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TMCNet: (9/2010) Failed American Financial Strategies

[September 02, 2010]

(9/2010) Failed American Financial Strategies

Sep 02, 2010 (Basil & Spice - McClatchy-Tribune Information Services via COMTEX) -- When ships sink, airplanes crash, or buildings collapse, experts quickly gather to examine the evidence in an effort to prevent recurrences. Unfortunately, that doesn't hold for economics in America. We just continue with more of the same -- Free Trade agreements, ineffectual immigration enforcement, stimulus, bailouts, deficit spending, tax cuts and tax credits, easy, low cost credit, and non-stop ideological 'debate' filled with lies, half-truths, and unsubstantiated assumptions. These failed strategies have brought us: 1) 28 years of consecutive and growing manufacturing trade deficits that have eliminated millions of U.S. jobs, hollowed out much of our manufacturing base, undermined expected high-technology growth, and are soon expected to expand into similar service-sector deficits and job losses 2) Millions of jobs lost to the 11 million low-skill low-wage illegals residing within the U.S., along with their adult 'anchor babies' 3) The weakest jobs 'recovery' in recorded U.S. history, a stubborn 9.5% unemployment rate, plus millions more that have given up looking, are underemployed, or working part-time -- despite corporations holding $2+ trillion in current assets 4) An anemic 2010 second-quarter GDP growth rate of 1.6% 5) No private-sector job growth over the past decade -- despite record corporate profits 6) About $72 trillion (almost 5 times the GDP) in unfunded Medicare and Social Security obligations, state and local debt, and Federal debt 7) The world's highest health care and defense costs, and increasingly unaffordable college education costs 8) Nearly one in four home mortgages being underwater, and reduced equity in almost all others 9) Manufacturing capacity utilization down to 71.4%, retail vacancies at 10%, and office vacancies at 17.4% 10) Two major economic downturns in the past decade 11) Deteriorating infrastructure in need of $2+ trillion in upgrades and repairs 12) Transitioning from the world's largest creditor nation to its largest debtor nation in only 30 years 13) An economy that relies more on financial engineering than making things 14) An inability to fund significant 'Global Warming' initiatives 15) Average household debt, though declining slowly, still near record levels at 90%+ of GDP 16) Excessive emphasis placed on middle and high margin products and service, instead low margins that better serve rapidly growing low-income U.S. and developed world markets 17) Vulnerability to politically-motivated cutoffs, and currency devaluation from being the world's greatest energy user/capita 18) Negative stock market returns for the decade 19) Growth in unfunded corporate pension plans ($506 billion shortfall for the S&P 1500), a major shift from defined-benefit to far less valuable defined-contribution pension plans 20) 35% of all wealth being owned by just 1%, CEOs laying off the most workers being paid 42% more than their peers, and CEOs now being paid 263 times the average workers -- up from 30 times in the 1970s, and far more than their Asian counterparts Albert Einstein once said, "The definition of insanity is doing the same thing over and over again and expecting different results." This Labor Day weekend would be an especially appropriate time to break that cycle.

The really bad news is that it has taken China 30 years to rebuild an economy similarly mired in faulty ideology and failed strategies; ironically, they learned much from us 'round-eye devils.' We're now the ones with a long, uncharted journey. Let's take that first step -- we could begin by learning from them. i" Loyd E. Eskildson is retired from a life of computer programming, teaching economics and finance, education and health care administration, and cross-country truck driving. He's now a blogger and reviewer for Basil & Spice. Visit Loyd E. Eskildson's Writer's Page.

To see more of Basil and Spice, go to http://www.basilandspice.com/ Copyright (c) 2010, Basil & Spice Distributed by McClatchy-Tribune Information Services.

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