Here's a bourgeois economics, but very sober and factual, assessment of the sorry state of the US economy. Did people notice that California "created" a net of 900 new jobs last month? This piece doesn't connect it to the costs of the empire, the war and the greed of the imperialists, and it doesn't even begin to look at the impact rising prices due to the oil price will have.--MN
FALSE PROSPERITY Present Economy Driven By Consuming Our Accumulated Wealth Not Income By historical standards, our present economy is being driven by selling the family jewels rather than measured consumption commensurate with actual income. In recent years, income growth after inflation has been at or near zero percent. Contributions to economic growth have been largely limited to two factors: (1) rapid increases in asset prices (public equities during the 1990s and housing equity in the first part of the 2000s) and (2) inviting cheap overseas imports into the US produced at a fraction of the amount it would cost us to produce. As a result, we are now extremely vulnerable as our industrial infrastructure has almost shut down (as our cost to produce is uncompetitive) or sold out. Now we can no longer produce enough for ourselves to maintain our present strength and living standards and have become dangerously dependent on imports. According to a recent Bloomberg article, household wealth grew six times faster than wages from 2001 to 2005 the biggest gap of any five year period in history. Meanwhile, trade deficits have sent trillions of dollars of US assets overseas during that time to finance the consumption of foreign oil and other largely perishable goods. Internal US government budget deficits are now for the first time almost 100% financed by foreign lenders. If we were spending what we were actually making, US GDP would likely be stagnant or receding. The personal savings rate has for the first time in decades turned negative meaning that we are consuming every dollar we make plus spending trillions of dollars of accumulated wealth. There is no longer any cushion. At present, this economic joyride has claimed the lower classes as victims while leaving middle and upper classes with a false sense of prosperity. Those without significant assets are not able to participate because their consumption and savings are largely composed of income from stagnating wages. They are condemned to live paycheck to paycheck. Cheap imports, offshore outsourcing, foreign insourcing, and the liquidation of US industry are placing tremendous pressure on wages. Goods producing industries (typically the highest paying industries on average) are shrinking rapidly while low-paying service industry positions (waitress, retail, education) are not even creating enough jobs to keep pace with population growth. Ironically at this point, the standard of living of the lower income population is being sustained by the same low-cost imports at discount retailers that have destroyed their opportunity for economic advancement. We have lost our leverage. History tells us that no country can continue indefinitely to sell its wealth, borrow from other countries, and sentence its citizens to hopeless servitude. Pressure on the US dollar due to decades of outrageous foreign borrowing is being temporarily offset by the rising US interest rates (rising interest rates tend to buoy the value of a countrys currency for a time). Despite recent increase of over 4% points, the value of the US dollar has still declined. Furthermore, these rate increases are a huge cost to the US especially to those who do not benefit from the increased yield on their investments because they have no investment! The US government is now forced to raise rates or accept a lower dollar and more expensive imports. The only other vehicles available to the government include taxation, subsidies, and perhaps default. Any of these options are going to cost all classes of this country. Former Federal Reserve and Treasury officials, Nobel Prize-winning economists, preeminent investors, and industry leaders have widely acknowledged these imbalances for many years. Those in power who must face the music are looking for every reason to push the difficult decisions to the next guy. However, there is no hope of recovery without a plan and there can be no plan until there is at least an acknowledgement that the problem exists by those who are in power! Demand leaders who will address these issues now even though it may be too late. This article can be found at: http://www.economyincrisis.org/showarticle.asp?ID=1008 --------------------------------------------------------------------------- LAAMN: Los Angeles Alternative Media Network --------------------------------------------------------------------------- Unsubscribe: <mailto:[EMAIL PROTECTED]> --------------------------------------------------------------------------- Subscribe: <mailto:[EMAIL PROTECTED]> --------------------------------------------------------------------------- Digest: <mailto:[EMAIL PROTECTED]> --------------------------------------------------------------------------- Help: <mailto:[EMAIL PROTECTED]> --------------------------------------------------------------------------- Post: <mailto:[EMAIL PROTECTED]> --------------------------------------------------------------------------- Archive1: <http://www.egroups.com/messages/laamn> --------------------------------------------------------------------------- Archive2: <http://www.mail-archive.com/[EMAIL PROTECTED]> --------------------------------------------------------------------------- Yahoo! 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