall continue to endure far longer than the nay sayers would have us believe.
There is no question that as a nation we must make massive changes in order to right our economic ship. Our national debt is ridiculously high ... our government spends more money than it takes in ... and our financial regulation enforcement is a joke. (More regulation, by the way, is not the answer; more and better enforcement of existing rules is.)
In 1999, for example, a concerned Wall Street insider sent the SEC a 19 page document that explained in clear, easily understood English the exact nature of the alleged fraud being perpetrated by Bernard Madoff.
Point by point he laid out how Madoff had to be lying. All the SEC had to do was match the trade tickets with the reported counter parties and they would have busted this fraud wide open. I'd like to believe that they weren't paid off ... but if corruption wasn't at the root of this evil, then the only other explanation left is utter incompetence. The idea of a corrupt agency would sit better with me than a toothless, incompetent one.
Barack Obama promised change, and now it's rubber meets the road time. The SEC essentially needs to be deep sixed, and the government has to start over again. In the months ahead, the U.S. Government will enact the largest stimulus package in American history (and hopefully they'll earmark some of that money to funding greater enforcement efforts).
Some clear winners from all of this government largess will be the green technology sector, infrastructure, heavy equipment and education companies.
That leads us to the question of who is going to pay for all of this lavish spending?
The rest of the world will, that's who. They will buy up our bonds with an almost religious fervor.
Why?
Because the fastest way to get their economies to turn is to help turn ours first. The U.S. is the engine of global economic growth. It won't always be that way ... Asia's catching up and the Europeans will finally get their act together at some point and start acting in a more collective fashion. But for right now, in the world we live in today, our economy drives the world economy.
Where do you think China, Japan and the Arab world's foreign reserves came from? From me, from you, from all of our massive buying habits. That's where all of that global wealth came from. Our buying habits paid for China's shiny new roads, our buying habits paid for Dubai's gleaming new towers, and our buying habits have given Japan the world's second largest GNP.
Our buying habits, not theirs. They have nothing, they build nothing, they sell nothing without OUR demand.
We are the most efficient and hardest working group of people in the developed world. Our collective earnings power is truly magnificent. Our limitless belief in ourselves and in a brighter tomorrow is our greatest economic weapon.
Let me be clear, we've gorged ourselves on a horn of plenty that was fueled by easy credit and massive financial leverage, and now we have to pay the price. That means 2009 will be a very tough year. Unemployment will rise, crime will increase and many more families will lose their homes.
In short, we will experience the hardest recession we've seen since the 1930's. I don't see government intervention reaching consumers fast enough to stave off severe pain in the so called "real" economy.
But let's not confuse a broken leg with a broken neck. And that's what I see happening: I see so many people jumping on the "America is finished" bandwagon that it makes me sick. America is you and me ... it's not some abstract idea. And so long as there are people like you and me that refuse to embrace this media-fueled dark and dim view of America's future, we will overcome.
We may be battered, we may be bruised, but we will never be beaten.
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This article has 69 comments:
Is it just me, or does nobody in the mainstream realize that the US is totally and absolutely irrevocably insolvent? I realize that this is not an original point of view and that many smart people on the margins have been banging this drum for years, but how is it that this plain fact is not common knowledge by now, and the fundamental basis of all collective domestic and global economic policy as well as individual investment planning?
We seem to be living in a literally insane mummery where people somehow believe that you can borrow your way out of a crushing debt burden and counterfeit your way out of a crisis of confidence in the currency. Kafka would have been proud to have created a fiction on par with the US of today.
Again I ask: Hello?
I do not have a degree in physics, but I did pass some of those classes in university. For those who have perhaps forgotten some fairly basic laws of conservation, let me review a little here. I have read that in recent years consumer spending is on the order of 72 percent of US GDP. How far out of my way do I need to go to point out that consumption, which is the literal DIGESTION of wealth (with the usual end product of digestion...) is not PRODUCTIVE. What genius decided that you should count consumer spending as a productive output of an economy?
On the other hand, perhaps consumer spending really is the primary product of the US these days. And that is exactly the issue. Leaving aside questions of accuracy in the percentages of the components of the GDP number, any percentage of real GDP that represents consumption of more than 50% leads to insolvency. It's pretty simple physics. If you consume more than you produce, eventually you run out. If you are somewhat prudent, you would want to actually consume somewhat less than you produce, so you could save up a little surplus for unexpected costs that might crop up from time to time, like insane wars to secure supplies of foreign oil.
Does anyone really, truly believe that the US at some point is going to actually make good on all of its foreign and domestic debts and financial obligations (including the various entitlement programs)? Are you kidding me? There are three choices for the US:
1) The US can default on its obligations
2) The US can massively inflate the dollar by printing to nominally pay down its obligations with the resultant debased currency
3) The US can do both 1 and 2
One interesting question is how long this train wreck is going to take to play out. Lately, things sure do seem to be accelerating a bit. Another interesting question is how bad the fallout of this US-led train wreck will ultimately be in the parts of the world that are net productive rather than net consumptive.
This comment is typical of the myopia of many American financial analysts. The world is a very big place. Other economies can exist independently of US demand for product. It is revealing that China continues to run a trade surplus despite the downturn in the US.
The US would be bankrupt if the dollar were not a reserve currency. The biggest Ponzi scheme in world history is not Madoff's but that run by the US Treasury. Every day new debt is issued to pay off old investors and lure in new ones. Some day it will all end badly. It is inevitable.
Yes I can. I go to make merit several times a week and ask Buddha for that very thing.
The time to deploy strong domestic fiscal stimulus was 2007. Senator Kerry had it right in his 2007 Small Business plan. The pillars of job creation and entrepenuarship was crushed as was the middle class, so of course it was no suprise the platform on top was going to fall off. You could see this train wreck coming from a mile away.
PUT DOWN THE KOOL-AIDE AND STEP AWAY FROM THE SIPPY CUP!!!!
On Jan 09 10:04 AM bosun.j wrote:
> "Can you imagine a world without the United States in it?"
>
> Yes I can. I go to make merit several times a week and ask Buddha
> for that very thing.
On Jan 09 10:15 AM iThinkBig wrote:
> Cool. I know how to get top 20 ranking also Bosun. I can just keep
> repeating how I hate America. You dolt, you know little of history.
> You would have a world of Buddists being oppressed globally without
> the United States. All of you would have been forced to speak Japanese
> and worship the emporer. We'll now see a diminished United States
> on the world stage over the next several years. Let's see if the
> world gets better or much, much worse.
>
>
> On Jan 09 10:04 AM bosun.j wrote:
Too many of us want life to be comfortable, easy and relaxing. So we purchase disposable, materialistic products/services to provide comfortable feelings. As a society, we continue to consume to achieve this end.
We are not the greatest generation - we shun sacrifice and spirituality. The author makes many good points and perhaps could conclude with: reform or perish.
These are the sort of platitudes that became stale for the Republicans this election cycle. I disagree that we are the "hardest working group of people in the developed world." Come visit Southern California. We have millions upon millions of lazy people, including illegal aliens from Latin America and beyond using our public schools, roads, public assistance, etc. We have citizens that can barely read and write and are only equipped to work as store clerks for the rest of their lives.
Our country is decaying in a way similar to the Roman empire in its final years. We have absorbed huge numbers of unwashed masses who have little desire to become American but want to take advantage of all the riches that come with living here. At the same time, we live off of the achievements of our forefathers, such as our highway system, public works, universities, and, ahem, reserve currency.
I agree that but for our reserve currency, we would have hit bottom already. When will our government realize that we need to start instituting stiff tariffs against Chinese made products? And we need to tariff European luxury cars? We need to harness our great "collective earning power" and buy our own manufactured goods. Why do economists and policy makers think we are exempt from everything?
Hmmm. Lets think! We need a load of naive Joe's to borrow money to buy our goods and then pay us back.
So, do we go with the last lot of suckers that are so indebted they can barely cover the existing repayments, or do we search out people in emerging economies who although don't have as high earnings on paper are paid in a currency that is not going to nose dive in the near future because their economy, whilst going through a rough time, is not going to totally implode?
Then, if we are really cautious about who we actually advance credit to, because we are uncertain how things will pan out, then the most sensible thing is to spread it around a bit. Now, that is something that never happened before!
The way we'll get out of this is by actually getting our economy productive again instead of relying upon foreign capital as we have for so long to provide an illusion of prosperity.
Yes I can since 400 years ago, there was no USA.
"They have nothing, they build nothing, they sell nothing without OUR demand."
Saudi have oil. China as massive population as well as massive projects. Japan bearing the brunt and may need China's help to stay afloat. To say such things would suggest the author is not up to current events, purposefully misleading readers using nationalistic emotions, or both.
Absolutely.
But there is zero interest in doing this. In fact the consensus in Congress is that we need to continue what we have been doing: cutting taxes, increasing deficits, borrowing more and more.
The road back would be a lot easier if (1) some of the Wall Street moneychangers would jump out of buildings and (2) flight 93 had hit the capitol and we could start over with 535 new senators and representatives. It's hard to imagine a comeback when "change" means re-arranging the deck chairs on the Titanic.
My take on that is Americans really have no clue what the rest of the world is. Many Americans might have been to other countries, and for some reason that makes them think they have seen it all.
As an immigrant to the US, currently living in Europe, and having traveled extensively to China, I can confirm from experience that Americans is the most efficient, hard working nation on the planet. I am completely signing off on the thesis of your article.
But the negative comments really concern me. I have seen nations of Eastern Europe in the 90s destroying their own identity and wallowing in self-defiance, which nearly destroyed their economies and brought a lot of hardships. Hopefully it will not happen to the US.
Even if I accept that this is all true, well, if Detroit made cars that people wanted it would not be an issue. If the UAW did not draw the life blood out of the D3, then product would be cost competitive. If the product designers came up with less silly designs, it would not be an issue. Unfortunately, the D3 and the UAW have had their heads in the sand for 3 decades, and now sadly, the price will be paid.
On Jan 09 09:40 AM Michael66 wrote:
> People just do not comprehend how much harm they do to the American
> economy when they buy an imported car.
>
> Take, for example, the effect of buying a $50,000 Mercedes here in
> the US.
>
> Approximately 60% of the list price of the Mercedes or $30,000 is
> transferred to Germany. That is $30,000 of American capital. The
> US loses $30,000 of capital and Germany gains $30,000 of capital.
>
>
> This $30,000 of capital is permanently lost to us. We can no longer
> use it to invest in America.
>
> In addition to a transfer of capital, that $30,000 transferred to
> Germany also represents $150,000 of jobs transferred to Germany.
>
>
> Economists figure that when one dollar is introduced or transferred
> out of a country it actually represents $5.00 of jobs gained or lost.
> This is called the “Job Multiplier effect” of capital lost or gained.
>
>
> Multiply $30,000 by the standard job multiplier of 5 and you have
> the sum of $150,000 which is the dollar value of jobs that the $50,000
> Mercedes sent to Germany and that we here in the US have lost.
>
>
> In other words, the purchase of the Mercedes lost America the equivalent
> of three jobs each paying $50,000. Germany gained the equivalent
> of three jobs each paying $50,000.
>
> Currently we are transferring $6,000,000,000 (six billion dollars)
> of capital per day out of the US to purchase depreciating and wasting
> assets. In essence, we are squandering our capital.
>
> This is a disaster in the making.
BUT, the Americans are also more diverse, and you tend to believe that the small world within the US that you are familiar with is what "America" is. For instance, if your experience of "America" is working in New York City as a banker, it no way represents what America really is. I would imagine that the top half of the American population is indeed the hardest working and most efficient people on earth. The bottom half, however, is a completely different story. As another poster has said above, there are many Americans who can't even read. In Japan, that would be hard to find. So, overall, I doubt that there is much difference between the productivity of Americans as compared to the rest of the advanced world.
What is ironic is that those "efficient" people would not be so nationalistic as to stay in this country when the ship starts sinking. Unlike the Japanese businessmen, the Americans are very quick to leave their employers as soon as they find better ones. They have no loyalty to the companies they work for, and the companies have none to their employees. The employees (especially in Wall Street) don't care what happens to the company after they leave. That's part of the American efficiency. This means that many of these efficient and talented people will quickly leave this country also. Nationalism is an inefficient sentiment in the market which can only lead to things like protectionism.
So, it is quite ironic to be expressing a sense of patriotism and at the same time singing praises of the American efficiency, for the latter would only help destroy the former.
My advice to these people is to do something constructive, say something constructive, get a life. If you can't, crawl back in the hole whence you came. You will be left lying there by the rest of this America that is going to recover
and continue to be the greatest country on the face of this earth. You can be a part of it or die fighting it.
To all, Have a great day!
USA is basically consuming a large pie of the world's productions... think of it as a supply chain with the USA at the end of it.
Going by this logic- It all sounds fine and dandy, but the matter of fact is the wealth of other countries are increasing because the USA is buying these goods and/or services... to grow their economies and/or kick start their economies (under-developed and developing nations), the buying power of the US is used to buy time before their citizens become more wealthy to sustain the growth needed... eventually, there won't be any need for the US- if things continue in a straight line and there is an end to human greed of course.
However, man is greedy... and instead of learning how to manage whatever resources we have in the pie, we will always instead seek to enlarge the pie. Add that and corruption... and you see a constant struggle between the good and bad of capitalism.
And what does the world get in return? Military protection of freedom? Security over naval routes? Money? Your guess is as good as mine.
Globalization is an equalizer, not a "rising tide that lifts all boats"; the solution is simple for USA- Get back to basics; produce and sell. If a global depression is needed to get the world back into a more prudent thought of thinking, then so be it.
I feel for the poor people out there like myself, but that is the society we live in.
The biggest Ponzi scheme in world history is not Madoff's but that run by the US Treasury. Every day new debt is issued to pay off old investors and lure in new ones. Some day it will all end badly. It is inevitable.
The one hope for salvation though is that, unlike other Ponzi schemes, the existing investors in US Treasuries, which includes a lot of foreign governments, have a real interest in keeping the scheme afloat
On Jan 10 09:46 AM okl wrote:
> Americans are creative, inventive and hardworking by nature. Unfortunately,
> having too much money in the system is detrimental to these good
> characteristics; greed takes over.
>
> USA is basically consuming a large pie of the world's productions...
> think of it as a supply chain with the USA at the end of it.
>
> Going by this logic- It all sounds fine and dandy, but the matter
> of fact is the wealth of other countries are increasing because the
> USA is buying these goods and/or services... to grow their economies
> and/or kick start their economies (under-developed and developing
> nations), the buying power of the US is used to buy time before their
> citizens become more wealthy to sustain the growth needed... eventually,
> there won't be any need for the US- if things continue in a straight
> line and there is an end to human greed of course.
>
> However, man is greedy... and instead of learning how to manage whatever
> resources we have in the pie, we will always instead seek to enlarge
> the pie. Add that and corruption... and you see a constant struggle
> between the good and bad of capitalism.
>
> And what does the world get in return? Military protection of freedom?
> Security over naval routes? Money? Your guess is as good as mine.
>
>
> Globalization is an equalizer, not a "rising tide that lifts all
> boats"; the solution is simple for USA- Get back to basics; produce
> and sell. If a global depression is needed to get the world back
> into a more prudent thought of thinking, then so be it.
>
> I feel for the poor people out there like myself, but that is the
> society we live in.
On Jan 09 10:15 AM iThinkBig wrote:
> Cool. I know how to get top 20 ranking also Bosun. I can just keep
> repeating how I hate America. You dolt, you know little of history.
> You would have a world of Buddists being oppressed globally without
> the United States. All of you would have been forced to speak Japanese
> and worship the emporer. We'll now see a diminished United States
> on the world stage over the next several years. Let's see if the
> world gets better or much, much worse.
>
>
> On Jan 09 10:04 AM bosun.j wrote:
Buddah said "life is suffering" sit quietly until the dust settles.
but if you really want to be a first rate country and a world leader you should stick to what made you great in the first place...
your politix an financial establishments have for whatever reason known only to them...presided over an inexorable decline in power...
moral authority, industrial muscle, financial accumen have been squandered...
the usa is a debtor nation ...
there appears no plan nor will to tackle this situation...
democracy appears incapable of delivering sound finances...
as i said before...we here in palookaville know all about this...we have travelled the road before you...
you should try to learn from our mistakes...so should we!
On Jan 10 09:15 AM abetterplace wrote:
> Has anyone ever witnessed a victory of any sort, by a group or team,
> that was negative to everything positive and positive to everything
> negative.These postulations come not from true Americans that believe
> in this country, but from a segment of the millions that are here
> ,by America's courtesy, to find a better life from some other God
> forsaken country that they call home. While most of these are good
> people, some harbor a rage of jealousy towards the USA. Most felt
> to have a successful life they had to come here, although, they would
> rather be in their home country. Some of this bad sentiment comes
> from born and bred Americans that at some point fell down on their
> luck and cannot seem to recover. Thus, let's just all hate America
> and all it stands for.
>
> My advice to these people is to do something constructive, say something
> constructive, get a life. If you can't, crawl back in the hole whence
> you came. You will be left lying there by the rest of this America
> that is going to recover
> and continue to be the greatest country on the face of this earth.
> You can be a part of it or die fighting it.
>
> To all, Have a great day!
They were wrong! Wrong! Wrong! The American people have always come back. We have a never give up spirit. We will overcome these present challenges and the result will be an economically stronger United States.
I am avoiding USA investments -except FCX,CLR
IMO
What do you mean "we", kemo sabe? The middle class people that I know spent this decade worrying about holding onto their jobs, watching their wages stagnate while the costs of housing, energy, food, and education all rose dramtically. They watched all of the benefits flow to the multi-millionaire bond traders and hedge fund managers (yes, I'm looking at you), while these same multi-millionaires were able to get their obligations toward maintaining the the costs of the society that enabled them to reap their fortunes steadily reduced and pushed down the road to be paid for by the children and grandchildren of the middle class.
The middle class aren't the ones who "gorged ourselves on a horn of plenty that was fueled by easy credit and massive financial leverage" - yet they are they and the poor will end up being the ones who will get hurt the most now that it's time to pay the piper while the bond traders and hedge fund managers are laughing themselves all the way to the bank via government bailout million dollar bonuses.
When you speak of these problems caused by this "we" - look in the mirror at yourself and your wealthy Wall St buddies - but leave the middle class out of it - we're way too busy having to clean up after your mess.
If China is funding our consumption, they do not need us to do that anymore.
China can spend its own money on its own people now: They do not need to lend it to us.
While America has a consumer economy, China has a producer economy.
It is called Gross National PRODUCT and not Gross National CONSUMPTION for a good reason.
Consumption produces spending, which is why it is so responsive to the money supply.
But producing things actually takes hard work and cannot be done magically overnight by someone in the government increasing the money supply.
Also, I do not understand why "professionals" make such a big difference between macroeconomic policy and microeconomic policy.
If spending more money than you make is bad policy at the individual level, how in the world do "experts" think that somehow it works at the "macro" level?
On Jan 09 10:04 AM bosun.j wrote:
> "Can you imagine a world without the United States in it?"
>
> Yes I can. I go to make merit several times a week and ask Buddha
> for that very thing.
(By the way, personally, I like my Buddhists slow-roasted rather than BBQed. Anyone dumb enough to pour gasoline and light themselves on fire deserves heaps of scorn and ridicule. What does that solve? Nothing.)
And the only reason you heard about them was because free countries have a free press. You don't hear about all the Buddists, like in Tibet, who were just rounded up and summarily shot by communists because there was no free press there to photograph them like there was in South Vietnam. Have you heard of Tibet?
On Jan 10 10:43 AM anarchist wrote:
> Nice to hear from a student of history. I seem to remember waves
> of Buddhist monks torching themselves in Vietnam in protest of the
> U.S. presence. Have you ever been it Japan? Japan has always been
> tolerant of a number of religions including the Buddhist. I have
> a friend who was raised in Japan during the second world war, his
> mother an American and his father German and they were never harassed
> or sent to a detention center unlike the good ole US of A where panic
> and ethnic hate overruled common sense - kind of like now (viva guantanamo
> eh iThinkBig?).
"Leaving aside questions of accuracy in the percentages of the components of the GDP number, any percentage of real GDP that represents consumption of more than 50% leads to insolvency. It's pretty simple physics. If you consume more than you produce, eventually you run out. "
While I think your point is worth noting, your math unfortunately is not correct. In order for us to consume more than we produce, we would need consumption to exceed 100% of GDP, not 50%. Historical average is around the low to mid 60s%. Greece for one is running close to 100%, and is on the brink of insolvency.
Nice try though.
As an old guy, I must say that I agree with the concept that we consume to much and produce to little. My parents and everyone I knew as a kid were "productive". They made, grew or sold things that were made here.
For some reason, this became unfashionable. We didn't need to do "menial" jobs. We could do "paperwork" and be educated and sophisticated. Let the overseas masses do the manual labor. That expanded to growing, cleaning and cooking your own food - how gross, let someone else do that. Now, just eat veggies and look good.
Point is, we evolved into useless, politically correct (everyone needs to be treated equally and be saved from themselves) but nice looking paper pushers. Hard work is not important. Everyone should share the benefits and be treated with respect and gag gag gag even if they are unemployed leaches. What is important is to be hip, attractive, and very liberal. Or, to take advantage of the myriad educational and social services and then head back to the home country.
We did this to ourselves.
America became great because of its individuals and resources. Efficiency and freedom are very important. How many people are contributing to what you need to live? How many people cannot even speak the language, but think they are entitled to all the benefits of the efficient, single language society that produced those benefits? Social programs and liberal attitudes did not create this country.. I doubt the Puritans were liberal.
This is a far more complicated problem than just bailing everyone out and debasing the currency. It requires a paradigm shift - backwards, as most would call it.
If you build them, they will come.
Until then, look out below.
On Jan 09 09:40 AM Michael66 wrote:
> People just do not comprehend how much harm they do to the American
> economy when they buy an imported car.
>
> Take, for example, the effect of buying a $50,000 Mercedes here in
> the US.
>
> Approximately 60% of the list price of the Mercedes or $30,000 is
> transferred to Germany. That is $30,000 of American capital. The
> US loses $30,000 of capital and Germany gains $30,000 of capital.
>
>
> This $30,000 of capital is permanently lost to us. We can no longer
> use it to invest in America.
>
> In addition to a transfer of capital, that $30,000 transferred to
> Germany also represents $150,000 of jobs transferred to Germany.
>
>
> Economists figure that when one dollar is introduced or transferred
> out of a country it actually represents $5.00 of jobs gained or lost.
> This is called the “Job Multiplier effect” of capital lost or gained.
>
>
> Multiply $30,000 by the standard job multiplier of 5 and you have
> the sum of $150,000 which is the dollar value of jobs that the $50,000
> Mercedes sent to Germany and that we here in the US have lost. <br/>
>
> In other words, the purchase of the Mercedes lost America the equivalent
> of three jobs each paying $50,000. Germany gained the equivalent
> of three jobs each paying $50,000.
>
> Currently we are transferring $6,000,000,000 (six billion dollars)
> of capital per day out of the US to purchase depreciating and wasting
> assets. In essence, we are squandering our capital.
>
> This is a disaster in the making.
On Jan 10 09:15 AM abetterplace wrote:
> Has anyone ever witnessed a victory of any sort, by a group or team,
> that was negative to everything positive and positive to everything
> negative.These postulations come not from true Americans that believe
> in this country, but from a segment of the millions that are here
> ,by America's courtesy, to find a better life from some other God
> forsaken country that they call home. While most of these are good
> people, some harbor a rage of jealousy towards the USA. Most felt
> to have a successful life they had to come here, although, they would
> rather be in their home country. Some of this bad sentiment comes
> from born and bred Americans that at some point fell down on their
> luck and cannot seem to recover. Thus, let's just all hate America
> and all it stands for.
>
> My advice to these people is to do something constructive, say something
> constructive, get a life. If you can't, crawl back in the hole whence
> you came. You will be left lying there by the rest of this America
> that is going to recover
> and continue to be the greatest country on the face of this earth.
> You can be a part of it or die fighting it.
>
> To all, Have a great day!
"Japan has always been tolerant of a number of religions" -- wrong. Another nice exaggeration.
As for prejudice, I lived there for five years and can tell you it is quite real, especially against blacks and south east asians. WWII brought the Bataan Death March and Nanking massacre among others.
If you are going to make an argument, support it with facts, not fiction.
On Jan 10 10:43 AM anarchist wrote:
> Nice to hear from a student of history. I seem to remember waves
> of Buddhist monks torching themselves in Vietnam in protest of the
> U.S. presence. Have you ever been it Japan? Japan has always been
> tolerant of a number of religions including the Buddhist. I have
> a friend who was raised in Japan during the second world war, his
> mother an American and his father German and they were never harassed
> or sent to a detention center unlike the good ole US of A where panic
> and ethnic hate overruled common sense - kind of like now (viva guantanamo
> eh iThinkBig?).
Nice out-of-the-box solution.
On Jan 10 07:33 PM realold wrote:
> Hi folks,
>
> As an old guy, I must say that I agree with the concept that we consume
> to much and produce to little. My parents and everyone I knew as
> a kid were "productive"... They made, grew or sold things that were
> made here.
>
> For some reason, this became unfashionable. We didn't need to do
> "menial" jobs. We could do "paperwork" and be educated and sophisticated.
> Let the overseas masses do the manual labor. That expanded to growing,
> cleaning and cooking your own food - how gross, let someone else
> do that. Now, just eat veggies and look good.
>
> Point is, we evolved into useless, politically correct (everyone
> needs to be treated equally and be saved from themselves) but nice
> looking paper pushers. Hard work is not important. Everyone should
> share the benefits and be treated with respect and gag gag gag even
> if they are unemployed leaches. What is important is to be hip, attractive,
> and very liberal. Or, to take advantage of the myriad educational
> and social services and then head back to the home country.
>
> We did this to ourselves.
>
> America became great because of its individuals and resources. Efficiency
> and freedom are very important. How many people are contributing
> to what you need to live? How many people cannot even speak the language,
> but think they are entitled to all the benefits of the efficient,
> single language society that produced those benefits? Social programs
> and liberal attitudes did not create this country.. I doubt the Puritans
> were liberal.
>
> This is a far more complicated problem than just bailing everyone
> out and debasing the currency. It requires a paradigm shift - backwards,
> as most would call it.
I enjoyed your good article. Thanks. A little note below.
Regarding your remarks, "...Where do you think China, Japan and the Arab world's foreign reserves came from? From me, from you, from all of our massive buying habits. That's where all of that global wealth came from. Our buying habits paid for China's shiny new roads, our buying habits paid for Dubai's gleaming new towers, and our buying habits have given Japan the world's second largest GNP...",
In fairness you might want to mention two other illustrious examples:) a. Vietnam the now burgeoning country where most of our women's bras are made; and b. Russia, yes, the Renaissance Russia after Yeltsin where they enjoyed a decade of boom, all because of us the U.S. of A.
You're not paying attention. I got out many years ago. Thank you for you kindness and concern for my welfare. Chok dee.
On Jan 10 06:42 PM wrote:
> Please scram from USA pronto - and don't let the door hit you in
> the butt.
"(1)Our national debt is ridiculously high ... our government spends more money than it takes in ... and our financial regulation enforcement is a joke. (2)(More regulation, by the way, is not the answer; more and better enforcement of existing rules is.)"
As to #1 - Where were you the last 8 years as Bush sent the debt sky-rocketing? Did you ever complain about the tax cuts and rebates that were increasing the deficit?
As to #2 This was the whole problem with the derivatives market ("Financial weapons of mass destruction" according to Warren Buffet) - there was no regulation. Also the insurance of them by AIG was not regulated. All this was due to the incessant mantra of the neo-con-men of "Deregulation! Deregulation!"
We need first off to reinstate the repealed (1999) Glass-Steagle Act that kept banks from investing, an inherent conflict of interest. Then we need to reinstitute the USUARY laws - to curb the absolutely obscene greed of exorbitant interest rates. Then we need to review existing regulations, strengthen them where necessary, cut them where appropriate, and create new ones if needed.
See the following for a fantastic description of how we got here:
www.vanityfair.com/mag...
It should be deemed that if an interest rate is greater than say 10% over base rate, then it is too high. If the risk is so great that kind of level of interest is needed then the risk should be deemed unacceptable under any circumstance.
Of course, we should not prevent lenders lending and we should not attempt to regulate that lending, but we could simply makes such debts unenforcible in law.
Likewise, if the intent is to invoke my patriotic feeling then again he had failed. Am I patriotic? Yes, absolutely. If the Chinese invades Hawaii I wouldn't hesitate to give my life to fight them. But come on, does he mean that every time I purchase a pair of shoes, drink a glass of wine, or check in to a hotel, I would have to scrutinize to ensuring the "American Content" would meet the marks? Some say that the game of manipulating patriotism had been perverted to the point of subsidizing mediocrity and outright incompetence. Indeed I would say buying into that would be both unpatriotic and un-American.
I hope I am not living in the Medieval Dark Ages where religious dogmas ruled.
On Jan 09 09:40 AM Michael66 wrote:
> People just do not comprehend how much harm they do to the American
> economy when they buy an imported car.
>
> Take, for example, the effect of buying a $50,000 Mercedes here in
> the US.
>
> Approximately 60% of the list price of the Mercedes or $30,000 is
> transferred to Germany. That is $30,000 of American capital. The
> US loses $30,000 of capital and Germany gains $30,000 of capital.
>
>
> This $30,000 of capital is permanently lost to us. We can no longer
> use it to invest in America.
>
> In addition to a transfer of capital, that $30,000 transferred to
> Germany also represents $150,000 of jobs transferred to Germany.
>
>
> Economists figure that when one dollar is introduced or transferred
> out of a country it actually represents $5.00 of jobs gained or lost.
> This is called the “Job Multiplier effect” of capital lost or gained.
>
>
> Multiply $30,000 by the standard job multiplier of 5 and you have
> the sum of $150,000 which is the dollar value of jobs that the $50,000
> Mercedes sent to Germany and that we here in the US have lost.
>
>
> In other words, the purchase of the Mercedes lost America the equivalent
> of three jobs each paying $50,000. Germany gained the equivalent
> of three jobs each paying $50,000.
>
> Currently we are transferring $6,000,000,000 (six billion dollars)
> of capital per day out of the US to purchase depreciating and wasting
> assets. In essence, we are squandering our capital.
>
> This is a disaster in the making.
those brilliant documents and guidelines laid forth by Jefferson, Washington,
Frankilin, etc....those ideas have long been distorted around the needs of people in power.
250 years later and the system has been decaying for quite some time..anyone
thinking clearly knows this system can't go on in the current configuration..
the question is how much pain and collapse is involved before serious reform
takes shape..how many more years? or does it implode in 20 years?
Generational Dynamics say that one generation will repeat the previous generation's mistakes and human nature says that once a society acheives a certain degree of wealth it will not be able to sustain it because it is that very wealth that destroys the drive and need to achieve that made that country great in the first place.
We only need to determine if we are now on the decline or whether we have a little more greatness in us. I believe we have started a long, gradual decline and I base that not on statistics but on the degradation in societal values. We are fat, lazy and weak and pretty much happy with that so why should we get up off our fat asses and do anything about it?
--Fred
On Jan 09 11:41 AM dixie wrote:
> Fundamentally, isn't this about the change in societal VALUES? <br/>
>
> Too many of us want life to be comfortable, easy and relaxing. So
> we purchase disposable, materialistic products/services to provide
> comfortable feelings. As a society, we continue to consume to achieve
> this end.
>
> We are not the greatest generation - we shun sacrifice and spirituality.
> The author makes many good points and perhaps could conclude with:
> reform or perish.
And where is the outrage? Why aren't Americans protesting en masse in the streets over the Wall Street bonus grabs by the financial vampires that sucked the life out of the economy, out of pension plans, and basically every hard working American's future? Apathy on a grand scale.
There has been a vacuum of leadership, accountability and enforcement of the regulations that are supposed to oversee the financial system. Wake up America. Get involved at a grassroots level if possible and lobby for jobs for Americans, products made and sold in America, and tariffs on the imports that take so much away from American soil.
Globalization is an undeniable and inevitable fact but it does not mean that Americans have to lose themselves in the process. It will take some sacrifice in terms of shunning luxury items, saving some money, and spending time on getting politically savy enough to take back your right to have a say in your future.
The great American empire can survive - all it takes is an honest desire to do so.
My Proclaimation: If (may not be such a big if) Mark Goldes is for real. Then the New CLEAN COAL/Hydrocarbon Technology that I have Proclaimed will be the God sent "LIFE SAVER" of the COAL, OIL, GAS AND Fossil fueled Industries/Power Generators!!!!
Saudis have oil. but take us away and who do they sell it to? the EU?
China and India have massive populations true. but have such tiny consumer basis that they would have no need for 90% of their economies output. the vast majority of these countries population are dirt level poor.
Japan is and has always been massively hurt when the US goes into a recession, cause they sell the majority of their stuff to us.
On Jan 09 08:20 PM prastagus wrote:
> "Can you imagine a world without the United States in it?"
>
> Yes I can since 400 years ago, there was no USA.
>
> "They have nothing, they build nothing, they sell nothing without
> OUR demand."
>
> Saudi have oil. China as massive population as well as massive projects.
> Japan bearing the brunt and may need China's help to stay afloat.
> To say such things would suggest the author is not up to current
> events, purposefully misleading readers using nationalistic emotions,
> or both.
On Jan 10 09:34 AM willynill wrote:
> yada yada is not completely wrong, but his use of physics to describe
> economic conditions is wrong. He assumes that the economic world
> is a zero-sum game, but it is not. If he had taken some more economics
> courses, he would have learned that income is a function of consumption--reduce
> consumption and reduce income (lose-lose). If consumption is increased,
> income is increased (win-win). That's why China is trying so hard
> to get its citizens to consume more, but they won't--they are savers,
> at least the older generations are. Think about it: when people
> consume less, businesses sell less; when businesses sell less, they
> employ fewer people; with fewer people employed, the standard of
> living falls for everyone and the government collects less in tax
> revenues requiring higher tax rates. This is a downward spiral.
much of a clue. A lot of people who voted for him were the what's in it for
me crowd. My daughters college roommates stated they were voting for
Obama because he would pay off there student loans. We're going to have to feel a lot of pain.
On Jan 09 09:33 AM yada yada wrote:
> Hello?
>
> Is it just me, or does nobody in the mainstream realize that the
> US is totally and absolutely irrevocably insolvent? I realize that
> this is not an original point of view and that many smart people
> on the margins have been banging this drum for years, but how is
> it that this plain fact is not common knowledge by now, and the fundamental
> basis of all collective domestic and global economic policy as well
> as individual investment planning?
>
> We seem to be living in a literally insane mummery where people somehow
> believe that you can borrow your way out of a crushing debt burden
> and counterfeit your way out of a crisis of confidence in the currency.
> Kafka would have been proud to have created a fiction on par with
> the US of today.
>
> Again I ask: Hello?
>
> I do not have a degree in physics, but I did pass some of those classes
> in university. For those who have perhaps forgotten some fairly basic
> laws of conservation, let me review a little here. I have read that
> in recent years consumer spending is on the order of 72 percent of
> US GDP. How far out of my way do I need to go to point out that consumption,
> which is the literal DIGESTION of wealth (with the usual end product
> of digestion...) is not PRODUCTIVE. What genius decided that you
> should count consumer spending as a productive output of an economy?
>
>
> On the other hand, perhaps consumer spending really is the primary
> product of the US these days. And that is exactly the issue. Leaving
> aside questions of accuracy in the percentages of the components
> of the GDP number, any percentage of real GDP that represents consumption
> of more than 50% leads to insolvency. It's pretty simple physics.
> If you consume more than you produce, eventually you run out. If
> you are somewhat prudent, you would want to actually consume somewhat
> less than you produce, so you could save up a little surplus for
> unexpected costs that might crop up from time to time, like insane
> wars to secure supplies of foreign oil.
>
> Does anyone really, truly believe that the US at some point is going
> to actually make good on all of its foreign and domestic debts and
> financial obligations (including the various entitlement programs)?
> Are you kidding me? There are three choices for the US:
>
> 1) The US can default on its obligations
> 2) The US can massively inflate the dollar by printing to nominally
> pay down its obligations with the resultant debased currency
> 3) The US can do both 1 and 2
>
> One interesting question is how long this train wreck is going to
> take to play out. Lately, things sure do seem to be accelerating
> a bit. Another interesting question is how bad the fallout of this
> US-led train wreck will ultimately be in the parts of the world that
> are net productive rather than net consumptive.
Brilliant.
Such a world would be a much lesser place, however. I encourage all Americans to take a less belligerent view of the rest of the world than Mr. Tiwari does, and to acknowledge based on recent events that the USA can no longer pretend to have all the answers. The better alternative is to join the rest of humanity as equals.
So far, the solutions proposed to our debt-induced problems have been more debt.
The USA has called itself the world's wealthiest nation and we have spent like that's true. But, we don't own the assets or generate the month-by-month production to back up the claim.
On Jan 11 09:10 PM Grouper wrote:
> Great article, mostly uninformed comments. Go get a list of the
> world's largest economies, ranked by total output. The US is so
> far ahead of its closest competitor it is a joke. So we are "insolvent"
> as a country. Who has the bigger problem if we default or if we
> inflate our way out of debt? Us, or the countries that "loaned"
> us the money? You just saw what happens to the price of oil and
> every other economy when the US is in a fairly severe downturn.
> Oil drops 70%, and everyone else panics. China is getting ready
> to stimulate local demand with a stimulus package in the range of
> 15% of its annual economic output. It will be fun to see them spend
> their US dollar reserves if we default......And oh, by the way, is
> there anything other than consumption? Think about it.
Oh...do you mean "too big to fail?" Like Lehman Brothers? or do you mean "too big to fail" as the moral compass and the melting pot of the free world?
We will, as a nation, survive the greed and averice of the Wall Street criminals who both lobbied and against Government regulation and defied what little regulation there was.
Our bigger challenge is to continue down the path of religious and social freedom, and to have a larger majority of our citizens take advantage of the opportunities that are available to us via education and civil service, without being dragged down by those around them who are uninterested and uninvolved.
Short-termism got us into this mess. It is perverse to assume it will get us out.
On Jan 10 08:30 AM Robotto wrote:
> Coming from Japan, I can also confirm that the Americans are more
> efficient and harder working than the Japanese. The Japanese may
> work longer hours, but not harder or more efficiently. They only
> care about appearing to work hard.
>
> BUT, the Americans are also more diverse, and you tend to believe
> that the small world within the US that you are familiar with is
> what "America" is. For instance, if your experience of "America"
> is working in New York City as a banker, it no way represents what
> America really is. I would imagine that the top half of the American
> population is indeed the hardest working and most efficient people
> on earth. The bottom half, however, is a completely different story.
> As another poster has said above, there are many Americans who can't
> even read. In Japan, that would be hard to find. So, overall, I doubt
> that there is much difference between the productivity of Americans
> as compared to the rest of the advanced world.
>
> What is ironic is that those "efficient" people would not be so nationalistic
> as to stay in this country when the ship starts sinking. Unlike the
> Japanese businessmen, the Americans are very quick to leave their
> employers as soon as they find better ones. They have no loyalty
> to the companies they work for, and the companies have none to their
> employees. The employees (especially in Wall Street) don't care what
> happens to the company after they leave. That's part of the American
> efficiency. This means that many of these efficient and talented
> people will quickly leave this country also. Nationalism is an inefficient
> sentiment in the market which can only lead to things like protectionism.
>
>
> So, it is quite ironic to be expressing a sense of patriotism and
> at the same time singing praises of the American efficiency, for
> the latter would only help destroy the former.