Sunday, August 15, 2010

Our Looming Lost Decade

Readers will note my byline that says "things are not going to get better." And by "things" I mean the economy specifically, or more generally, the vitality of our nation, its institutions, and its citzens. Yes, it is pessimistic. Here is another bundle of reasons for that pessimism, from Professor William Black, a man who has received some attention in the news because of his testimony before Congress, but not nearly enough (watch the video here. And thanks to Badabing at DailyKos).

Follow the link and take the time to watch the 14 minute video. I will only add here that, among other things, Professor Black refers to Japan's lost decade and how it would not aggressively deal with the debt of the big national banks. He argues the US is setting itself up for its own lost decade.

If we could only get off so light.  There are some crucial differences between the two countries, and they do not auger well for us. We are the ones with massive consumer debt, not Japan. We, not Japan, have by far and away the world's largest trade deficit, which many now recognize as deeply structural. We have allowed our trading partners to erode our industrial base; Japan's remains largely intact.

Even our daily government operations are being financed by our economic competitors, including Japan and now most certainly China. The interest on that debt pours into the economies of these other nations. The Japanese government is also deeply in the red. However, the difference is that it does not owe money to foreigners. Interest payments go to Japanese institutions and citizens. Most of it stays in Japan to the benefit of the local economy.

Lastly, we have been completely unable to rein in our hugely expensive warrior class. Our appetite for empire combined with an unwillingness to pay for it will seal our fate.

 But hey, you have a good day. A tax cut is what we need, don'tcha know?

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