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The Worst Is Yet To Come

Posted by RON BEASLEY in Economy, Politics, Society.
Oct 11th, 2010

A few days ago I said:

I don’t really understand why the Republicans or the Democrats would want to win this election cycle and be forced to take responsibility for the next collapse of the financial system.

I was talking about the fraud that threatens to take down the financial system but there is another big problem – jobs.  Everyone is wondering why there is little job growth.  Private business is not hiring because not enough people have enough money to buy the things they produce.  How did we get here?  It’s more than the recession; it’s a structural problem created by supply side economics and “free trade”.

Supply side economics was never a serious economic policy but a scam to take money from the middle class and give it to the top one or two percent.  The result was less money in the consumer economy.

I’ll let Ronald Reagan’s Assistant Secretary of the Treasury, Dr Paul Craig Roberts, explain how “free trade” has given the US a third world economy.

[SNIP]

So “free trade” was just another scam to enrich the corporate CEO’s and Wall Street.  Outsourcing jobs has been going on for years as Americans were encouraged to borrow so they could continue to spend and keep the consumer economy going.  The borrowing came to a screaching halt as a result of Alan Greenspan’s credit/housing bubble.

[SNIP]

An economy that depends on consumer spending cannot survive when the well paying jobs are shipped to China and India.  There is a name for workers who make a living wage – customers.  Without those customers the economy can’t recover.

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Unfortunately, and reluctantly, I agree totally. Ron Beasley's summary is highly accurate... and I say that as a trained economist who daily faces the pressures of (the impact of and push for) globalization and outsourcing.

This is one of the key reasons why I have issues with what the GOPers have put out in their "contract" - there is really nothing there towards strengthening the competitive front of the US.

Further, the impact of globalization and flat world is impossible to hold at bay. The only thing that U.S. can do is help cushion the people for the hard landing.  There i a lot of pain yet to come -- and I am saying this as a very realistic thinker. This is very difficult situation for the country.

The cycle of economy is so huge that the government's fiscal policy can only whittle at the end and not really shift the cycle.   It is only further aided by the "perfect competition" that the Internet has promoted. Borders have literally disappeared for the most part [except when it comes to Health Insurance and Rx meds it would seem].  Short of re-erecting borders -- which is very difficult to erect against countries like China -- US has to live through the global leveling/flattening.

In the years ahead, I expect significant inflation in combination with further job pressures.  With that inflation, the government will be forced to retrench.

As individuals, it is imperative that we make our lives as comfortable as possible, while saving as much as possible for the years to come.