Archives - Business: Page 15
Author: rhyco5 (Fri Mar 16, 2007 11:48 am)
Title: Dying American Economy
How is the economy doing? If you ask president Bush or anyone on Capital Hill, " the economy is as strong as it has ever been." If you look at the stock market set to earn returns over the average 10% you might be convinced that this statement is true. However, the truth is the American economy is dieing slowly. Many of the returns that companys are getting that is pushing their stock prices up are due to diversification into foreign markets. What does this mean? American companies have started doing more business in European and Emerging markets. As a result the American companies appear to be receiving returns higher than the US average only because they are, in some cases, 50% or more deversified in the foreign make. Make no mistake about it the US economy is dieing.
What statistical proof can you offer that the economy is dying? The presence of foreign investment is a good thing because it illustrates the unity of a global economy. While the United States may be lacking in its competitiveness globally, the fact that we are diversifying is good. The weakest part of our economy is the housing market, but that in no way suggests a failing economy. It is just another bubble that busted, and investors are looking for the next big thing, the next "dot com boom."
Its true we are moving towards the unity of a global market, and if that is the case what will determine the strength of each individual country? Don't worry I'll tell you, the strength of a country in the global market will be pushed by the strength of that countries currency and the any resources produced by that country. Well seeing how our dollar is continually weakening and that we are becoming a "united global market" what does that say about the economy. You want proof, no one has proof. The president can get on tv, as he has, and tell you, "Our economy is doing great and then he can read off all the information to make you believe him; but proof my friend all depends on how you communicate the statistical information.
So there is no proof of anything, only theories. Your theory is that in the new global economy, a country will rely on the strength of its currency, and the resources it posseses. I agree with you on that. My theory is that while the USD might be depreciating against
some other foreign currencies lately, that doesn't mean it will continue. Also, the US has vast resources to bargain with in a global economy. One of the only resources we are lacking is human capital, which China and India have sufficiently beaten us in. The president is practically required to come on TV and tell us the economy is doing well because idiot americans always associate the state of the economy with the president's policies. If we are in a recession, it must be the president. Similarly, Clinton enjoyed a marvelous presidency and completely avoided the backlash of a slowing economy by transferring it to Bush on his way out of office. It doesn't matter what the president says, it matters what we do as a country. It matters what the FED does with interest rates, open market operations, and the discount rate. It matters what investors do in response to the news that Ben Bernanke, George Bush, and others report on the state of the economy. It matters much less how strong our dollar is, because we don't rely on exports that much anyway. Looking at our export/import statistics currently, I would say there's no where to go but up.