Getting America's House in Order
I mentioned my article "Wall Street's House of Cards" a few weeks ago on the Huffington Post and received requests to publish it online. Well, I finally got around to posting it on my website. I hope you will read it and find it enlightening. I also included the responses I received from a number of well-respected individuals who reviewed my article early last year in order to provide a balanced view to my points and to offer a historical perspective. Their comments can be rather interesting in hindsight.
One of the things I mentioned in my article is that rate cuts by Bernanke are not going to help the United States in the long-term. By lowering rates, the Fed is only going to stoke inflation around the world, a terribly irresponsible move. What is really needed are incentives from our fiscal policies to rebuild a more sustainable U.S. economy. We need more investments in technological innovations, not more financial scams. The world needs to know that the U.S. can repay all our excessive debts, otherwise they will lose all confidence in extending us credit.
If all we do is just print money to solve our problems, then the world will see no reason to hold U.S. Treasuries and our securitized credit cards and mortgages which all have already caused them losses in the billions. Instead of buying Treasuries and other worthless paper, they will likely go on a spending spree to buy hard assets that will hold their value better. If the American government cannot sell debt to these foreign investors, then market U.S. interest rates will go much higher from these current low levels to entice buyers regardless of what Bernanke and friends do. In that ugly scenario, the United States will have high inflation, especially in food and energy, because we import much more than we export. Exports are only about 8% of U.S. GDP while the financial services sector is over 20%. If our main competitive advantage is just to create clever pieces of financial paper that nobody wants anymore, then the United States is in danger of becoming a phantom economy indeed.
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Honestly, I have no idea if the reduction in interest rates will help.
But I do know this...
That if we continue to Overseas Outsource our jobs, use H 1-B Visas and L-1 Visas, our downfall will continue.
That's just common sense, however, many in America today seem to have lost common sense.
You do a good reality view of what is wrong with the picutre on wall street. I am not seeing at my level any hope in the future as the fed just prints more almost phoney cash to give me $600 whenever they get to it. I used to be middle class and afforded my life well but I am working poor one check away from indigent and wondering if there is any way for the economy to fix things for me. As everything gets more expensive my check amount goes down in what I can afford. The price added of being chronicly ill just means I have to squeeze medication and doctor visits out of the same check that means less now. When I recieve my little check in August as I doubt before then, it will go towards the bills I cannot afford to pay now. I don't think except for illness to be any different from the rest of the people who will receive the little check. Unless there is more done for those at my level how can this economy be fixed?
The reason they are doing it is to keep the incumbents in power through the next election. Simple as that. The reason the rest of the world lets us get away with it is that they have built in to their business models American Consumers buying their products and can't afford NOT to subsidize us. The Japanese suffered for this and now the rest of the world will share that fate. Devaluation of the US currency is the goal. It's as plain as the nose on your face, but it's still just as hard to see.
There is a new ingredient now however, and that's the moving away from dollars as the currency of choice in Oil transactions. The Euro is the big competitor, and that's why they did not follow suit in lowering their value by slashing their rates.
I agree with your analysis and think it will not work as well as it did with the Japanese. I agree with Soros, that there will be a tremendous shift in power away from the US. International businesses will come to see the US Consumer as unreliable, but only if it saves the rebate and starts to reduce living beyond its means.
By virtue of people like you publishing articles like this, you make the American Consumer smarter and make this potential change more likely. I don't think the powers that be see that yet as enough of a threat to deal effectively with it, yet. But then, there is Murdoch.
The only long term solution that would make me happy is a substantial raise for those in the bottom 3 quintiles. It seems to me our long term problem is the loss of disposable income for middle class Americans. The only reason we have been doing OK economically for the past decade is because of the increase of consumer debt.
My solutions? Cease the war on unions. Tax increases for the top 0.5% (50% + is a good start). Exxon Mobil and other oil companies pay more than 13% tax rate on their profits. Remove the cap on SS taxes, and means test SS and Medicare (about $500K would be OK with me.)
Great post put in simple terms for the people who are not up to speed, Ann.
Come around more than every couple of months.
Are you really so naive as to think this is Bernanke? What pressure and what leverage do the big money boys place on Ben? Indeed, if you really think about getting the house in order, maybe the problem is that the democracy is a ruse and this is a government by, for, and of the big money interests (investment banks etc). Who do you really think little Geo works for?
PS - I tried the link you provided to your website but all I get is a page from HuffPo saying no such page. And I also googled your name without success. Spooky!
When in doubt, start a war ... and if that doesn't work, start a bigger war that will pull in everyone.
Listen as the drum beats for Iran.
"They forced our hand, we couldn't stand by and let them have their own nuclear weapon"
Excellent Ann. I only wish I were able to articulate my views as well as you. This is exactly what is needed.
You are absolutely right.
It isn't rocket science. But, amazingly, the Powers That Be appear to be oblivious to this.
What is going on?!? Is it possible that they really ARE "that stupid?" Or could it be that there some other goal they have in mind that could explain such an inexplicable path?
They must be ignorant, deluded, deceitful, desperate ... or some combination ... none of which bodes well for American citizens.
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