Unsettling Prediction (The Washington Note)

[tomfodw]

http://www.thewashingtonnote.com/archives/000027.html

RICH AMERICA? POOR AMERICA? AN IMPORTANT DEBATE. . .

:::snip:::

An array of structural imbalances in the American economy is making America feel like a richer nation than it is. U.S. savings levels have reached all-time lows. America is exporting the least in memory in comparison to that which it imports. And as Martin Wolf writes, "foreigners are now funding close to three-quarters of net U.S. investment." In commentary that Wolf offered a week ago (on August 18th), he writes "unless trends change, 10 years from now the U.S. will have fiscal debt and external liabilities that are both over 100 per cent of GDP. It will have lost control over its economic fate."

Despite this worrisome data, Japan and China continue to finance America's current account gluttony to keep U.S. consumers intoxicated on their exports. At some point, however, the only way out of America's dysfunctional binge is that it consumes less or exports more; that it buys down debt and external liabilities by working harder without near term rewards because these rewards were enjoyed yesterday and paid for through a mortgage. At minimum, when accounts revert to historical trendlines, American living standards will certainly flounder but more likely fall.

[kikiek]

1. We will be owned by Japan and China by our debts. Thanks Bush.

[sinkingfeeling]

2. Isn't it great that China could collapse the US economy at any

time? Then what? With a weak US dollar, no manufacturing stateside of needed items, and in debt up to our eyeballs, what will we do?

[tomfodw]

3. Start all over again...

...only without the virgin continent of vast untapped natural resources.

Without strong labor unions to protect workers during the period of capitalist accumulation.

Without environmental protections and enforced workplace safety rules and the Superfund to make polluters pay for their messes (and thus build clean-up costs into their business models before deciding whether or not to make those messes).

America has gotten used to owning the world. We're in for a very rude cognitive shock that I bet most Americans simply will not be able to accept. Predict more decadence and distraction and frivolous self-indulgence before a second Depression that makes the first one look like a brief turndown. Followed by a Man On Horseback (or some such authoritarian) who promises to Make It All Better as long as we Trust Him. Oh, wait - isn't that what we already have?

[kikiek]

4. This of course provides opportunity for them to stop soc sec and

medicare. I truly believe the current admin has this as its goal.