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I am on an airplane headed from Washington, D.C., to San Francisco. It is late Christmas Day, 2008. I am at 32,400 feet flying at 458 mph just south of Indianapolis on a Virgin America flight. It is negative 57 degrees F. outside my window and I just finished reading a very long article in the Dec. 1, 2008, issue of the New Yorker entitled "Anatomy of a Meltdown, Ben Bernanke and the Financial Crisis."
It did not inspire me to break into a refrain of Joy to the World.
The author, John Cassidy, a New Yorker staff writer, does an extremely commendable job in describing the biggest economic calamity of the past 80 years. He speaks with all those who needed speaking to, repeating the phrase "he told me" when quoting such people as John Mack, chairman of Morgan Stanley, Glenn Hubbard, former chairman of the White House Council of Economic Advisors, Fed Chairman Ben Bernanke and many other notable economists.
Many thousands of words after starting his article, Cassidy writes that federal efforts to prop up the financial system "have so far had little effect on the housing slump, which is the source of the trouble."
That is A source of the trouble, but not THE source of the trouble, which was the collapse of the U.S. industrial base and the unsustainable trade deficits that sapped the energy out of the U.S. economy long before the housing bubble burst.
Why doesn't a single one of these economists mention the trade deficit as one of the primary causes of the meltdown? Their refusal is bugging tens of millions of non-economist Americans who have desperately watched as millions of good-paying jobs vanished -- jobs making such things as refrigerators, shoes, microwave ovens, toys, golf clubs, bathroom fans, television sets, car parts, solar panels, socks, nuclear plants, printed circuit boards, luggage, ceramic tile, jewelry, dehumidifiers, air conditioners, clothing, candy and crock pots -- this unbelievable list goes on forever, and basically includes virtually every product sold in Wal-Mart.
I spend my days studying what economists say and write, and comparing their version of reality to the one described by workers and executives of American manufacturing enterprises struggling to say afloat. Very little of what economists say -- that outsourcing is a net plus for the U.S. economy and that the trade deficit is not a problem -- jives with the reality of the more than one million workers who lost their jobs in November and December alone.
The United States is completely broke -- it has been for a long time -- because it has a trade deficit in goods that rose to an unbelievable $838 billion in 2006. It dropped to $819 billion in 2007, but it is persisting at elevated levels because the United States government -- listening the advice of such economists -- has decided that it is not important to manufacture the products that its citizens consume.
Now we have a new president and a new government that is, quite inexplicably, made up of many of the same people who got the country into this mess. It is stunning that at the very moment the United States faces one of its most grave economic periods in its history that there isn't one person in the new Obama cabinet or on his senior White House staff that has experience working for an American industrial enterprise.
This is no ordinary cyclical recession and ordinary responses like spending trillions of borrowed dollars for a "stimulus" will not solve the problem. When demand for products picks back up there will be no jobs for Americans to return to to produce the products to fill that demand. America's industrial base is vanishing and in many cases is gone. There is nothing left to stimulate.
Now, the task is for America to somehow build the factories that will produce the goods that Americans might demand. But without the jobs and the wealth that is multiplied through entire American supply chains that factories generate, it might be a long time before Americans have enough money to create demand. Until the United States starts producing the products it is consuming, the United States won't be consuming many products. It is a sobering fact well understood by manufacturing executives but that America's top economists don't ever seem to acknowledge.
President Obama will be taking advice from people like economist and former Harvard University president Lawrence Summers who said in November: "Frankly, I did not see this financial meltdown coming."
Really? He didn't see it coming? Had he not spoken with the tens of millions of Americans who understood that it was occurring as they were watching their beloved communities throughout the American homeland suffer through the economic meltdown of losing their industrial base? Where was Summers living? In the president's suite in Harvard, which has an endowment of $34 billion and whose students are of the upper crust.
Obama's stimulus package will fail. He will spend a trillion dollars trying to resuscitate the U.S. economy. But without an industrial base, there will be little or nothing to show for it, save for more debt that will have to paid off.
That is when the economists who put the country in its present fix and who will have provided all of their sage advice to Obama will be thrown out -- just as Obama's mentor Abraham Lincoln fired all of his idiot generals until he finally settled on one who could get the job done. The old ways will not work. Like in the modern American movie classic "Mississippi Burning," the solution to America's economic problem will require a radical change of approach.
In two years, when the country's ruling elite finally realizes that there is no wealth being generated -- when there are tens of millions of unemployed Americans who are no longer hidden from Harvard and University of Chicago economists -- that is when Obama gets desperate. That is when he gets livid with his economic generals. That is when he starts to look at real solutions to address the economic stagnation that will confront him.
He will start to listen to people like Brian O'Shaughnessy, CEO of Revere Copper, the oldest company in the United States, Bob Baugh of the AFL-CIO Industrial Union Council, Clyde Prestowitz of the Economic Strategy Institute, Leo Hindrey and Ralph Gomory. None of the people in the "domestic production" community are perfect -- but neither was Alan Greenspan nor his legions of cronies who, in a month's time, went from being Gods to being Goats.
cont. Source: Manufacturing and Technology News January 16, 2009 Volume 16, No. 1
This should be moved to a different forum, I'm just not sure which one.
It did not inspire me to break into a refrain of Joy to the World.
The author, John Cassidy, a New Yorker staff writer, does an extremely commendable job in describing the biggest economic calamity of the past 80 years. He speaks with all those who needed speaking to, repeating the phrase "he told me" when quoting such people as John Mack, chairman of Morgan Stanley, Glenn Hubbard, former chairman of the White House Council of Economic Advisors, Fed Chairman Ben Bernanke and many other notable economists.
Many thousands of words after starting his article, Cassidy writes that federal efforts to prop up the financial system "have so far had little effect on the housing slump, which is the source of the trouble."
That is A source of the trouble, but not THE source of the trouble, which was the collapse of the U.S. industrial base and the unsustainable trade deficits that sapped the energy out of the U.S. economy long before the housing bubble burst.
Why doesn't a single one of these economists mention the trade deficit as one of the primary causes of the meltdown? Their refusal is bugging tens of millions of non-economist Americans who have desperately watched as millions of good-paying jobs vanished -- jobs making such things as refrigerators, shoes, microwave ovens, toys, golf clubs, bathroom fans, television sets, car parts, solar panels, socks, nuclear plants, printed circuit boards, luggage, ceramic tile, jewelry, dehumidifiers, air conditioners, clothing, candy and crock pots -- this unbelievable list goes on forever, and basically includes virtually every product sold in Wal-Mart.
I spend my days studying what economists say and write, and comparing their version of reality to the one described by workers and executives of American manufacturing enterprises struggling to say afloat. Very little of what economists say -- that outsourcing is a net plus for the U.S. economy and that the trade deficit is not a problem -- jives with the reality of the more than one million workers who lost their jobs in November and December alone.
The United States is completely broke -- it has been for a long time -- because it has a trade deficit in goods that rose to an unbelievable $838 billion in 2006. It dropped to $819 billion in 2007, but it is persisting at elevated levels because the United States government -- listening the advice of such economists -- has decided that it is not important to manufacture the products that its citizens consume.
Now we have a new president and a new government that is, quite inexplicably, made up of many of the same people who got the country into this mess. It is stunning that at the very moment the United States faces one of its most grave economic periods in its history that there isn't one person in the new Obama cabinet or on his senior White House staff that has experience working for an American industrial enterprise.
This is no ordinary cyclical recession and ordinary responses like spending trillions of borrowed dollars for a "stimulus" will not solve the problem. When demand for products picks back up there will be no jobs for Americans to return to to produce the products to fill that demand. America's industrial base is vanishing and in many cases is gone. There is nothing left to stimulate.
Now, the task is for America to somehow build the factories that will produce the goods that Americans might demand. But without the jobs and the wealth that is multiplied through entire American supply chains that factories generate, it might be a long time before Americans have enough money to create demand. Until the United States starts producing the products it is consuming, the United States won't be consuming many products. It is a sobering fact well understood by manufacturing executives but that America's top economists don't ever seem to acknowledge.
President Obama will be taking advice from people like economist and former Harvard University president Lawrence Summers who said in November: "Frankly, I did not see this financial meltdown coming."
Really? He didn't see it coming? Had he not spoken with the tens of millions of Americans who understood that it was occurring as they were watching their beloved communities throughout the American homeland suffer through the economic meltdown of losing their industrial base? Where was Summers living? In the president's suite in Harvard, which has an endowment of $34 billion and whose students are of the upper crust.
Obama's stimulus package will fail. He will spend a trillion dollars trying to resuscitate the U.S. economy. But without an industrial base, there will be little or nothing to show for it, save for more debt that will have to paid off.
That is when the economists who put the country in its present fix and who will have provided all of their sage advice to Obama will be thrown out -- just as Obama's mentor Abraham Lincoln fired all of his idiot generals until he finally settled on one who could get the job done. The old ways will not work. Like in the modern American movie classic "Mississippi Burning," the solution to America's economic problem will require a radical change of approach.
In two years, when the country's ruling elite finally realizes that there is no wealth being generated -- when there are tens of millions of unemployed Americans who are no longer hidden from Harvard and University of Chicago economists -- that is when Obama gets desperate. That is when he gets livid with his economic generals. That is when he starts to look at real solutions to address the economic stagnation that will confront him.
He will start to listen to people like Brian O'Shaughnessy, CEO of Revere Copper, the oldest company in the United States, Bob Baugh of the AFL-CIO Industrial Union Council, Clyde Prestowitz of the Economic Strategy Institute, Leo Hindrey and Ralph Gomory. None of the people in the "domestic production" community are perfect -- but neither was Alan Greenspan nor his legions of cronies who, in a month's time, went from being Gods to being Goats.
cont. Source: Manufacturing and Technology News January 16, 2009 Volume 16, No. 1
This should be moved to a different forum, I'm just not sure which one.
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