Comments on: Downsizing America

By: elleno

elleno — Tue, 10 Feb 2009 18:29:30 +0000

An excellent insightful article (I think you are right, though I hope you are wrong).

It seems that there is likely to be political fallout too. Regardless that the economic downsizing is politician independent Obama will bear the brunt of the electorates unhappiness when it becomes apparent that TARP and the other economic stimuli simply don’t deliver. Obama was elected on a platform of change a.k.a. improvement that will not come to pass.

Also as America becomes weaker other countries will begin to assert themselves and make demands knowing full well that the US will simply not have the financial wherewithal to assert itself. China’s recent demand that the US subjects itself to IMF scrutiny is symptomatic of what is to come.

Other characteristics of the downturn will be a shift in the US body politic. During hard times politics moves to the left, but social values move to the right so the Democrats should keep their hold on power, though coastal liberalism – gay rights etc – may wane.

All in all not a pretty picture.

By: VP1

VP1 — Tue, 10 Feb 2009 16:43:13 +0000

Just wait until the 7 and 10 year ARMs are due on these overpriced homes… then we are really screwed….

By: RangerTurtle

RangerTurtle — Tue, 10 Feb 2009 11:31:23 +0000

Great summary! Our recovery must be based on the U.S. returning to manufacturing what we consume. Continuing to rely on importing foreign oil, importing Chinese goods, Asians financing our imports, will lead us further downhill.

By: DoctoRx

DoctoRx — Tue, 10 Feb 2009 00:11:19 +0000

Agree. Re SBUX- news out this PM: 1) price cuts and more bkfst products competing w MCD and 2) ST debt downgrade from S&P. Kind of puts an exclamation point on the end-of-an-era meme.

(Typos and grammatical errors hurt yr image IMO.)

By: AGG

AGG — Mon, 09 Feb 2009 21:19:06 +0000

The Pentagon is another outfit that desperately needs downsizing. They emplot 27,000 just for recruiting and PR.
http://www.buzzflash.net/story.php?id=1001742

By: AGG

AGG — Mon, 09 Feb 2009 21:09:02 +0000

This from a Lawrence Lessig interview at Mother Jones:
How do you phrase issues so that people begin to recognize that the issue that they’re most concerned about—whether it’s global warming, or health care, or safety in the workplace, or safe foods for their kids to eat—is at base also an issue about the kind of corruption that I am focused on. We’re thinking, how do you get people to have a refrain in their head: “It’s the money, stupid.” That’s the constant single thread that links these problems that people look at, and at a certain point, get people to recognize they’re just going to have to do something about this underlying problem. It’s hard. I just don’t accept the idea it’s impossible, which is what people typically infer from the common wisdom about process reform. Reform is possible, especially here, especially because so many people are so deeply convinced about the underlying predicate for that reform, namely that the system is corrupt.

The thing that needs most downsizing is congressional greed.

By: Winston Munn

Winston Munn — Mon, 09 Feb 2009 19:21:36 +0000

Without addressing falling wages, there can be no longterm economic fix.

Here are two propositions.

Shri Prabhat Ranjan Sarkar: “First, the foundation of prosperity is people’s purchasing power; second, rising inequality eventually destroys any economy. ”

Alan Greenspan: “Company profits and labor productivity are the main engines of economic growth and prosperity. High profits generate high employment and high wages lead to joblessness. ”

Whose ideas have been shown to be correct?

By: willid3

willid3 — Mon, 09 Feb 2009 19:18:45 +0000

isn’t the down sizing of America just the logical conclusion of globalization? after all, if consumers (aka workers) fund 70% (or more) of the economy and they are all competing with workers in third world countries for work, then wages have to keep falling which causes the economy to shrink since there is nothing to inflate it any more . and since business hasn’t been investing in America of late, I am not really sure that the remaining 30% isn’t government. and if China and India don’t get busy and create their own consumer economies they will end up deflating faster than we do. and where that ends up is a highly likely hood of wars. as countries struggle to survive

By: tCA

tCA — Mon, 09 Feb 2009 17:17:49 +0000

Barry,

Bruce N Tennessee says, “Well, if wages will most likely decline the next 2-3 years (and who wants to look out farther than that?)..then I would seem to me, even if there is not a “depression” and this winds up as merely being finally defined as a particularly ugly, long recession, then why would stocks be a bargain?”

I’d be curious to see a chart that shows a P/I ratio (S&P 500 price-to-personal income) over the years. In doing so, I’m thinking we can look through the earnings to see what was actually available to buy stuff. I get that the consumer doesn’t make up the entire economy, but I think there’s a story there- like Bruce’s point that stocks may not be that cheap to individual investors on a relative basis.

tCA

By: zitidiamond

zitidiamond — Mon, 09 Feb 2009 17:15:04 +0000

Fox Business News has little chance of surviving. Fox has been outflanked on the right by CNBC. Palinism from Kudlow and Kernen has a more authoratative punch, than that delivered by the runway titters at Fox.