America's Real Wealth 30 comments
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These are crazy times and the hyperbole is getting more and more ridiculous with each passing day. The most galling commentary comes from both “friends” and foes overseas who are gloating as the foundations of Wall Street buckle. Whether it is the leftist German Finance Minister, the increasingly thuggish Prime Minister of Russia or smug editorial writers on virtually every continent, the U.S., its economic and finance system and the way of life of its citizens are being pilloried by commentators who can barely conceal their glee at our misfortune. Of course, you have to overlook the fact that virtually every trading nation’s economy has benefited from the surge in the U.S. economy over the past decade. Furthermore, these debt instruments which are now imploding were certainly snapped up willingly by foreign buyers while times were flush.
The U.S. economy is certainly going through one of the most traumatic periods in our history. Sadly, I would envision that the turmoil and pain will continue for many years and that life as it was a couple of years ago in many ways will never be the same. For many, many years, the U.S. tax code was designed to encourage consumption and penalize savings. While any economy needs a happy balance between spending and saving, over the past few decades the U.S. economy became too focused on consuming. We needed bigger homes, bigger cars, bigger boats and more exotic vacations. Eating out became a habit rather than a treat. Shopping malls grew dramatically in their size and selection. As a people, we were addicted to spending.
Spending is not all bad so long as there is a concomitant willingness to save. Somewhere along the line, saving went out of fashion. The long bull market for stocks which ended in 2000 did much to dampen people’s thrift. While stocks were booming, both people and businesses were able to accumulate retirement savings without really having to put much away. When the roaring stock market came screeching to a halt in 2000, it was hard for people to adjust. Our own government encouraged this profligate behavior. In the aftermath of 9/11, rather than asking for sacrifice, all our government really asked most of us to do was to go out and spend—as if nothing had happened.
In the years following the bursting of the tech stock bubble and the end of the bull market, another asset class took up the slack and began a period of sustained out-performance. This one—the house—was more widely owned than even stock accounts. New mortgage products allowed more and more people to live in bigger and bigger homes, without much consideration given to the long-term prognosis for those loans to be repaid. Average folks, being wise to these trends, began trading up and using their ever-appreciating homes as an ATM.
When the music stopped, there were way too many big homes and condos to be absorbed in many markets. Many of the loans that had been made and sold off in newfangled investment products became problematic. These loans, embedded in collateralized debt obligations which circled the globe, then triggered the first winds of what would become a financial typhoon of biblical proportions.
For years, the U.S. economy had been the envy of the world. Comparatively, sclerotic Europe looked vastly outmatched. The best and brightest products of our education system bypassed careers in medicine, engineering, rocket science and the like and migrated to Wall Street where they could make more in a decade than most folks could hope to earn in three lifetimes.
And here we are. Wall Street lies in ashes and will never be the same. Many fortunes have been either massively reduced or completely wiped out. Other scions of finance that have so far preserved their fortunes, will probably see them eroded by the drip, drip, drip of litigation in the years ahead. Some, perhaps many, will ultimately spend time in jail.
And the world, despite its own problems, stands with arms folded over its collective chest and smugly criticizes “greedy” America while predicting that the days of American financial dominance are over.
We beg to differ! Yes, we are in a bind. Yes it will require sacrifice, change and patience. Things will never be as they were. However, the real wealth of America is not in its currency. It is not in our too-big homes or our garages crammed with SUVs. It is not in our skyscrapers, our Michelin-rated restaurants or our sports venues. Our wealth is in our people—their intelligence, optimism, can-do spirit and willingness to take calculated risks. These are traits that many other peoples share, but almost never in such a combination. Indeed, it is this aspect about America that attracts immigrants from around the world who also possess this collection of traits and find something lacking in their homeland.
America, at points over its history, has faced adversity; we have been counted out before. But because of our unique national skill set, perseverance and optimism, I know that America will lead the world out of whatever financial hardship lies ahead. There will be fewer of our best and brightest flocking to Wall Street, but that is not a bad thing. They will gravitate to fields out of favor a decade ago but which offer the opportunity to solve some of the most pressing issues facing mankind. Ten years from now, I would be willing to bet that the U.S. will still be the dominant economic power on earth and that the same folks who are chortling at us now will still be green with envy.
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This article has 30 comments:
By the way, those same Socialists leaders worldwide of tremendously eager to see Sen. Obama win the election...wonder why?
"Our wealth is in our people—their intelligence, optimism, can-do spirit and willingness to take calculated risks."
The former Treasury secretary (Snow) and Federal Reserve chairman (Greenspan) were warning congress that a disaster was ahead if mortgage market wasn't regulated. Democratic senators like Chuck Schumer, Chris Dodd, and Barney Frank were condemning them for interfering with the nation's progress and boasting how great things were, ignoring the time-bomb developing.
Next, blame rests in the people you fail to point out in the crowd - those without a penny to their name who were buying homes they couldn't afford. The very same people Obama helped to get into homes they couldn't afford while working as a community organizer in Chicago with the ACORN organization. Let's not forget about the speculators/investors/... who fueled the bubble as well - speculators who bought 10 or 20 houses at a time without any documents proving they could afford them.
WE SEEM TO BE CREATING A NEW CULTURE OF ZERO ACCOUNTABILITY IN THE UNITED STATES OF AMERICA UNDER THE BUSH ADMINISTRATION. This isn't a Democrat or Republican issue because morons on both side are responsible for not living up to their responsibilities to protect and serve the nation, rather they were living the high life - fancy galas, hefty campaign contributions, gifts, prestige, power, vanity.
NOW OUR EMPIRE CRUMBLES AT THE HANDS OF FOOLS.
(Where are our military leaders? Isn't this a national security issue?)
(Shouldn't certain members of congress be impeached, brokers jailed, liars fined, spending controlled????)
As for the situation of the respective economies I would say that now Europe has a enormous problem because most of the toxic debt lies as assets (worthless) of the european banking system (and Asia). That is the equivalent of the financing of the current account deficits of the US in the past decade, a great chunk of US foreign debt.
Now that debt is worthless. Nobody says it clearly in Europe, but most people consider this as the default of US foreign debt, the equivalent of similar defaults of foreign countries in the past years, if only this time much bigger. They feel cheated as they trusted the American financial system, only to find now that the niceky packaged (with plenty of beautiful As) mortgage backed bonds that US were exporting were just thrash. I am not blaming anybody, this is just past history, I am just stating what I consider aroung here the general feeling. The main concern about all now is to ascertain the willingness of the US to pay in the end anything (if just a little) to foreign creditors. In my opinion creditors do not have the slightes chance. They will suffer losses of 3 Trillion dollars, and the financial meltdown outside America is going to be horrendous. In US things will be better; with no more debt to worry about it is very logical that the US dollar is getting stronger.
1. We are one of the worst in education in the western world
2. You said yourself the best minds went to wall street. Lots of good they will do there going on to the future
3. "Optimism and can do spirit" ARE THE SAME THING, both of which aren't going to save us
If all we have are our people "intelligence, optimism and willingness to take risk" then you can put a fork in us.
No amount of blind patriotism will take this fork out.
Isn't 8 years of this moronic lie enough?
What a bunch of hypocrites and revisionists of history.... pathetic.
They're more ignorant than the nitwit from alaska, and that's saying something... but if they keep her penned up on McCant's ranch brainwashing her for another month, well, she'll be close.
1. Because he is a person of considerable intellectual gifts who also has a commitment to fairness, justice and the common good. 2. Because he is honest. Anyone who doubts this should read Obama's story of his growing up years, "Dreams From my Father." Obama is not afraid to recognize his own mistakes and the challenges of moving beyond them. 3. As evidenced by his own campaign, Obama has a great capacity for assembling intelligent people around him, listening to their different views and crafting a way forward.
This is less a question of Democrat or Republican than it is a question of capacity to do the job. Obama has it. McCain does not, as his choice of Sarah Palin for VP and his staged heroics around the financial rescue bill make clear.
Taken in conjunction with phoney fear-mongering to initiate war in the Middle East and phoney moralising sponsored through supposed charitable foundations such as Human Rights Watch (see their misinformation on the Giorgia conflict), this starts to amount to a pretty scary profile.
There is little scope for pleasure in any of this, but it is increasingly relevant to ask whether the wonderful American 'can do' spirit should be 'let do' by anyone who has the ability to deflect and deter.
I hope needless to say, that few would suggest that Americans are at fault for any of the above individually. But collectively, there has been too much tolerance and even now there does not seem to be the revulsion against the status quo that might lead to real change.
Taken in conjunction with phoney fear-mongering to initiate war in the Middle East and phoney moralising sponsored through supposed charitable foundations such as Human Rights Watch (see their misinformation on the Giorgia conflict), this starts to amount to a pretty scary profile.
There is little scope for pleasure in any of this, but it is increasingly relevant to ask whether the wonderful American 'can do' spirit should be 'let do' by anyone who has the ability to deflect and deter.
I hope needless to say, that few would suggest that Americans are at fault for any of the above individually. But collectively, there has been too much tolerance and even now there does not seem to be the revulsion against the status quo that might lead to real change.
They continue to get reelected because the Federal goodies are a function of seniority. Earmarks anyone?
Jimmy Carter promoted energy efficiency and alternative energy as necessary steps to deal with the challenge he could see was coming.
Ronald Reagan removed the solar panels from the White House and bowed to the automobile industry's opposition to higher fuel economy standards. No president can be right on all things, but on this central question which is of overwhelming importance to us now, Jimmy Carter was right and Ronald Reagan was wrong.
Look at the last three generations. I do not want you to have to go through what I did. Let me give you, let me buy you, let me allow you.. come on..grandparents passed are rolling in their graves. Lets spend.. can't make the housepayment when the ARM increases.. no worries.. we will refy.. here is a new credit card.. oh what?? you don't have a job currently? No worries. We will figure it out later. I see it every day. Where do you start the blame game? be careful where you point fingers.. remember what Palin said.. where are the rest of those fingers pointing.
Philly Jim hit it hard.. culpability.. we are our own worst enemies. And who do you think has been buying the dollar all the way up? The same ingrates that mock and ridicule us to the point of perpetuating our failure rather than to re-invigorate this hapless economy. That is right those same countries that benefitted from our economy. It is not al Wall street. not all Washington.. not all Main street but a conglomeration of all of these together.
I truly believe it will take a housecleanening of biblical proportion to get this team of horses on the right path. We can but it is gonna take more than just money to rectify what we ..(yup I said we because I too belong to this great nation). have done over the last bunch of years..
Now our country has taken in many other cultures and peoples that have not been impacted or directly descended from that uniquely European background. If those people harbor the same work skills, and are willing to assume the same risks and accountability ... then the author's optimism may be warranted. But, if our new American generation has lost, forgotten, or denied its roots (which seems to be the case) then we no longer have the character traits that he is referring to.
We must admit that in the past 20 years the only reason we came out of any bad economic time is due to credit. Before that we came out of hard times by working and saving. The problem is we have no ability to pay more credit and no more assets to borrow on. Do we have the desire to work, sacrifice short term material gain, and save? Time will tell but the early returns are not good.
btw.....1)to the blah blah blah political classes, please get out of the way
2) if we really want to mess with finding a speedy solution to the current problems, we will elect Democrats to all levels of government
3) I recall reading in Greenspan's memoirs how he marveled at the flexibility of the US economy......was he that Machiavellian to assume that innate flexibility would come to the rescue of his own errors!
I pray and hope that you are right. That the American People will stand up to the challenge. But both the regular folk and our leaders have repeatedly failed to live up to that challenge since the end of the Cold War. It finally seems that when other Peoples get a shot at democracy & capitalism, they are better than Americans. It's just that they didn't have that chance before ever in their lives.
It's the end of the Empire!