An important article dealing with the economy is available at Itulip. Eric Janszen entitled his piece The Next Ten Years – Part I: There will be blood.
Mr. Janszen describes the causes of our problem and the problems we have created trying to solve it with improper economic policies:
Our economic crisis is a credit and energy crisis rooted in the inability of our national economy to produce enough primary surplus to grow, create jobs, and also pay debts left over from a previous splurge in private and public borrowing, and also afford an energy intensive transportation infrastructure as oil import costs rise.
America is not alone with its political struggle between creditors and debtors. The political consequences of the failure to keep promises made with borrowed money are being felt in Spain, Greece, and China. The failures of American FIRE Economy policies are behind the movements in Libya, Yemen, and Syria, as reflation measures, from quantitative easing to currency depreciation. Simmering hatreds are exacerbated by the developing global crisis over oil supplies and costs.
Something has to give. Something will give, in my estimation within the next ten years.
Janszen describes the incorrect assumptions that still guide too many Americans:
The majority of Americans may believe that the economic crisis knocked them off their destined course to wealth and prosperity, but the truth is that we were never as rich as we thought we were when cheap credit and cheap oil expanded our purchasing power unnaturally beyond the limitations of our productivity, of minds and machines, to generate an economic surplus.
If we were honest we’d admit, like a lottery winner who has spent all his winnings on cars and drugs, that the era of free-wheeling fun has come to an end.
We had a blast, but it’s over.
At least some of us had fun. The dot com speculators who sold at the top. The housing bubble speculators who got out in time. The Wall Street investment bankers who played it both ways, selling junk on the way up and shorting it on the way down.
Too bad for everyone else, for those who missed out, for the paycheck workers and the stock mutual fund buy-and-hold investors. The losers along with the winners will have to shoulder the burden of coping with cheap oil and credit era debris. The inherent unfairness of this outcome of the credit bubble era will pose yet another threat to the long standing presumption of American political stability and security that underpins the relative safety of US capital markets.
The article is a must-read for those who don’t understand what is happening and also for those who believe we will come out of this mess without major unrest and an unchanged economy and future. The article is filled with information and reasonable predictions.
