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The Kindness of Strangers |
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Written by Stumo
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Monday, 18 August 2008 |
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Dr. Nouriel Roubini is an economics professor at New York University. A major article about him over the weekend credits him with foreseeing the current financial problems, notifying the IMF in a speech, and being ignored.
The article is entitled "Dr. Doom", because Roubini has been pessimistic about the economy. We are too debt ridden, banks will fail, consumer confidence will fall, and we have a huge trade deficit. We exist because our biggest creditors are still kind... sort of ... namely China, Russia, and the Middle East. Too bad they are geopolitical rivals - to say the least.
But the title is, "Dr. Doom", also a comment on the author and the economics profession. The business page does not like pessimists. Optimists are in. Wall Street bankers like to engage in cronyism and the imaginative conversion of a package of shaky debt instruments into... voila... an asset. Pessimism does not help that conversion... or at least does not help to convince the market that the resulting asset is valuable. The grudging respect paid by the article is indeed grudging.
Why post this economics article here? Because of the direct commentary on our trade deficit.
“Our biggest financiers are China, Russia and the gulf states,” Roubini noted. “These are rivals, not allies.”
The United States, Roubini went on, will likely muddle through the crisis but will emerge from it a different nation, with a different place in the world. “Once you run current-account deficits, you depend on the kindness of strangers,” he said, pausing to let out a resigned sigh. “This might be the beginning of the end of the American empire.”
We must produce things here. Food. Manufactured goods. Technology. U.S. policies must be changed to stop the offshoring. Regardless of your pet theory on international trade.
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In the news
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The following article appeared on the online site for Manufacturing & Technology News on November 17, 2008 and was written by Paul Craig Roberts, former Assistant Secretary of the Treasury in the Reagan administration.
By most accounts the U.S. economy is in serious trouble. Robert Reich, an adviser to President-elect Obama, calls it a "mini-depression," but that designation might be optimistic. Russian economist Mikhail Khazin says that the "U.S. will soon face a second Great Depression." It is possible that even Khazin is optimistic.
I cannot predict the future. However, I can explain what the problems are, how they differ from past times of troubles and why traditional remedies, such as the public works programs that Reich proposes, are unlikely to succeed in reviving the U.S. economy. |
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