Tell Me Why I'm Wrong

The present recession is not ending.

No amount of additional investment, spending cuts, prayer, etc. will change that.

The reason for high unemployment is thirty years of massive trade deficits...period.

We buy more goods than we sell, and a portion of manufacturing has been lost thereby. It's not coming back, and will not be supplanted by anything else that we might sell in exchange.

Nothing will be done about it because no one wants to admit that trade is the cause.

This is something that was papered over for twenty years because of mortgage policies that excited a construction bubble that's over and never returning.

It's done.

btw---
In 1946 government spending went from 60% of the economy to 20% overnight, yet the economy grew by 30%. The cause of the depression was capital constriction, which was never remedied until emergency wartime conditions came into effect. Once capital was available and demand bounded back everything improved. Nobody ever addressed the cause of the depression because no one cared to understand it. Everyone thought the old remedies would work when they wouldn't. The same is true today.

Your simplistic view of economics makes it hard to express "Why I'm Wrong". There are two general concepts at play - macroeconomics and microeconomics. Many of the ideas expressed ignore the economic principles and focus on political sound-bites the media like to hype as reality. I will try to address this hype:

The recession is not ending - All recessions end, economic cycles come and go
Congress usually exacerbate cycles as they have done recently.

The reason for high unemployment is thirty years of massive trade deficits...period
trade debts occur when someone in another country makes a product that is more economical than can be made in that country The theory is that everyone benefits as it frees up money for new products. The US has moved into a service economy rather than a manufacturing economy - Jefferson advocated a agrarian economy and I think he may have been right - the US is still the most efficient at growing food. Industrialization caused many of the problems we have now such as pollution and reliance on fossil fuels, but it did afford us the luxuries we have today.

Trade is not the cause.

This is something that was papered over for twenty years because of mortgage policies that excited a construction bubble that's over and never returning - who was president 20 years ago and who wanted to change regulations to get "everyone in a home" This policy, plus greedy investors, realtors, and mortgage companies took advantage of these policies and caused the current recession.

I don't see an argument here.

The US is now a "service economy?"

rubbish.

Actually I'm pretty sure I'm not wrong about any of this.

This is not a "cycle," and it will not be remedied.

There will be no recovery....ever.

Yes, you are wrong about this. We had a mild recession back around 1999, and we came out of that just fine. Economies are cyclical, and it will turn around, eventually. The problem we have now is that we have a policy set in place where we are trying to prop up the market with fake money, instead of letting the market find the bottom. The only thing that is more certain than gravity is that a market will eventually find the bottom. When it does, the net effect will be worse, because we'll be at the bottom, and have a bunch of funny money floating around that won't be worth anything. Inflation will be a bitch.

I've long contended that if we didn't do the bailouts, the bottom would have been worse, but instead of talking about when things turn around, we'd be talking about economic growth and recovery in the 4-5% range.

We can come out of this, but it's going to take someone with the balls to tell the government to quit spending more money than they take in, quit running the printing press like you're printing monopoly money, and quit stifling economic activity with burdensome regulations. When those three things happen (especially the latter), this economy will take off again.

Right-on BG! Some of us remember the 70s. When was the last time you had to wait in line to get gas if you could get it at all?

but.. but.. Aren't you the epitome of a "service" industry, serving the "Economy"? and you seem to be doing ok in this "service economy".

I don't see an argument here.

The US is now a "service economy?"

rubbish.

Actually I'm pretty sure I'm not wrong about any of this.

This is not a "cycle," and it will not be remedied.

There will be no recovery....ever. Originally Posted by theaustinescorts

I don't see an argument here.

The US is now a "service economy?"

rubbish.

Actually I'm pretty sure I'm not wrong about any of this.

This is not a "cycle," and it will not be remedied.

There will be no recovery....ever. Originally Posted by theaustinescorts

This economic problems will go on for years. Obama talks higher taxes, I say we need more tax payers. Get the unemployed educated with skills the businesses need and it will jump start the economy pretty fast. Get those jobs from China and India back to the US and Mexico and you kill two birds with one stone. You'll get our economy going again and you'll end the drug war and illegal immigration problem in mexico.

you'll end the drug war Originally Posted by kingorpawn

The only thing that will end the drug war in Mexico is a drastic reduction in the demand for illegal drugs in the US.

The only thing that will end the drug war in Mexico is a drastic reduction in the demand for illegal drugs in the US. Originally Posted by Billy_Saul

That can be done if the emphasis is on the "illegal" aspect. It might even raise some revenue for our government.

That can be done if the emphasis is on the "illegal" aspect. It might even raise some revenue for our government. Originally Posted by Booth

My thoughts exactly.

This is not a "business cycle."

It started in 2008 with the crash of a real estate bubble and then progressed into a banking crisis.

This is exactly what happened in 1929 - 1933....

The Great Depression began with a market crash and progressed through banking crisies after banking crisies all of which was made worse by restrictive monetary policies and government austerity programs....

There is no such thing as "phoney money" either.

Fiat money works better than gold-backed money because it can be controlled at the stroke of keypad, whereas gold is an almost useless metal that some countries have in abundance and other have none of.

And if you think that Fiat Money is worthless than let me ask you,

Have you ever tried to MAKE any of it? It can't be done.

The reason why any currency works as a medium of exchange is because it's SCARCE and cannot be made OR FOUND by just anyone.

For these reasons a Fiat Currency is much, much better than any kind of gold standard.

Furthermore there will be no inflation from monetary expansion because none of the new money is finding it's way into the hands of consumers without them putting forward the same amount of labor to get it.

There will be no inflation.

I held back before, but I can't resist after this rant. Take an economics class. I did!

Exporting low-productivity jobs where they can be done for less is good for everyone. Otherwise, we should all still be on the farm. We have a couple of systemic problems dragging us down right now.

The first is that the bankers loaned a ton of money on overvalued houses to people who could not afford to pay them back. But the government is not going to make the banks take the hit, but perhaps the lawyers will. And of course, they are going to use the right-wingers to try to fight that off too, by arguing that making them pay for their mistakes will actually weaken the economy. The obstructionist efforts of the banks is the same reason that all of the mortgage relief plans that could have helped have been such failures.

The second is that our workforce does not match the jobs that we have. Exporting low-productivity jobs is a good thing if we then find higher-value jobs for our workforce. This was supposed to be the sugar that made NAFTA go down, and for reasons which I fail to understand for any reason other than wanting the economy to stay bad to boot out Obama, the Republicans are still opposing retraining programs. It doesn't help that universities make no effort to encourage students into high-tech majors by limiting the number of less-useful liberal/fine arts slots available.

The base of any economy is it's goods for trade.

The richest economies in the world export natural resources instead of manufactures...Norway in Europe and Australia in Asia.

But if natural resources are looted by elites they can result in them being the basis for national bankruptcy.....central America, Africa, etc....

In countries like the United States, Japan, Germany, etc. with not too much natural resources to export, manufacturing is the core.

I repeat that...FOR THE UNITED STATES MANUFACTURING IS CORE.

Manufacturing jobs in the US are what fed national growth and prosperity until the last few years.

As we lost traditional manufacturing jobs beginning thirty years ago we replaced those with high tech manufacturing that our competitors were behind the curve on.

But now anyone anywhere can make even the most high technology manufactures, and even our clean tech technologies like solar and wind turbins are all manufactured overseas.

With the loss of most of our manufacturing jobs employment remained high because of the construction boom created by high population growth from immigration combined with progressive credit policies.

But that's all gone now...and it happened suddenly.

There will be no recovery.

Ok the richest countries are not natural-resource exporters. Most countries that have nothing but abundant natural resources are at the bottom of the food chain: almost all of Africa, and vast swaths of Asia. The country that is the best off in Europe is Germany. Do you know what their number one export is, which accounts for a full 20% of their economy?

Mechanical engineering.

Note that is not automobiles, of which they export quite a bit, but the service of the engineering itself. As I said above, losing manufacturing is not a bad thing except that it was something that could be done for a high wage with little education. Such jobs are going away worldwide, not just here. High-tech service jobs are the next big thing, just as agricultural manufacturing was then mechanical manufacturing was after that. We just need to invest in the education and training necessary to have the workforce capable of doing these type of jobs.