Getting Better?

Nope, leading indicators show we are about to drop off the cliff into a double dip recession/depression. Sovereign Debit/GDP ratio is steadily climbing in the US and is on track to be at Greek levels sometime in the next 18-24 months. China is washing it's hands of US Treasuries, and the US bond rating is in danger of being downgraded. Unemployment is at record levels and climbing. Texas is doing better than virtually all of the rest of the US simply because we have such a low tax/business friendly environment, but with this stupid offshore drilling moratorium (including the de facto shallow water moratorium that is also in place) as well as greens attacking hydro fracing technology onshore. our primary industry is under heavy attack by the Obama administration. look for oil and gas prices to spike in the not too distant future and by that time all the offshore rigs will have been moved to other countries and will be under contract and won't be coming back any time soon. all this will do is make us that much more reliant on foreign energy sources.

the only thing that has a ghost of a chance of saving this economy is his impeachment combined with a republican takover of both the house and senate.

now you might ask, given that this is a "global economy" how the US economy faltering matters to europe and china and others. well, we are the number one economy on the planet, and since this IS a global economy, when the US economy sneezes, Europe's economy gets pneumonia. our economy has a HUGE influence on the rest of the world economy. And since China has such huge US Treasury holdings and is one of our largest trading partners, a sneeze by the US will put China in the intensive care ward. the rest of the world REALLY hates to admit it, but you guys need us WAY more than you even realize. and it is not as much of a two way street as you might think. If the US were to default on it's sovereign debt, we have enough resources and infrastructure and our internal markets large enough, we could probably survive without international trading partners, the same is not true of Europe or China. it would hurt, no doubt about it, but we could probably survive after an initial disruption if we had competent leadership (which we do not currently, but that is going to bee changing, I just hope soon enough.). but without us, who would China sell all of it's manufactured goods to?

Morgan-Stanley is now saying a US Treasuries default is inevitable.

http://www.bloomberg.com/news/2010-08-25/morgan-stanley-says-government-bond-default-is-question-of-how-not-if-.html

There goes the bond rating.

Seems to me that a great portion of whether we are going up or down depends on attitude as much as anything else.

Amongst all the other problems - during the last election Obama spent a lot of time talking down the economy - we are/he is still reaping the benefit of that.

The trillion dollar stimulant package was nothing to do with instant stimulus but a political pork barrel! A significant portion is yet to be spent. How in the world can you stimulate the economy when the spending is 24 to 60 months down the road?

We have too much TV news and too many analysts all beating their own tom-tom. The internet is another means that bad information and misunderstood information is perpetuated. Most bloggers have no idea what they are blogging about creating confusion.

The editors of years past sifted through all the news written and separated the wheat from the chaff - now it all is presented to the public as news.

What is puzzling me is fact that U.S is large country with very high natural resources like agriculture, oil, forest, minerals. U.S has small population compared to India and China. It has huge industrial base.It has highly advanced research and educational system. So how come its economy is in bad shape?. Is it due to large number of people on social security, dominance of Dollar due to which it is non competitive in world market? Is it due large spend on military activity in other country and large amount of international aid?.

Suresh, there are a number of factors that contribute. our birth rate is falling precipitously, our life span is getting longer, our medical care is getting more advanced by the day (and more expensive in the process) and our social security pension system and now our socialized health care system is essentially a Ponzi scheme writ large. the system relies on younger workers paying into the system to pay for the current pensioners which are becoming more numerous by the day. but there are not that many new workers in the pipeline coming into the system. This is by the way true of virtually ALL western economies, but especially those of Europe. You'll note that they are the ones closest to the brink too. That is not coincidental. That is one problem.

another problem is that the electorate has figured out that it can vote itself a share of the treasury and it can put it's hands in other people's pockets to pay for it, so there is no incentive for someone to bust their hump to make a success of themselves because any excess will simply be taken away in the form of taxes an redistributed to those who can't be bothered to make anything of themselves. the problem is that eventually you run out of other people's money. read "Atlas Shrugged" by Ayn Rand, you'll see the path we are on quite clearly.

Dear Mr.Rorschach,

I am not an economist, I am Mechanical Engineer with basic knowledge of economics. We in India were also in similar situation till our Prime Minster who is expert economist and Ex Professor of Economics at Jawaharlal Nehru University at New Delhi. He was brought in as Minister of Finance around the year 1980. He opened up the economy and introduced many reforms by which India is economically in sound condition.

You need a person like him to turn around the U.S economy. Coming back to spend on old persons and other medical expenses, can you tell me what is fraction of total budget is spend on this head. Also if you have few young persons to contribute on the revenue then why not import young persons who can work and contribute to nation. At present only IT professionals are hired from abroad. These persons can exploit the natural resources and add to the revenue of the nation.As it was being done in early days when African were hired to do farm work and other jobs.

Dr. Manmohan Singh was named finance minister in 1990 I believe.

He managed, with the support of the prime minister NS Rao, to get the politicians, peasant socialists and crooks a step back from the controls of the country - did a fantastic job.

Suresh, about 20% of the US federal budget goes to defense and security, another 13 percent goes to things like education and scientific/medical research and transportation infrastucture and such. the rest goes to what are called "entitlement" programs, essentially some form of socialism. 2/3 of our budget goes to pay for medicare, social security, welfare, and other related programs. of that 3.6 trillion dollar total, 1.4 trillion will be borrowed, and that is just FY2010.

Here is an analysis from a left leaning group on the budget and even they can't hide the truth.

Part of our problem is that the electorate elects people who promise them all the largest cut of the pie, but they are having to take other people's pies to do it.

I am really surprised at the expenditure incurred on welfare measures by U.S Govt. Is it turning itself in socialist republic?.If big chunk of revenue (63%) goes for welfare then how you can grow?. Here in India we have pension scheme under which, during service period employee contributes around 8% and employer contributes 8% so total of 16% is added to Provident Fund every month. After retirement the employees gets pension for life long this amount is paid from his P.F accumulated fund. So it is not liability on the Govt. For Medicare we have Mediclaim insurance policy which takes care of medical expenses. For this also retired employee has to pay himself.

My last para is unanswered about exploitation of vast natural resources which can add to revenue in large scale.

The funding method for retirement and medical care is no different and the politicians play with the money in any case every where. Medical care is cheaper in India as the public expectations are very much lower.

For the last paragraph - Thanks but no thanks - there are more than adequate people with the exception of certain areas and those are addressed annually. Not long after the immigrant arrives he discovers what the real wage scale is and doesn't work cheap for long.

Thanks for your comments. I do not know how are things working in Turkey. May be similar like India?. Please enlighten us all.

I was referring to the US and India. I am originally from the US so know some about it.

Too much truth!

LBJ started a war on Poverty, unfortunately Poverty won.

Worse yet Obama restarted the same war and wants to out do Johnson!

And his strategy, just like LBJ's, is to put everyone in poverty so that the truly impoverished won't have to feel bad about their lot in life. it is easier to steal from the rich than it is to teach the poor to empower themselves. Of course a large part of that problem is that many of the poor don't WANT to work at improving their lot in life, it is too much trouble. They've been made too comfortable in their ignorance and sloth.

there is a quote that has been attributed to Ben Franklin that goes something like:

"Do not make a man comfortable in sloth, but instead drive him from it." essentially don't give him a hand out, make him work for it.

GA

Hi Rorschach,

After reading many posts my mind is blowing off. What is remedy? Well it is just virtual discussion. Who would hear to technocrats?. They are supposed to simply slog and just grease their hands in shop floors.I can only feel sorry for great nation with whom I am just connected as my own daughter and her family live there and my brothers and other relatives live there since 40 years. What is the future for their kids?. Just dreaming about American Dream?.

Again there is lot of discussion about industrial growth and Green Earth. Here in India we need industrial growth but Environmental ministry is holding back many mega projects such as mining for steel,bauxite, Power projects even though we are very much power hungry. So how to find a balance between growth and environmental protections. We have promote industry with zero pollution to limit further heating of the globe. May be these hurdles are intentional created by politicians just fill up their deep pockets. God save this earth.

Suresh, you are not alone in feeling like your head is about to explode. There is a very large group of people here in the US that feel the same way. Close to 60% of the population is mad enough to, well, start a revolution if it comes to it. So vary many of us were "fat, dumb, and happy" when the good times were here and we really weren't paying attention to the slide into socialism. There was enough profit margin in the system that it compensated for the drag on production that we didn't really see/feel it. Even our "poor" here in the US are far far richer than just about all of the rest of the world. Our own media have conspired against us and continue to. Every time the Tea Parties hold a protest, we get little to no coverage in the media, or if we are covered, the numbers of protesters are always reported as 1/10th of the actual participants, but protests FOR the current regime's programs are always multiplied by at least that many in the media. Meanwhile just here in Houston yesterday the Voter registrar in Harris County announced that tens of thousands of fraudulent voter registration applications were turned in by a group operated by Democrats, almost all of them in a single congressional district with Sheila Jackson Lee as the congresswoman. She is heavily embattled against a Republican opponent and she is probably the worst, most ineffective member of congress, so of course the democrats pulled out the same old playbook and tried to pad the voter rolls with ghost voters. Was it covered in the local newspaper? not yesterday, and I'll be surprised if it is today, or if it is, I'm betting it will be a small blurb with little detail de-emphasizing the whole thing.

To bad so many of the tea party candidates are on the loony fringe.

They will pick up a few seats and affect a few more but that is all.

I think the problem is the general public's perception of the tea party mirrors your statement. There may be some loony fringe members of the tea party, but as a percent of tea partiers I doubt it's any different than the loony fringe element of the democrat,republican or libertarian parties.

What gets plastered in the news is the loony fringe, not the hundreds of thousands of everyday normal folks who are fed up with a politicians dipping into their pockets for every pet project they (the politician) thinks will keep them in office.

Russ, that characterization is incorrect and it is the story that the media would have you believe. Sure there are a few loons in the mix, but the vast majority are not. None of the big names are. That is part and parcel of the conspiracy of the media against us. They are married to the current regime and they are going to back their guys to the hilt and if that means character assassination and outright lying about the opposition candidates, they'll do that and won't even blink an eye.

I am not talking about the general public that may be in the party but the candidates that use the banner.

The tea party candidates are using the same extreme methods as anyone else and in many cases even more so.

The tea party has probably even managed to maintain Harry Reid as a senator due to what they backed to run against him. He is one I would love to see lose but then we get Angle?

Conspiracy? Not another conspiracy please!

Angle is not the loon that the media (and Harry Reid) try to make her out to be. Is she politically inexperienced? yes. Is that a problem? I would say no, if anything that is a benefit.

Here is the bottom line, Reid is spending HUNDREDS of MILLIONS of dollars campaigning against Angle, Angle is not spending NEARLY as much but yet she is either statistically tied or pulling ahead of Reid in the polls (depending on the poll you look at.)

There was a protest in Searchlight Nevada against Harry Reid. Ten thousand people turned out there. Did you hear anything in the media about it? Did you? My bet is no, you did not unless you looked to an alternative media outlet.

My prediction is that Reid is going to spend a whole lot of Democrat money and it is going to be a blowout in the end. Angle is going to kick his arse. Look what is going on with his son's governor campaign. He's taken his last name off of his campaign stuff because he doesn't want to be associated with his dad. His dad is toxic.

Russ, we'll have a much bigger impact than that. I expect that the balance of power in both the house and the senate will flip to republican in november. I'm betting on veto proof majorities in both houses. (that is not 100% certain of course, but that is my gut feeling.) and the bigger impact will be the shift to the right of the GOP. for years the GOP leadership has been steadily moving to the left and the conventional wisdom in the halls of power was that the GOP had to move to the left to pick up the "moderate" vote. but in doing so, they have moved away from their conservative base. They have sacrificed the 40% that would never contemplate voting democrat for the 10-15% of moderates that would turn their backs on us as soon as the winds change. The base might not vote democrat, but they WILL stay home on election day if they just can't bring themselves to hold their nose and vote for the "democrat lite" candidate. This is what happened in 2008. The GOP Leadership put up the king RINO as their candidate and knowing that the base would have a real problem with him, they put Palin in as his running mate to try to assuage the Base's sensibilities. Had Palin had an even slightly more conservative running mate, the last 18 months might have been very different, but enough people were disgusted by McCain's democrat tendencies that they simply stayed home and look what happened. The GOP is starting to figure that out, but it took a lot of pain (on the part of everyone involved) to get that lesson learned.

We differ greatly in our analysis of these times.

1) I didn't vote for McClain due to his running mate. I would never vote for Palin as I consider her brain dead and useless. She would be enough to make me vote for anyone running against her. She turns off anyone not on the far right fringe.

2) The Democrats would lose their veto proof majority this election if Mickey Mouse were running against them. It is traditional for the president's party to lose seats in the off election and the lousy economy guarantees more seats lost. The tea party is simply stumbling into this.

3) The Republican 'base' as you call it are the party activists that are most prevalent in the primaries and have excess influence at that time. The general party is not nearly that far to the right despite what you may hope or think.

I long ago quit calling myself Republican as I got disgusted with many of the parties weird ones - that would include the tea party in general. I will remain an Independent for the balance of my years.

The Tea Party had several noticeable failures the past couple of weeks - even ones Palin campaigned for. In the general election most will be putting distance between themselves and her.

Due to McCains choice of a running mate in the presidential election we have Obama for either 4 or 8 years! Wonderful, huh?

Russ, we'll have to agree to disagree on those things. The proof will come in november.

Agreed - but not just the Democrats losing their death grip but how many tea party types get elected - ones actively using the tea party banner.

Suresh, here is a graph that puts the argument that it was military spending on the Iraq war that bankrupted us to bed.

Along with some other interesting bits taken from this article:

There is an important note to go along with that Obama stimulus number: the stimulus did not even start until 2009. By 2019, the CBO estimates the stimulus will have cost $814 billion.

If we look only at the Iraq War years in which Bush was President (2003-2008), spending on the war was $554B. Federal spending on education over that same time period was $574B.

So the following are facts, based on the government's own figures.

• Obama's stimulus, passed in his first month in office, will cost more than the entire Iraq War -- more than $100 billion (15%) more.
• Just the first two years of Obama's stimulus cost more than the entire cost of the Iraq War under President Bush, or six years of that war.
• Iraq War spending accounted for just 3.2% of all federal spending while it lasted.
• Iraq War spending was not even one quarter of what we spent on Medicare in the same time frame.
• Iraq War spending was not even 15% of the total deficit spending in that time frame. The cumulative deficit, 2003-2010, would have been four-point-something trillion dollars with or without the Iraq War.
• The Iraq War accounts for less than 8% of the federal debt held by the public at the end of 2010 ($9.031 trillion).
• During Bush's Iraq years, 2003-2008, the federal government spent more on education that it did on the Iraq War. (State and local governments spent about ten times more.)

My business is based on a tech service provided to a specific industry. This will probably be my most profitable year since I started in august 1994. That said I do not anticipate hiring. New employees cost a lot to train and the tax structure makes it unappealing at best. I pay better than industry standards, cover all cost for med insurance as well as presrcriptions, dental and eye. I am a tyarant to work for because I provide all the motivation and I know that when, not if, the economy dumps there will still be oportunity for the the most highly skilled and most reliable in the trade. Our skill sets will be in demand althogh at reduced levels and prices.

that said I see deflation as a fact and don't agree with economists that it is bad. Government interference and the tax system create falsity in our economy. we need a system that rewards based on quality and productivity. when the average total compensation to gov is double the private sector and the only gov services that are needed and function well is post office , garbage sewer and water and whose workers are at the bottom of the payscale I detect a flaw. I was born poor and I made myself comfortable. I refused stimulus checks and will not take soc sec. My only request from the government is to have all resign and stop compensating people for nothing. If you need help supporting your children I would pay you to pick-uptrash, sweep streets etc.

If I could run this country my first act would be to instruct all government employess to enforce every law and regulation without exception and to the fullest. My second action would be to form panels to decide which laws and regulations to repeal. Congress would have to abide by the same rules as everyone else. All judges would be elected and trials would take place within 60 days. PI attorneys would not be allowed within 1 mile of a courthouse and the losing party would always pay all legal costs. I would also punch in the face anyone that said the military cannot defend our borders. It's not the law and it is the primary role of the military. Pershing and Patton were fighting Mexico when they were sent to Europe for WW1 and Mexico was Pattons first combat kill. If I sound anry I am. The people that wrote the constitution never thought that whipping or hanging was cruel and unusual and there were no prisons anywhere at that time. Both penalties are proven cheap and effective in regards to recidivism. In the event they are not them a penal colony would do the trick.

I don't disagree with all your points but do disagree with your 'my way or the highway' philosophy.

Of course there were prisons or what passed as prisons in the days of the founding fathers. There were also slaves and indentured servants and a whole lot of other things we are better off without. Penal colonies? Many of our ancestors got free trips across the Atlantic for that reason.

Enforce all laws and regulations? There are many that are outdated and even foolish. Enforce them?

The robber barons of yesteryear (totally unfettered capitalism) are the reason for many laws on the books today - they were real basta*ds!

You don't so much sound angry as you sound like you have an attitude problem, are confused, have no idea how society functions and certainly have no idea about spelling!

Deflation not a problem? Come on!

An economy is bad when deficits build up.

An economy breaks even when deficits stop.

An economy is good when profits are made.

Who pays for the profits?

And where do they go to? A nation with everything, sources, resources, without export cannot build up the economy.

Internal clients only move the money stream to the most - call it inventive?

The credit expansion has been created at the cost of a virtual dollar, which becomes more and more a symbol, and with hedge funds like pyramid games with no happy end.

A nation with low valuta quota exports and this enables growth.

Internal clients has proven not to work in socialism or communism.

In a few years we will learn that it also doesn't work in capitalism.

A lot of adaptations in spending, moral, lifestyle will be needed to turn the boat around. The advantage of Europe is that the boat is already half turned.

There are no big pensions anymore for the private man and soon it will be a general rule for everyone.

People have savings, money is spent for different things.

Wealth is more spread. Still IMO too much of a police state, but only a small % compared to our system here in NA.

The US economy is 300-350 Million, The EU is 500-550 Million. (people) Who is the #1 economy depends only on the way you try to sell it and the virtual value you play with. But there is hope: after 7 years of suffering, the 7 years of prosperity begin again (quote- bible) Nothing is perfect. I hope you agree at least with the last statement. Strength.

DVMDSC relying on only internal markets is definitely sub-optimum, but you are incorrect to think it does not generate wealth. any form of manufacturing or production generates wealth. government does not generate wealth, and the US government is the largest growth industry in the US. more government jobs are being created than the next TWO fastest growing industries combined.