The Fundamentals of the Economy are Not Strong

Of course, Americans workers are energetic and skilled. Our business people are entrepreneurial. Our nation is vast. Its resources are deep. Its spirit strong. Well, sometimes strong.

But this does not mean the fundamentals are nearly in place for rapid economic growth in the new global environment. John McCain and George Bush have told us that the economy is fundamentally strong. Sadly, they are wrong. They are old-timers resting on a nation's past laurels. McCain tried to amend his case when questioned, saying he meant American workers were strong. Pandering can only go so far.

There is much to build on in America, but we are not doing so. Here is a snap picture of the cracking foundation.

--The rapidly rising costs of healthcare and the ineffeciencies of American medicine will consume hundreds of billions of dollars more of valuable resources in coming years without providing Americans adequate healthcare. And more people not fewer will have no health insurance coverage.

--We are fast becoming a low wage nation for far too many, right up to the middle of the income distribution, and even higher. We all know that median wages have not rise in the 2000s and typical family income is down. But do we all know that wages for male median workers have not risen for four decades?

-- In a time when two-worker families and single-parent families are the norm, the nation has no universal free pre-k education system of quality. Many of our competitors do.

-- Getting into a good college increasingly depends on the income of one's parents. Getting a good job increasingly reuires going to a good college, not just any college. We are becoming a class society. Income mobility is not as fluid as it is in much of Europe.

-- Engineering experts give America a 'D' for the quality of its infrastructure.

-- The nation has no national energy policy.

--Much of the nation's growth of the past twenty years was built on a mountain of debt, which is now crumbling.

That leaves quite an agenda. The beginning of reform is the admission of problems, not the trite and tiresome cliches about how all is well. Cheerleading is not leadership.

Comments

[Sundialsvc4]

When the Internet was originally designed, it was designed to withstand a nuclear strike.

This was done by designing massive redundancy into the system. The series of "packets" that contain this reply may take any number of "routes" to get from my computer to yours, and each may find its own, different course.

"Massive redundancy" is something that our economy used to have. Every big factory was surrounded by little factories that weren't far away. The big factory had many different sources, all domestic. Both wages and finished goods did not travel far. A great deal of the economy was both domestic and "redundant."

"Redundant." Sounds wasteful, does it not? That's what the accountants said in the board rooms. No one said, as Henry Ford did, that "we must pay workers enough that they can afford to buy Ford cars."

An accountant's world-view ends with one company's balance-sheet. It doesn't consider where the orders come from, or where those "expensive" wages go. If a "less expensive" source happens to be 10,000 miles away, it sees no problem with sole-sourcing from it, "to save money."

An accountant's world-view also sees money as "a Thing." It "has value." It "IS value." But it's not.

When there isn't money in the worker's pocket, he doesn't buy. And that non-buying MULTIPLIES in its effect as it rises farther and farther up the chain to ... your now-struggling company.

[BARRISTER]

Bravo Sundial, Bravo!!

[wilray]

McCain corrected himself to say that by "fundamentals of the economy" he meant the American worker and how dare Obama insult the American worker. Poor Obama -- no crystal ball -- how was he to know that on the 22nd time McCain used this phrase this year that the meaning would shift from the previous 21 times.

From Alice through the looking glass.

"I don't know what you mean by 'glory,'" Alice said.
Humpty Dumpty smiled contemptuously. "Of course you don't -- till I tell you. I meant "there's a nice knock-down argument for you!'"
"But `glory' doesn't mean `a nice knock-down argument,'" Alice objected.
"When I use a word," Humpty Dumpty said in a rather a scornful tone, "it means just what I choose it to mean -- neither more nor less."
"The question is," said Alice, "whether you can make words mean different things."
"The question is," said Humpty Dumpty, "which is to be master -- that's all."

[Egalitare]

I've come to the conclusion that the phrase "the fundamentals of the American Economy are sound" mean that long term investors should wait about 2-3 years before picking up some really juicy assets at 10 cents on the dollar.

[joebaggadonuts]

Sound fundamentals means the economy collapses when it suffers a blow because it's hollow.

[dadw5boys]

FUNDAMENTAL -------- IF YOU CAN'T AFFORD TO GO TO WORK --- BAD FUNDAMENTAL

iF YOU CAN'T AFFORD TO FEED YOUR FAMILY AFTER WORKING ALL WEEK --- BAD FUNDAMENTAL

IF YOU CAN'T AFFORD FOOD, GAS AND HEALTH CARE --- BAD FUNDAMENTAL

[hopeless277]

And when George W. Bush declares that elections cannot be held in a 'time of crisis' and both he and Cheney will not step down and 'abandon their country', we will truly know that the experiment failed.

[Henry]

The fundamentals of the economy, in the form of numbers, are not too bad. Look at these:
1) Prime Rate 5.0% easy money (too easy really which is part of the problme)
2) Inflation 4.0% or so... not good, but not as bad as in the 70s
3) Unemploymnt 6.1% not good, but not the 33% of the great depression
4) GDP 1.8% or so.... not good, but not a number that evinces formal "recession"
5) Trde Bal -$800 bil per year. Not good.... This is and has been the worst of our numbers.
6) Bud Deficit $400 bil Not good and quite sad for conservatives.

Well... maybe they are not so good after all? Do these Republicans know the meaning of the word "Conservative"?

[BrettnCalgary]

http://www.shadowstats.com/alternate_data

This website calculates stats using the methods used in times of yore, it is interesting, to say the least.

[JesseDF]

After I read Henry's post I was about to send him to the same site you did BrettnCalgary. Good move. Thanks for reading my mind.

[DuganS1]

Actually, if you take out oil, the trade deficit was the smallest in July than in any month since early 1999. And GDP was revised up to 3.3% for Q2.