Global economy losing traction

Now that’s an understatement of a headline, and cheap electronics can only bear so much fruit.

The results are finally coming in on what surely will be the start of a long, hot summer for Wall and Main streets.

Some economists are predicting another round of quantitative easing (QE III) when the Federal Reserve Board has its next policy meetings June 19 and 20.

I don’t begin to know much about how this all works. I read and try to glean what I can from the news—good and bad.

It seems anything that can be done about the economy has been tried, with mediocre at best results.

We went down the road of excessive spending and globalization and hadn’t a care in the world (pun intended) when we began.

The poor consequences of choosing this economic course, at least at the beginning, did not seem to come close to outweighing the benefits.

Sure, we would be outsourcing our manufacturing and much of our technology sector jobs, but we would surely enjoy the much less expensive TVs, smart phones, digital cameras and laptops that would be ours for the asking. We forgot to consider how interdependent we would become on the economic health of our business partner nations.

We misguidedly thought America would always be the king of innovation.

I would suggest that it is impossible to innovate when you are no longer producing or creating anything that is being consumed by the public at large. The ones who are innovating are the eastern rim nations that are eating our lunch, producing and manufacturing many of the goods that made us the most powerful nation of the 20th century.

On paper we are still the world’s biggest economy.

But that can suddenly shift as we are no longer in control of our own destiny when it comes to our economic fate. Sure, the dollar is still (more barely than ever) the world’s reserve currency. This allows us to flood our capital markets with fresh cash to keep them propped up. This only postpones the inevitable pain, however.

We made some decisions that permitted certain institutions to remain afloat—“too big to fail” comes to mind. Taxpayers gave them a bailout. Unlike small to medium sized businesses that can no longer compete and must dissolve, we enabled bloated, inefficient companies to remain in business. Maybe we will bail out institutions again in the near future, but I need the marketing pros to come up with something other than “too big to fail” as the advertising slogan before I’ll ever get behind it again.

I’m afraid not much has changed in terms of a more austere way to operate going forward. We continue to rely heavily on other nations as they simultaneously experience stagnant growth, such as China (whose recent government stimulus efforts are largely lacking as their uncontrolled economic expansion came much too quickly and much too soon).

The prospects of a return to manufacturing in this country, even on a limited basis, are bleak. While we outsourced our jobs to the Chinas and Indias of the world, they refined manufacturing and technological processes to such a cost effective point, that the U.S. will never be able to regain a fraction of its former manufacturing base.

Unless tariffs are imposed on U.S. companies who source jobs abroad, to the point of reducing tax breaks whereby it becomes less attractive to have the product or service they offer, rendered abroad, that will not change. Don’t hold your breath waiting for that one, though. Corporations and politicians need companies’ earnings maximized for stockholders—losing money is not part of the proposition.

So where does that leave us?

I’m afraid all the economists haven’t a clue. Our current economic policy is just like kicking the can down the road. We can only do it for so long.

And we’ll have to take the pain just like we would if it was our own business, we made poor decisions and were forced to scale back or go out of business.

I’m still optimistic about the future. We need to keep in mind, however, while we are watching our cheap TVs, texting on our iPhones, Tweeting, updating our Facebook statuses and generally hiding behind the isolated, technological lifestyle the global economy has afforded, we’re bound to face some pain for the paths we have collectively chosen.

Our elected leaders need clear vision, a plan, have to take responsibility and have to lead. We need to treat these people with both our immediate and long-term futures in their hands, like companies we own stock in. Like a shareholder of a publicly owned company, we must demand nothing short of excellent performance from them, as we are their bosses.

Make a difference, share your ideas and bring your solutions for our problems out into the open for all to see. Our cheap electronics make it easier than ever before to do so.


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