Friday, August 22, 2008

US Economic Concerns

The US is facing “the largest financial shock since the Great Depression” according to the IMF.

“The details are too technical for most of us to understand. (They’re too technical for many bankers to understand, which is part of the problem.)” according to the NYT.

It isn’t really all that difficult to understand: When economies grow the benefits are supposed to flow on to workers and the wider community. That was before the investor became all important and jobs were taken overseas to cheaper labour markets.

The dynamics meant that American workers would buy imported products with their reduced incomes. What is so bloody difficult about that? American’s had they jobs taken off them, or incomes reduced, in favour of cheaper foreign workers.

For Wholesale Inflation Surges read “we’ve screwed up, but we don’t want to tell you…” The supply chain is just that, a linked sequence. If one part of it is in trouble the rest are surely infected as well. The wholesale sector doesn’t just suck up its losses, it passes them on, just as the investment (market) sector does. “Yous’all pay!”

For the life of me I can’t imagine who was supposed to pay for the corporate rape and pillage of the past decade. Certainly it was unlikely to be the Cheney/Bush crew and the Wal-Mart crowd are still trying hard to retain their exalted rights to continue. But just maybe it will take a dose of the McCains to convince America they are being led by crooks.

2 comments:

lindsaylobe said...

Actually no one was paying for it! It all came from borrowings and now the credit tap is in the ‘off’ position the economies in dire straits. This time there is nothing in the reservoir and fiscally it’s unsustainable.

The inflation worries will mean there is no option but to increase interest rates, or accept continually high inflation.

Best wishes

Cart said...

I expect, Lindsay, they are the soft options of a favourable scenario.