A Couple Reasons Why The US Is Not Recovering
October 26, 2010
– Comments (22)
TMFKopp wrote a TMF article called "A U.S. Collapse? Don't Make Me Laugh." I disagreed with a lot of what he wrote and, as usual, found myself writing more than I should for a comment. So here it is in blog form.
Matt, I'm not selling anything and I believe the US is in an indefinite imperial decline.
I've been blogging about it all month, so I won't state all the details---about ubiquitous and unprosecuted corporate and political fraud at levels never before seen, housing consolidation among the poor and unemployed, net job losses every week and a 22.5% unemployed/underemployed rate (I wouldn't call this a "sticky problem" when the Great Depression peak rate was 25%), the most manipulated stock market we've had in our lifetimes, declining wages, cheaper workers available overseas, and looming global agricultural and water problems---but I will throw a couple thoughts your way.
Maybe you'll modify your thinking that the US is not business as usual, and everything will not return to normal again. Maybe you'll see that some trends really do show a decline, and revise your "I'll just say that it's all absolute poppycock" statement.
FIRST, Peak oil. We are there. Our entire economy is based on carbon fuels. Everything you eat, wear, talk on, type on, drive, or do involves oil to transport and most likely to produce. The US, about 5% of the world's population, consumes 25% of oil produced. Most of our oil is imported. Most of the "easy," cheaply produced oil has been had. The demand for oil is growing like crazy. We have militarized control of the last gigantic oil region left. Others will want it. Prices will skyrocket, and wars will be fought. They already have and are. Pinch supply a little harder and the economy as we know it slows greatly or even halts. There is no replacement energy on the horizon.
SECOND, every company you mention is a multinational. I agree that they are great companies. They will survive and most likely thrive no matter what happens domestically. Do you not believe it possible for the US to be in a decline while transnational US companies record record earnings? Believe it---that is what is happening! Your statements on the economy, however, seem to focus on corporate earnings and not AMERICAN PEOPLE. This is a big difference that many on MF can't see for some reason. US global corporations can no longer be seen as strongly representing the US economy in my opinion, as they have an increasingly diverging correlation. These companies are American In Name Only (AINO---I just invented that! haha). Recent headlines show how Google paid ~2.4% taxes because they funnel money through Ireland then through the Netherlands and finally to the US. Americans are prohibited by law from doing such a thing. Yet that represents a perfect example of how disconnected these major companies are from the average American.
Our economy is unsustainable on many levels and your focus, like many, is on individual stock picking. It completely neglects the foundational drivers, like the energy needed to make it all happen and like global labor wage inequalities that make US companies able to profit in domestic downturns.
Thank you for mentioning psychology, the recency effect. We neglect the psychology behind our own leanings too often. Confirmation bias is something similar and I know I'm vulnerable to them both, but I keep them in mind to criticize my own thoughts (which is better than those who are so stubborn they don't know of such vulnerabilities!). I'll one up you, though, and say that surely there is a psychology term that describes an everything-will-be-okay-and-never-change attitude (which is actually quite healthy, even if not realistic).
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