The Future for U.S. & World Economies

Recession, depression, stagnation; labels aside, main-street U.S.A. is in and will continue to be faced with a decline in demand for goods and services the majority of citizens can no longer afford. While academics , "professional" economists, the Fed and Presidential advisers, quibble over semantics, theories and blind hopes the U.S. economy will be long, very long to to regain its status circa 2005.

Today "bail-out", "stimulus", and "negative interest" are the buzz words. The reality the majority of Americans well know, is that the jobs that they will get in the future, will not pay what the jobs they lost paid in 2005. So what does this mean for the U.S. ? What does this mean for for the rest of the world ?

The U.S. has been exporting jobs and production to foreign, off-shore, countries for over a decade. This is common knowledge; the labor differential, NAFTA and related trade agreements have hastened the process. While CEO's have pocketed tens to hundreds of millions, U.S officials and the U.S. Congress have never addressed the "end-of-the-day" scenario. 2008-9 are the "end-of-the-day"; the end of millions of U.S. jobs, jobs at pay rates, that will not return. Slight-of-hand economics and policies will no longer mask the reality that the U.S. economic engine has burned itself out.

What does it mean ? It means that the disposable income of the U.S. worker will decline over the coming years; decline as much as 33%, or more, over the next five ( 5 ) years. This decline will be aggravated by inflation: increased costs for electric, water, sewer, garbage phone and utilities, and higher local and state taxes. Accordingly, the U.S. consumer will buy 33%+ fewer goods and services. The disposable income of U.S. consumers and high U.S. consumption rates, have been the fuel for world economies. As of late, China has been the major producer of goods consumed by the U.S.; Europe and other emerging economies have benefited proportionally. The decline of average wage earned by U.S. workers will have a major impact on other economies. While academics, economists, politicians and world leaders focus on the "financial" community, liquidity and credit, the real problem is the decline in U.S. worker wages and disposable income. Few, if any, in high places understand the bottom-line which means that the future, next five plus years, spell gloom for the U.S. and the rest of the civilized world.

G-20 HUFF & PUFF

The G-20 meeting has accomplished little to nothing toward resolving the global financial discord. One major stumbling block is the U.S. posture and neo-Keynesian approach to resolving the U.S. recession, stimulus ( government ) spending. As the main world reserve currency, the U.S. dollars use impacts global trade and the value of all other currencies in play. The U.S. posture and U.S. resistance to the regulatory approach favored by most European and Asian nations, is the harbinger of a prolonged global recession now cascading to depression.

Had the U.S. approached the G-20 with an open minded plan, some agreement may have been possible at the March meeting. Instead the U.S. appeared armed with Obama rhetoric and good will, but no acceptable "plan" to address world concerns.

In November, 2008, as the ugly head of recession was prominent in the U.S., common sense and straight forward suggestions were posed to the U.S. congress: Cap interest rates at 12 % simple interest per annum, 6 % on 20 year home loans; eliminate "day trading", and require that stocks be held for a minimum of 13 months; restrict commodities trading to end users only; limit financial instruments to traditional stocks and bonds; repeal Pub.Law 106-554(1)(a)(5) [ Commodities Futures Modernization Act ] and re-institute Glass-Steagall [ Banking Act of 1933 ] provisions. In addition, it was suggested to the U.S. congress, that there be modifications to the Federal Reserve Act of 1913, requiring among other things, that banks rates have a universal rate range of .05% and minimum reserve requirements of 20% be established.

Had the U.S. appeared and presented G-20 members with a "plan" based on components designed to stabilize financial markets, e.g., retail interest cap, central bank rate range of .05%, elimination of " day-trading" of stocks, and restriction of commodities trading to end users, there may well have been something concrete and tranquilizing emerging from the G-20, March, 2009, meeting. As it is, G-20 accomplished little except as a format for G-20 leaders to get to know President Obama. World financial markets remain in disarray, as the global recession deepens giving rise to political instability in certain G-20 participants. What a mess the U.S. Congress has gotten the world into.