America’s Economic Catch 22

Even more important that producing more (i.e. working harder & smarter) and saving more (i.e. consuming less), is the need to restore trust.

There is so much bad debt on bank balance sheets that no one trusts one another anymore. Until that bad debt is identified and written off, or written down to level that can be serviced from ongoing documented income, there can be no resumption of trust.

Recognising that true level of bad debt will be be very painful indeed. Many banks will be insolvent after that restatement. But that pain must happen before we can start building up our trust in one another again.

@ Maxo,

"We got in to this problem by over investing money in markets that did not return profits."

Totally agree. When I first got into my 401k, 7 years ago, it took a few years of tracking it to notice I was losing 25 cents for every dollar invested, then another 25 cents for every dollar that made it a year invested. The only person profiting on the process was the traders, the investment managers, trading on bad deals, making their profits, and somehow losing the money in the result. It got so bad that they were projecting loses every quarter, even overprojecting just to buffer the blow.

I said enough is enough, and turned what I had left into real estate in 2003, and I've still doubled my equity, even post crash.

America's problems are that we are being outmarketed by anonymous asian factories that can't be held accountable for their cheap products on one hand, and then (we are) our congress is being lobbied to death to force trade imbalances through their legitimate channels on the other hand.

Here at home our factories are liable for any frivolous lawsuits a laywer can draft, which pumps up our prices, and the domestic lobbying collectives are hell bent on getting their piece of the markets before they exist. In California we are forced by law to spend money on insurances that have a degree of likelihood that they won't ever pay off, and that money gets invested in risky ventures that may or may not be foreign in nature. Sometimes it gets socked under the housing investments, and we saw what happens there.

These built in faults are not being addressed, as people in the positions of power to address them are profitting off of them, and will do so for as long as they can, and then will defend their bilking scheme, as they seem legit in the meantime.

One caught on the news lately; transit authorities, like BART, let banks filter money through their organization as a tax dodge, then they split the savings, to the maximum effect.

another one caught on the news fringe; Splash and Dash is a loophole for foreign oil from poor as hell countries to get into the U.S. and dodge embargos by having an oil tanker almost filled with foreign crude have a percentage (often less than 10%) "splashed" with American crude. Who lets this happen?

Somebody lets it happen, and they are being protected by an infrastructure already in place, and everyone gets a piece.

Something for everyone to look into.

-=T=-

I heard someone on NPR articulate it like this. We got in to this problem by over investing money in markets that did not return profits. The last thing we should do is encourage people to invest money in markets that are becoming more and more unlikely to have return profits. We need to be saving our money and watching out intelligently for markets that are likely to grow. The idea that if we just invest in anything and everything again is going to do us any good is outright stupid. If a particular industry or stock is poor then what absolutely need to do is talk about it and discourage investments in those areas, not pretend that it's not bad so people do invest and prop the pyramid scheme back up again.