Strengthening Constitutional Self-Government

No Left Turns

Good Economy, Troublesome Economy, Horrible Economy?

While complainging that the MSM (main stream media), especially the ’New York Times,’ won’t report it, Lawrence Kudlow argues that the U.S. Economy is doing very well. Kudlow points out that GDP was up 3.8% in the last quarter of last year, business investment is up 18%, and other indicators point to sustained economic growth in the future. Why does the MSM hide these facts, because to report them would mean they would have to praise Bush’s tax cuts.

Irwin Stelzer argues that the U.S. economy is doing ok. He is troubled by the impact the oil markets and the foreign exchange market can have on the U.S. Economy. He writes: "HAPPENINGS IN THE TWO GLOBAL MARKETS that do not conform to Adam Smith’s model frequently roil free-market economies such as America’s. The foreign exchange market is dominated by central banks that manipulate the value of national currencies for reasons unrelated to what we think of as natural economic forces. And the oil market is heavily influenced by a producer cartel determined to keep prices well above those that would prevail in a competitive market" Stelzer argues that America’s real GDP is reduced by 0.4% by every $10 increase in the price of a barrel of oil. If Foreign Exchange Markets decide to sell rather than buy U.S. Dollars this could drive the value of the dollar even lower. That scenario leads to the apocalyptic vision of Paul Craig Roberts.

The greatest pessimism about the future of the U.S. economy is expressed by Paul Craig Roberts in his article entitled,’America’s Superpower Status Coming to and End?’ Roberts argues that the U.S. economy is failing because of its inability to create jobs, especially productive middle class jobs, and because the dollar is losing its value and undermining its status as the world’s reserve currency. Roberts concludes:

"Oblivious to reality, the Bush administration has proposed a Social Security privatization that will cost $4.5 trillion in borrowing over the next 10 years alone! America has no domestic savings to absorb this debt, and foreigners will not lend such enormous sums to a country with a collapsing currency – especially a country mired in a Middle East war running up hundreds of billions of dollars in war debt.

A venal and self-important Washington establishment combined with a globalized corporate mentality have brought an end to America’s rising living standards. America’s days as a superpower are rapidly coming to an end. Isolated by the nationalistic unilateralism of the neoconservatives who control the Bush administration, the United States can expect no sympathy or help from former allies and rising new powers."

Let us hope that Roberts is wrong as he is about Abraham Lincoln and the Civil War.

Discussions - 1 Comment

I concur with Robert’s pessimistic summary...

Roberts continues his critique in "More Bad News On The Jobs Front" at PCR says very clearly, "The US has apparently lost the ability to create high productivity, high value-added jobs in tradable goods and services. The ladders of upward mobility are being dismantled by offshore production for home markets and outsourcing of knowledge jobs."
"How bad will things have to get before economists realize that outsourced jobs are not being replaced? Indeed, many American companies are ceasing to have any presence in the US except for a sales force."
"Unless there are major changes soon, America’s economic future is a Third World work force with a banana democracy’s worthless currency."

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